Sales Management Self-Learning Manual PDF

SALES MANAGEMENT
Every module consists of three to five units.

Structure of a unit is as under:-
1) Introduction & objectives

2) 2-5 sections
3) Short answer questions(SAQ)
4) Summary
5) Keywords
6) References
7) Suggested readings
Module I- Sales Process and its Management
1) Introduction to sales management 1 - 17
2) Sales Process 18 - 32
3) Personal selling 33 - 47
4) Computer applications in sales management 48 - 63
Module II- Selling Skills
5) Communication skills 64 - 80
6) Sales Presentation 81 - 109
7) Negotiation Skills 110 - 123
8) Retail communication 124 - 140
Module III-People Issues in Sales management
9) Job analysis, recruitment & selection 141 - 159
10) Training the sales force 160 - 174
11) Compensation and motivation of sales force 175 - 187
12) Monitoring and performance evaluation 188 - 204

Module IV- Sales Organization and Planning
13) Sales Planning 205 - 218
14) Sales Organization 219 - 235
15) Sales forecasting and sales quotas 236 - 249
16) Sales Budgeting and control 250 - 261

UNIT 1 INTRODUCTION TO SALES MANAGEMENT
Structure
1.1 Introduction
Objectives
1.2 Marketing Approaches
1.2.1 Production Concept
1.2.2 Product concept
1.2.3 Selling Concept
1.2.4 Marketing Concept
1.3 Marketing and Sales
1.3.1 Good Selling Process
1.3.2 Sales approaches
1.3.2.1 Direct Sales
1.3.2.2 In-direct sales
1.3.3 Types of personal sales
1.4 Evolution of sales department
1.5 Components of the Marketing Mix
1.5.1 Personal Selling and Other Promotional Tools
1.6 Functions of the sales manager
1.7 Sales Management Model

1.8 Summary
1.9 Glossary/ Keywords
1.10 References
1.11 Suggested Readings
1.1 Introduction
“Sales management” as the term implies means management of sales. Often it is

considered synonymous with the management of personal sales. It involves an
understanding of the effort that goes into the management of the sales force and the
various processes of sales.
Sales management initially was meant to be the direction of sales force personnel. Later
the term took on a broader significance apart from personal selling and the term “sales
management” included managing of all the sales related activities including below the
line advertising, sales promotion, physical distribution, pricing and product
merchandising.
The Definitions Committee of the American marketing association defined sales

management 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 sales force”. However, we shall also include in-
direct sales through channels within the ambit of sales management.
Objectives
After studying this chapter you will be able to:-
1) Identify clearly the differences between the functions of marketing and sales
2) Describe various marketing and sales approaches
3) Describe the marketing mix and the sales management model

4) Identify the various functions of a sales manager and his/her objectives
1.2 Marketing Approaches
Marketing is defined by the American Marketing Association [AMA] as "the activity, set
of institutions, and processes for creating, communicating, delivering, and exchanging
offerings that have value for customers, clients, partners, and society at large."
Marketing deals with the company orientation towards the market place. It deals with
mainly four concept’s namely the production concept', product concept, marketing
concept and the selling concept.
Marketing
Concepts
Production Product Selling Marketing

Concept Concept concept Concept
1.2.1 Production concept
The production concept founded on the belief that the customers favor those products
that are highly available and affordable to them. So the concept assumes that the cheap
products are sold well and relies on the improved production and distribution activities.
Companies try to attain profits by exploiting economies of scale. Improved production
and distribution are emphasized rather than the quality or features of the
product/service. This concept is also known as the manufacturing concept. This type of
strategy for a business works well in the developing countries where the demand is
more than the supply.
Important questions the firm has to address in this process are:-
1) Can the product be produced?

2) If the product can be produced, can it be done in required quantities?
China has oft practiced the production concept in making the goods/services available
at all times at very low prices and increased efforts to compete in international markets.
This concept is perfectly suitable when the company distributes the products/services
for the masses and not to a specific target group. This concept works well when the
demand for the product is high and the customer preference doesn’t change for a long
period of time.
Production concept works perfectly fine for some companies especially in the fast
moving consumer goods (FMCG) sector. However it was found later that some products
did not sell adequately irrespective of all the measures taken by the production concept.
Then this situation demanded another concept known as the product concept.
1.2.2 Product concept
Product concept relies on the assumption that the customers buy those products that
offer the most quality, performance, and innovative features. This concept suggests that
the quality of the product is an important factor in the customer buying process and
customers would always prefer to buy products of superior quality.
Computer industry is a good example where the production concept worked earlier but
later on product concept took over. Customers required more and more features and
quality while choosing a computer/ laptop. As more and more companies joined this
business and the foreign brands came in the local players had to adopt the product
concept.
Quality however needs to be defined. Attributes of quality may differ from customer to
customer. To some customers quality means faster processing technologies and to
some it may be some other features in the product. So companies must take enough
care in designing a product which would be in accordance with the quality parameters of
the target group. Timing of the product in the market also plays a vital part in the
success of a product. Sometimes technological or innovational products fail when they
are introduced in the markets and the customers are unaware of the benefits. So
educating the customers before introducing a product is important.
For instance the Golden Eye technology in televisions was introduced by Videocon but
the customers were clueless about what benefit it provides. After some time, when the
customers understood about that technology, it was introduced by LG and it became a
marketing success for its products.
In some industries the customer would not be able to understand the product benefits or
may be lacking a little motivation to buy the product even if they know it’s necessary. In
such cases product concept might fail to make the customer buy the product.
Hence the “Selling Concept” was adopted by some companies.
1.2.3 Selling Concept
This concept relies on the assumption that “We need to compel the customer to buy the
product”, so the customer will buy the product only if the company aggressively
promotes/sells their products/ services. This concept believes that customer is usually
inert and would not buy the product/service if the choice is left to them. So the company
would push its products/services towards the customers and push them to buy. Hence a
strong network of sales force is created for this purpose and they convince the
customers to buy the products/services through advertising and personal selling. This
kind of approach worked well with products/ services like insurance, vacuum cleaners,
water purifiers, and various other household items etc.
Important questions the firm has to address in this process are:-
1) Can the product be sold?
2) How much can we charge for the product or what can be the maximum discount
that can be given and still have a decent profit?
This concept would work well for the first time sale to a customer who might take the
product/service when persuaded by the sales representative. After buying the
product/service if the customer is not satisfied then he/she might not be interested in
entertaining the sales person for the next time.
It was later realized that most of the customers will buy the products which they need
and want. Hence the marketing concept has come into the picture.
1.2.4 Marketing concept
The marketing concept underlines the following principles:-
1) Identify the needs and wants of the customer
2) Design the products and services to fulfill the same
3) Use various promotion techniques to communicate the benefits of the product
4) Realizing the profit by satisfying customer needs over a long term
The marketing concept then is the management belief that customers will long those
products that they need and what and that the key task of the management is to identify
customer needs and wants and design products accordingly.
SAQ 1
1) Identify any two products for which you would prefer to follow the production
concept?
2) Explain which concept would work well in selling a cell phone to a CEO of the
company and to a small farmer?
3) Identify which model does Dell follow in selling the computer products and
explain how it has benefited them?
1.3 Marketing Vs sales
Sales as a process implies exchanging the products or services in exchange for money
in such a manner that what you get from it is more than what you put into it. In other
words, the difference between the realized sales price and the cost of manufacturing is
the profit for the organization from sales.
Marketing on the other hand includes understanding the value proposition in the minds
of the customer and designing the products and services accordingly.
1.3.1 Good Selling Process
Good Marketing makes sales easy. However, even when the marketing process is
good, the sales process needs to be handled carefully.
Good selling implies:-
1) Identifying the right customer
2) Communicating the product benefits to the customers and
3) Exchange of goods/ services for money
Sales are the culmination of all the marketing efforts and in a nut shell, it is the
exchange of good and services, for money. It may be said that marketing is all the
activities conducted to prepare for sales. Sales are all the activities required to close the
deal.
Clearly customers will buy those products which they need and also where the
perceived value of the product is greater than the selling price of the product. The task
of marketing is to enhance the value proposition in the minds of the customer and
increase the perceived value.
It would be ideal if the customers came and demanded the product/ service. However
the customers may not do so because of several reasons such as:-
1) He/ She doesn’t know that the product is available
2) May not know where the product is available
3) And have no idea of whom to contact

4) Have no clear idea of the value proposition and the benefits
5) May not be clear of the utility of the product in solving his / her problem
The sales force then plays an important role such as:-
1) To reach out to the customer and inform him/ her about the product benefits
2) Make the product easily available to the customer
The product can be made easily available by the following methods:-
1) Meeting the customer on a one-one basis and delivering the product at the door
step. This is referred to as personal sales.
2) Make the product available at place which is easily approachable by the

customer. This is refereed to Indirect or channel sales.
Sales management then begins with identifying the process of sales. The sales strategy
determines the route the sales would take.
1.3.2 Sales Approaches
Two possible approaches by which the sales would take place can be classified as
follows:-
Direct sales
Approach
Sales
Approaches
In-Direct sales
Approach
Depending upon the product and the approachability, needs and a affordability of the
customer one of the above approaches would be followed by sales personnel
1.3.2.1 Direct sales approach may be:-
1) Selling to offices- (for examples, Office Automation Products)

2) Selling to Industries- (business to business –B2B)
3) Door-to-door selling
1.3.2.2 In-Direct sales approach
1) Company to retailer to customer
2) Company to wholesaler and then to retailer to customer
3) Company to wholesaler to distributor and then to retailer to customer
An attempt is made to introduce these various sales approaches, but the following text
is primarily focused on personal selling.
The issues of channel management/ indirect sales approaches are also covered in the
course work of “Distribution& Logistics” and “Supply Chain Management”.
1.3.3 Types of Personal Sales
Personal sales can be classified into broad areas like:-
1) Office sales
2) Industrial/ Institutional sales
(In some countries like India there is significant difference in the approaches to
be followed for Industrial/ Institutional sales and the government sales)
3) Door-to-door sales
The kind of sales strategy to be adopted is the function of the product / service, the
market, buying process, and the competition.
SAQ 2
1) If you were a sales person for agricultural products like fertilizers, quality seeds
etc., which sales approach would best fit in and why?
2) In the above question, what steps would you follow if the customer has no
knowledge about the benefits of your product?
1.4 Evolution of the sales department
As described by Richard (2001), before the Industrial revolution the small scale
industries were the leaders of the market and selling the products / services was not
much of a problem. More emphasis was given on manufacturing activities. The orders
were in hand before the actual manufacturing process of those orders had started.
Meeting the demand was a major problem.
In many firms a small team used to supervise all the business activities. There was no
need of seperate teams for different functions like selling, marketing and manufacturing.
All the tasks were performed by the team or sometimes, by a couple of individuals.
Most of the time was spend on manufacturing. It was an ideal situation for most of the
firms not to bother about the marketing and selling activities until the Industrial
revolution began.
With the Industrial revolution, which began in 1760 in England and shortly after the
American Revolution, in United States, the companies had started to focus on the
expansion of their territory by finding new market places.
Factories were producing huge quantities of goods with the improved technology and
machinery. The production process had become simple and now the main problem was
what to do with excess surplus after meeting the domestic demand in nearby markets.
The situation demanded for the expansion of their presence in new markets, crossing
the boundaries of the cities, countries & continents.
With increasing presence in many countries, it became difficult to manage all the
departments by a single individual as was the case before the industrial revolution. The
size and volume of business had increased to such an extent that it became necessary
to delegate the authority to others. This process encouraged in establishment of various
functional units like manufacturing, finance, marketing etc. Each and every department
was to function independently and be supervised by a separate authority.
The creation of the marketing department has solved the problem of understanding the
market place & helped in performing all activities to improve the market dominance of
the products. With increasing markets and customers various sales divisions were
setup. However a major issue of how to communicate with customer has to be
perfected. This is where the roles of marketing mix and personal selling as a function
came into the picture.
Let us understand what marketing mix is and the importance of its various components.
1.5 Components of the Marketing Mix
As you have already studied in marketing, marketing mix involves several components
which can be understood by the following diagram.
Marketing
Mix
Product Price Promotion Place
Advertising Public Personal Sales Internet Based

Relations Selling Promotion promotions
(Sales management)
The marketing mix consisting of various components plays an important role in
establishing the market place/ dominance of a product.
According to the market needs the type of product, the pricing of product, the various
promotion mechanisms to be used and the type of distribution network followed (place)
should be decided.
Various tools of promoting a product include advertising, public relations, personal

selling, sales promotion and Internet based promotions.
Personal selling can be understood as the one to one oral communication between the
sales personnel and the target group in such a way that both the parties benefit from
each other. The oral communication could be a personal meeting, a telephone
conversation or by using latest trends in technology such video conferencing.
The benefits for a sale personnel would be in terms of financial reward for closing the
sale successfully & the customer would be benefitted by the product/ service received.
Often the objective of personal selling may not be to close a sale. Most of the time,
objective may be to pass on the information about the products/ services to the target
group. Maintaining a good relationship with the customer is often treated as one of the
important objectives of the sales team.
1.5.1 Personal selling Vs Other Promotional tools
Let us now understand how the personal communication differs from other tools such as
advertising, public relations, sales promotion and internet based promotion. We shall
also understand the situations in which the personal selling would be preferred over
other promotion tools and finally we shall discuss the disadvantages of the personal
selling.
Personal selling is preferred in cases where the customer cannot be reached or

communicated easily about the company product / services by other means, such as
the rural areas where the television or internet is not available. Secondly in the cases
where the target group might be a CEO of a company or a head of the institution, such
customers cannot be communicated easily with other tools as compared to personal
selling.
1.6 Functions of the sales manager
Any organization that has the sales people demands a sales manager. What does every
sales manager have in common? They accomplish the tasks through their people and
organizations. The sales manager is responsible for generating sales, profits & meeting
the customer satisfaction levels as per the company objectives.
One manager, John Rozurat of W.W.Grainger, described management as “the art of

getting things done through people”.
Charles Futrell(1998) describes the functions of the sales manager as follows:-
1) Planning :- Building a profitable customer oriented team

2) Staffing:- Hiring the right people to sell and lead
3) Training:- Educating sales personnel according to company
objectives
4) Leading:- Guiding average people to perform at above average levels
5) Controlling:- Evaluating the past to guide the future
The outcome of these several functions would be the attainment of objectives such as:-
1) Achieving defined goals

2) Product sales and profits
3) Better Customer satisfaction levels
4) Efficiency and
5) Effectiveness
Sales management has several functions like planning, budgeting, recruiting and
selection, training, motivating, compensation, designing territories & evaluating
performance.
1.7 Sales Management Model
The 1st step “describing the personal selling function” deals with understanding the job
activities and the sales process involved in personal selling
The 2nd step “Defining the strategic role of sales function” will deal with the corporate,
business and marketing level strategic decisions which typically provide guidelines
within which the sales manager and salespeople must operate.
Describing
the personal
selling
function
Defining the Designing Developing Directing Determining

strategic role the sales the sales the sales sales force
of the sales organization force force effectiveness
function and
performance
Source: Thomas N. Ingram (1989)
The 3rd step “Designing the sales organization” deals with the importance of designing
an effective sales organization which is necessary to implement the strategies
successfully.
The 4th step “Developing the sales force” highlights the importance of right recruitment
and selection methods and the need for proper training of the sales force personnel
The 5th step “Directing the sales force” presents that hiring the best people for sales is
one thing and directing their efforts to meet the sales organization goals and objectives
is another. Sales managers spend a great deal of time in motivating, supervising and
leading members of the sales force.
The 6th step “Determining sales force effectiveness and performance” deals with
monitoring the progress of sales force to determine the effectiveness and performance.
Developing forecasts, assigning quotas and budgets provides necessary information for
the performance evaluation.
1.8 Summary
In this unit we understood the definition of sales management and the differences
between marketing and sales. We highlighted various marketing approaches starting
with the production concept, product concept, selling concept and finally the marketing
concept and their role in sales generation. A good selling process is essential in making
the sales easier by identifying the customer, communicating the benefits and
exchanging the goods/services for money. For the sales process to be effective the
sales force plays an important role in identifying the right approach to reach out to
customers and make the sale. Later in this chapter we have studied the importance of
the components of the marketing mix in establishing the market place and the critical
role of personal selling played for the same. This unit also helped in understanding the
role of the sales manager in planning, staffing, leading, training and controlling the sales
force personnel. Finally in this unit we understood the sales management model which
helps in managing the sales.
1.9 Glossary/ Keywords
1) Sales Promotion Activities, techniques and incentives that are

directed towards customers with an intention to
create consumer demand.
2) AMA American Marketing Association is a

professional association for marketers.
3) FMCG Fast moving Consumer Goods are the

products used by individuals or households
which are used or replaced very fast by the
customers over a period of weeks, months of
within a year. Some examples would be soft
drinks, toiletries etc.
1.10 References
1. Tyagi C.L., Arun kumar (2004), “Sales Management”, Atlantic Publishers and
Distributors, New Delhi, India.
2. Charles Futrell. (1998), “Sales Management: Teamwork, Leadership, and

Technology (6th Ed.)”, The Dryden Press, Florida, USA.
3. Richard R. Still, Edward W. Cundiff, Norman A. P. Govoni (1998), “Sales

management: decisions, strategies, and cases (5th Ed.)” Prentice-Hall
International, New Jersey, USA.
4. Thomas N. Ingram, Raymond W. LaForge (1989), “Sales management: analysis

and decision making”, The Dryden Press, New York, USA.
1. Douglas J. Dalrymple, William L. Cron, Thomas E. DeCarlo. (2004), “Sales

Management”, John Wiley & Sons, New Jersey, USA.
2. Ralph W. Jackson, Robert D. Hisrich (1996), “Sales and Sales Management”,

Prentice Hall, New Jersey, USA.
UNIT 2 SALES PROCESS
Structure
2.1 Introduction
Objectives
2.2 Marketing Strategy
2.2.1 Segmentation and Target Marketing
2.2.2 Determining Potential buyer and buyer group
2.3 Sales Approach
2.3.1 Typical Purchasing Process
2.3.2 Essential activities of Sales Process
2.3.2.1 Interest creation activities
2.3.2.2 Pre-purchase activities
2.3.2.3 Purchase activities
2.3.2.4 Post-purchase activities
2.4 Summary
2.5 Keywords
2.6 References

2.1 Introduction
The previous unit dealt with the introduction to “Sales management”. It highlighted the
functions of marketing and sales, described various sales approaches and presented
functions of the sales manager.
We will begin the unit by understanding various steps in marketing strategy and then
deal with the sales personnel skills set and the various steps in the sales process. In
this unit we will discuss about the sales process activities. We shall discuss some
essential activities which need to be performed by the sales personnel in the sales
process. The sales personnel help in creating customer value and competitive
advantage to the product/service.
Irrespective of the nature of sale and the type of customer, the sales personnel should
follow certain basic activities for successful closing of a sale. We will discuss the
essential activities of the sales personnel in general and later on find out in depth how
the sales process changes for different types of sales like direct and indirect sales.
Objectives
After studying this unit you will be able to:-
1) Define segmentation, potential buyer and buyer group for the product/ service
2) Understand the typical purchasing process of the customer
3) Identify essential activities involved in a sales process
4) Explain the critical role played by the sales person in handling the sales process
2.2 Marketing Strategy
Marketing strategy can be thought of as all the activities performed to use the
company‟s limited resources to achieve the objectives marketing and sales and attain
competitive advantage.
The first step includes identifying the product/ service. The product/ service is
developed as per the company goals and the market needs. After identifying the
product/ service, the next step is analyzing the market. This is where we begin to
identify the customer for the product/service.
2.2.1 Segmentation and Target Marketing
Market segmentation is defined as “the process of dividing the heterogeneous market

into homogeneous sub-units”. If we take the population of a country say India, it would
be around 113 crores. For a consumer product let‟s say the tooth paste, the market is
huge. However, the entire population would not be looking for the same type of features
in the toothpaste. So we need to convert this heterogeneous group into homogeneous
sub groups. Let us say, we can divide the entire population into two categories, with one
category preferring ayurvedic/herbal toothpaste and the other category preferring non-
ayurvedic toothpaste. This categorization will give an idea of the market segment which
prefers your toothpaste. The need for segmentation is that the marketer is clear about
where to compete and place the product/ service.
There are different bases for segmentation, namely:-
a) Customer-based Segmentation
b) Product-based segmentation and
c) Competition based segmentation
Generally there are two important factors before selecting the target segment. They
are:-
a) Attractiveness of a market segment and

b) The strategic fit between the segment and the firm‟s objectives, resources, and
capabilities.
Market Research will play an important role in finding the answers to the above two
factors.
You can learn more about this in the module on marketing management.
Once the segmentation has been carried out for the product/service, we can define the
strategy using one or a combination of the following approaches:-
a) Standardization: - In this strategy, the firm maintains the same product, same
price and same communication medium to all the segments.
e.g.:- Cold drinks will be priced same to either the rich people or the poor people.
b) Differentiation: - In this strategy the firm differentiates the product to cater the
needs of different segment. The pricing would be different in this case.
E.g.:- The Indian Railways differentiates its service into several categories like
AC 2-tier, 3-tier, Sleeper and general coaches depending upon the various
segment needs.
c) Focus: - This is the combination of the above two strategies. In this the basic
product remains the same with additional features for various segments to be
added at an extra cost.
E.g.:- A given model of laptop will be priced same for all segments, but if the
segment needs an up-gradation of features it would be done at an added cost.
So using the above approaches, we market the product/ service.
2.2.2 Determining Potential Buyer and Buyer group
Determining potential buyer is more a marketing task than the function of a sales
process. The potential buyers for a product/service can be arrived by market
segmentation.
The buyer group may be different for the product category and a brand. For example, if
we take the cell phone. Every person in the segment is a potential buyer of the cell
phone. But the buyers are different for high end mobiles and low end mobiles within the
segment. Another example can be thought of as a photo copier. Every office is a
potential buyer of a photocopier but when it comes to brand the offices might go for a
cheaper brand an expensive brand.
This is where the sales team comes into the picture in determining who the potential
buyers for the brand are and the products associated with it.
The marketing group or the brand management should identify the potential buyers.
They ought to give certain marketing inputs in the form of promotions. It helps in
creating the awareness of the supplier and the brand to the potential buyer before the
sales person contacts the buyer. All these activities are a part of marketing policies and
approaches of the firm. The firm also has to provide the support material to the sales
people in terms of brochures, literature etc
This is where the sales team begins its activities. When the sales team takes their
responsibilities the first task is to find the customer, a process which we generally refer
as “Suspect to Prospect through MAN approach”. MAN stands for Money, authority and
Need respectively.
Every potential buyer may not be an actual buyer of the product. The potential buyer
cannot purchase the product if he doesn‟t have the money, authority and the need. It is
written in this order because it is easier to identify whether the person is having the
money followed by whether he has the authority to buy and finally whether he has the
need to buy, it.
Sales team needs to know how to assess whether the potential buyer has the money,
authority and need. One cannot just ask the potential buyer whether he/she has the
money. So, some parameters such as education, occupation, family status etc. needs to
be analyzed to arrive at a conclusion whether the potential customer has the money to
buy the product.
Similarly, the salesperson has to assess whether the potential buyer has the authority to
buy the product/ service and does he/she have the need for the same.
Marketing would do this job at a macro level and sales would do this job at the micro
level. Marketing identifies the target segment or potential buyers of the product/ service
but at the level of individual potential buyers it the task of sales person to identify the
needs and wants of the individual potential buyer.
SAQ 1
1) If you are the sales manager in your city for a firm selling laptops, what method
would you follow in identifying the segments for your product and why?
2) Explain the importance of MAN approach in identifying the actual buyer for
selling a high priced product like a luxury car.
2.3 Sales Approach
Once the sales team identifies the prospect, it‟s time to decide on the sales approach.
The first step in the sales process is the pre-approach. Pre-approach would include the
attire, presentation material, fixing an appointment and deciding what to do in the
appointment like opening remarks etc. The objective of the pre-approach is the often
data collection, knowing more about your prospect, the team involved in buying the
product, the customer history and so on.
The sales team will always be able to sell better if they talk customer needs and not the
features of the product/ service. This is referred to as term “FABing” which means
converting features to attributes and attributes to benefits.
If you are selling the photocopier it would be advisable to talk about the customer
benefits. You may start your discussion by saying “Last year the expense on photocopy
is „X‟ amount, if you install the machine you would end up saving „Y‟ amount per
annum”.
Now let us understand the typical purchasing process.
2.3.1 Typical Purchasing process
Every purchase has a process which can be understood by the following diagram.
Recognition Evaluation Purchase Implementation

of needs of options decision and evaluation
Most of the customers do not buy a product unless there is a need for it. The problem is
that the customer often does not know what he/she needs. So in the first step of
purchasing process one has to identify what the problem or need is.
In the second step “Evaluation of options” the customer would look for various
competitive products or solutions for his problem. There might be a different criteria
used by different customers. Some of them might be:-
a) Price: - Many customers use price as the differentiation criteria. Customers

might go for a cheaper product rather than a costly one. This is seen more often
in developing countries and less in developed countries. In this the sales person
may be actively negotiating for a better price or give some discounts. Discounts
play a major role in the successful closing of sale. But the sales person should
have a clear idea of what could be the maximum discount allowed by the
company for the product/service.
Some customers go on with the higher price products or some may buy the
medium priced products. The choice would depend on the customer mindset.
b) Quality: - Here the customer would be preferring the best quality product and
does not mind paying a little more. Quality might be different for different
customers. For the customer, Quality may be associated with long life of the
product, more features, best designs, better after sales service, and so on. Most
of the customers associate quality with the brand. It is the role of the sales
person to know what the customer means by a quality product and carry on with
the sales process.
In the third step the purchasing decision will be taken by the customer. The role of a
sales person is to make the purchasing process hassle free and convenient.
And the final step “Implementation and Evaluation” deals with the installation of the
product and evaluating the value. If the customer evaluation is positive it would lead to
another sale in the future.
These are the four steps in a typical purchasing process for every sale. The level of
activities involved in each step differs for different types of sales like direct and indirect
sales. For instance more activities might be involved in the first step (recognition of
needs) for an industrial sale while compared to door-to-door sale. It is very important to
know the kinds of activities involved in each of the steps for different types of sales.
2.3.2 Essential Activities of Sales Process
The sales process can be categorized into four main activities. Interest creation
activities, pre –purchase activities, purchase activities and post activities. To convert the
suspect to a prospect, each and every activity is important and needs to be performed
successfully. These activities aim at serving customer better. The process is called
sales process cycle.
Every sale has some essential activities to be performed by the sales team. Let us
understand those activities with the help of the following chart.
Interest Creation
Activities
Post Purchase Pre-Purchase

Activities Activities
Purchase
Activities
Source: Sales Management, by Andris A. Zoltner , Prabhakant Sinha, Greggor A.
Zoltners, page no: 41
2.3.2.1 Interest Creation Activities
The first activity is interest creation. Once a potential customer is identified, he/she
needs to be educated about the product/service you are offering. It is the job of the
sales person to be prepared with the necessary literature, brochures and or
presentations. If the product is a technical in nature, the aim of the sales person should
be in explaining the benefits of the product to the customer and not its technical
features. In this activity, creating awareness about the brand or product should be the
main aim than pushing for sales. The sales person needs to understand the customer in
this phase and identify his/her problem and provide the necessary information
documents which the customer may request. Various promotional techniques can be
used for interest creation. Some of the ways in which companies create interest in the
product/service would be:-
 Giving full access to the software features and capabilities for a limited time
period like 1 month. During this time the customer can evaluate the product and
then buy it. This is usually prevalent in firms selling software products.
 Distributing fee trial packs are along with other products. This is the case with
firms selling products like soaps, shampoo, toothpaste etc.
 Offering free test drive option to the customer, so he/she can purchase only if
they are satisfied in case of high – value product like automobiles.
 Coining motivational quotes. “Why should boys have all the fun” (Hero Honda‟s
“Pleasure”) implies that girls are entitled to same freedom as men and driving the
scooter is symbol of freedom and liberty.
2.3.2.2 Pre-purchase Activities
Having created interest in the brand/ product in the first activity, it is time for moving on
to the next activity by the sales person. In this process we assume that the customer is
actively considering various product offerings and comparing them. This activity aims at
describing the product or service features to the extent possible. Much emphasis is laid
on demonstrating the capabilities of the company and or the product. Here, the sales
person takes on an active role in assessing the customer needs and helping them in
problem solving.
2.3.2.3 Purchase Activities
Having presented a solution to the customer problems, it is time for the sales person to
push for closing. Here a lot of activities happen both, from the sales person‟s end and
the customer‟s end. Sales person‟s role lies in negotiating, bidding, finalizing the terms
and condition of the sale. The customer evaluates various proposals, negotiates and
finalizes the payment. It is not necessarily required that the same person or company
who initiated the pre-purchase activities would be involved in purchase activities. Some
of the processes may be outsourced to other agents.
Interest Creation Pre-purchase Purchase Post-purchase
Business partner does
IBM direct Business Partner delivery and installation

IBM
sales person (reseller) IBM may provide technical
support
Source: The complete guide to accelerating sales force performance, by Andris A.

Zoltner , Prabhakant Sinha, Greggor A. Zoltners, page no: 31
This table explains how the different stages in sales process are handled by the
company sales force and the selling partner. To sell an IBM product, an IBM sales
representative is involved in interest creation and pre-purchase activities like explaining
the features, capabilities and benefits of the product and how the product would be an
advantage to the customer in solving his problems. In the later stages like purchase
activity, the IBM sales person would handover the lead to a reseller business partner to
complete the purchase and post-purchase activities and technical support may be
provided by IBM team when required.
Companies may also decide to handle all the activities from interest creation to post-
purchase. Most of the companies who adopt the outsourced model that have several
advantages and disadvantages.
Advantages of Outsourced selling (Partner, reseller & distributor)
Customer relationships: If the reseller or partner has good communication and

negotiating skills, the chance of closing a sale is high.
Financial Costs: If the partner charges a percentage of sales made, the financial and
selling risk of the firm is reduced.
Product variety: A distributor can acts as a one-stop solution for all customer
requirements. If your company is good in manufacturing microphones/headsets only,
then you can take the help of the distributor who would be dealing with the computer
products. The chance of your product sale is higher when the customer comes for
purchasing a computer/laptop and buys your key board as an accessory.
 Variable capacities: If demand of a product/service increase, company can‟t

increase the sales force to sell the products and fire them when demand decreases. So,
in peak demand season the distributors can help in selling your products/service to the
customers.
Disadvantages of Outsourced selling (Partner, reseller & distributor)
 Conflicts: Conflicts can arise when deciding which customers to be served and
which territories should be assigned. The company may not be able to force the reseller
to follow its sales strategies.
 Control: Outsourced selling cannot be controlled like personal sales team of the
company. Companies may not be able to keep track of the reseller performance in
selling the goods/services. Reseller may be interested in his own profit and may
encourage the customer to buy other products as he/she may receives more
share/profit/commission by selling other products.
2.3.2.4 Post-purchase Activities
The post purchase activity begins after successful closure of the sale. This phase
includes delivery of the product/ service, installation (if required), providing more
information about the features and finally collecting the payment. This phase can also
include after-sales service. The primary objective of this phase is to win customer
loyalty so that he/she would be a regular customer of the brand/product.
As discussed earlier, some functions in this stage like providing information, delivery of
product and installation can be done by the company itself or with the help of a reseller.
After sales service plays an important role in creating the customer loyalty. It can be as
simple as addressing the customer problem on the telephone line or may be a
personally visiting the customer premises to resolve an issue. In B2B deals, post-
purchase activities can include installing the product or service and then providing
training for the uses of the product/service of the company until they understand the
new product/service.
Understanding the post-purchase behaviour by the sales team is an important task if the
company looks for repeated business for a long term relationship with customer.
Consumer
Post-purchase
Complaints
Dissonance Negative Evaluation
“Did I buy the right one?” “I’m calling the
“It doesn’t work well”
store.”
No Purchase
Purchase Usage Product disposal
“This is the one “I found another “Can I trade this in?”
. I want” for use…” Repurchase
Positive Evaluation
“It works well”
Source: Small business management: an entrepreneurial emphasis By Justin Gooderl

Longenecker, Carlos W. Moore, J. William Petty, Leslie E. Palich, page no: 298
This model explains that activities like post purchase dissonance is a type of cognitive
dissonance which would arise after the purchase decision is made and customer has
thoughts of other products as an alternative. This can create a negative effect on the
evaluation and satisfaction level with the product/ service. So, sales people should try to
find ways of maintaining this cognitive dissonance among customers.
SAQ 2
1) If you are in need of an anti-virus product, identify the typical purchasing process
you would follow.
2) If you are a sales representative for kitchen chimney products, what sort of
interest creation activities would you employ if the customer is not interested?
2.4 Summary
In the previous unit, we discussed various marketing and sale approaches followed by
the companies. In this unit we have understood the importance of segmenting and
targeting in identifying the customers. We have understood how the customer would
purchase the product/service starting with the recognition of needs, evaluating options,
making the purchase decision and finally implementation and evaluation of the product
after it is delivered by the sales representative. It is the job of the sales person to help
the customer in handling the purchasing process of the customer. We studied the
essential activities of the sales person in handling the customer and making a deal.
We understood how interest can be created in the product/service in various ways. After
the interest is created it is time for the sales representative to handle the pre-purchase
activities like giving sufficient information about the product/service and describing the
benefits. The next stage would be purchase activities where the sales representative
would be aiming at closing the deal successfully by negotiating and finalizing the
payment terms. Finally the post purchase activities would include delivering the
product/service, collecting the payment as per the terms and providing after sales
service. Finally, we discussed that for repeated business with customers, it has become
extremely important to handle the post-purchase behaviour of the customer as more
and more alternative products/services are available for customer.
2.5 Keywords
1) Reseller Company or an individual who purchases the

products/ service with an intention of selling
them to other customers on behalf of the
company.
2) Potential Buyer Buyer who is interested in buying your

product/service, but may not necessarily buy it.
2.6 References
1. Andris A. Zoltners, Prabhakant Sinha, Greggor A. Zoltners (2001), “The complete

guide to accelerating sales force performance”, Amacon, New York, USA.
2. Justin Gooderl Longenecker, Carlos W. Moore, J. William Petty, Leslie E. Palich

(2006), “Small business management: an entrepreneurial emphasis (13th Ed.)”,
South Western, USA.
3. Rajan saxena (2006), “Marketing Management (3th Ed.)”, Tata Mcgraw-Hill, New
Delhi, India.
4. William L. Cron, Thomas E. Decarlo (2006), “Dalrymple’s Sales Management

(9th Ed.)”, John wiley & Sons, New Delhi, India.

UNIT 3 PERSONAL SELLING
Structure
3.1 Introduction
Objectives
3.2 Personal selling as a marketing communication tool
3.2.1 Personal selling and other communication tools
3.2.2 Advantages and Disadvantages of personal selling
3.3 Personal selling activities
3.3.1 Pre-approach activities
3.3.2 Approach activities
3.3.3 Presentation activities
3.3.4 Objection Handling
3.3.5 Closing the sale
3.3.6 Follow up activities
3.4 Summary
3.5 Keywords
3.6 References

3.1 Introduction
In the previous unit, we examined a typical purchasing process of the customer and the
essential activities of a sales process. In this unit we will study about the steps involved
in handling the personal sales. We first define personal selling and understand how it is
differs from the other marketing communication activities like advertising, public
relations, sales promotions and direct marketing.
Personal selling is one of the oldest communication techniques practiced by companies.

Personal communication involves a person-to-person communication and is considered
to be one of the best marketing tools due to the involvement of human element which
helps to build up a long-term relationship with the customer understand the various
activities involved and understand the importance of customer relationship management
for future sales potential. Not every marketing communication tool is the best at all
times. In this unit we shall understand the advantages and disadvantages of personal
selling. Personal selling would achieve success easily when it is supported by other
marketing tools like advertising or Public Relations.
Objectives
1) Define personal selling and how it differs from other marketing communication
tools
2) Explain the advantages and disadvantages of personal selling
3) Understand various activities involved in handling personal sales.
4) Understand the importance of customer relationship management, in obtaining

future sales opportunities.
3.2 Personal Selling as a marketing communication tool
Definition: Personal selling can be viewed as a marketing communication tool that

involves a one-to-one communication, which can happen in the form of face-to-face
communication, over the telephone line, through video conferencing or by an email.
3.2.1 Personal selling vs. other communication tools
Personal selling is different from other marketing tools such as advertising, sales
promotions etc. Advertising is a communication tool which targets many consumers
simultaneously. Unlike advertising, personal selling is targeted at an individual prospect
and develops the relationship. Advertising aims at a group and is non personal where
the communication primarily relies on the media.
AMA defines sales promotion as “Media and non-media marketing communication

employed for a pre-determined, limited time to increase consumer demand, stimulate
market demand or improves product availability”. The major difference between sales
promotion and personal selling is that the latter is a non-personal way of communicating
with the customer.
3.2.2 Advantages and disadvantages of personal selling
Every communication tool serves the purpose of the company’s objective to increase its
sales. However, in doing so, some communication tools work better than others for the
business. Each and every tool like personal selling, advertising, sales promotions etc
have their advantages and disadvantages.
Advantages of Personal Selling
a) Flexibility in delivering the message

If the customer doesn’t understand the message conveyed by the sales
representative, then the message can be modifies and conveyed to the customer
again. Since 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.
Disadvantages of Personal Selling
a) High costs per sale

Personal selling can’t be applied to all the products even though it might be
efficient in building the long lasting relationship with the customer. Cost per sale
plays an important role in deciding the personal selling as a communication tool
by the companies. Personal selling would be applied if the cost per sale is
justified like Insurance products, loan products, credit card sales, personal
banking products, high value kitchen appliances like dish washers, water
purifiers, chimneys etc., in which the benefits from the customer to the company
are more than the costs that are incurred for the sale to happen. Low value
products can not be dependent on personal selling unless it is a repeat purchase
by the customer and long-term profit is justified for the cost incurred.
b) Misunderstanding by the customer

Many people prefer to buy the product/service from a store rather than buying it
from a sales representative who visits home. These customers might have
experienced the aggressive behaviour of sales people in the past and may be
determined not to buy any product from them. Customer might lose trust on the
sales people due to this aggressive behaviour, Hence, it is the responsibility of
the sales people to focus in making the customer happy rather than pushing
aggressively for the sale.
SAQ 1
1) Explain the benefits of using personal selling as a communication tool for selling
loan products.
2) If you are the sales manager for a FMCG product like tooth paste, which one
would you prefer among personal selling or advertising to increase the sales?
Explain the reason for your preference.
3.3 Personal Selling process activities
Sales representatives of a company would have to follow a sales method, which help in
dealing better with the customer. Various stages are involved in conducting a prospect
to a buyer of the product/ service.
Personal selling generally involves six steps as described below:-
a) Pre-approach activities
b) Approach activities
c) Presentation
d) Objection handling
e) Closing the deal
f) Follow up
The above mentioned steps are just a general way of understanding and the number of
steps may vary from company to company. Let’s understand these in detail.
3.3.1 Pre-approach activities

This includes all the activities a sales representative would perform before actually
meeting the prospect. These activities may include the following:-
 Knowing the details about the product/ service which is to be sold
 Knowing about the company which the product/ service represents
 Knowing the details of the prospect like name, family background, income status,
employment, credit history etc
 Knowing the right place and time to meet the customer
 Knowing the right approach in getting an appointment with the prospect
 Identifying which products/ services are to be presented to the prospect and
keeping sufficient manuals/ technical documents
The level of activity depends upon the type of customer or market. If the sales are for
the B2B market, then sales representative needs to have all the necessary documents
which clearly explain all the technical details or benefits about the product/ service. If
the sales are for the high value products like loan products, then knowing the credit
history of the prospect is an important task. Knowing the right time, place and approach
will be important if he/she is selling to top-level corporate like CEO of a company. Often
people encounter sales representatives who come to sell the product/ services without
even knowing the complete benefits or technical details. It is the job of the sales
representative to clearly know the benefits or details of the product and also the about
the company which they work for.
We already studied in the previous unit that the actual closing of the sale may not be
necessarily handled by company’s sales representative. The sales process may be
outsourced where the reseller will sell you the product/ service. In such cases the
reseller must have a clear idea about the company for which he/she is selling the
product/ service.
3.3.2 Approach activities

After identifying the prospect and gathering necessary information, it is time to interact.
It is said that the first impression would last longer and is critical for any future meetings.
The aim of the sales representative should be in gaining attention of the customer and
stimulate his interest in the product/ service. Opening remarks would play a major role
interest creation. Sales representative start introducing his/her name and the company
which they represent. Later on, they proceed with the product/ service which the sales
representative have in to offer. Interest can be created by citing product benefits, giving
referrals, repeated calling etc. In B2B markets, if you are the sales representative selling
a workstation to the IT firm, a single meeting wouldn’t be enough in getting to the
presentation stage, so repeated calling would be required. It is the aim of the sales
representative to create enough interest to transit to the presentation stage. In brief the
task of a sales representative in this stage can be summed up as following:-
 Gaining prospect attention

 Interest creation in the product/ service
 Gathering more information about the prospect
 Successful transition to the presentation stage
3.3.3 Presentation activities

This is the stage where the sales representative will work to his level best to convert the
prospect to a customer. The desire for the product/ service needs to be created by
handling the presentation carefully. So this is a critical stage and if the presentation is
not done effectively, the prospect might not be interested in listening to the presentation.
We need to set the environment in the first few minutes of the presentation and get a
positive impression. Often when we walk into an office for presentation, the prospect
would be busy in middle of some work, so it’s very important to get his attention in the
first few minutes. Just as people often judge the book by its cover, in the same way
looking at the sales representative people decide sometimes whether to entertain the
presentation or not. Attire and grooming of the sales representative like clothing and
grooming are very important.
It is important to deal with a positive attitude while making the presentations. If
you are dealing with PowerPoint slides, then there are some general guidelines which
you have to follow in making the slides. We shall discuss more about this stage in
subsequent units. Finally, to sum up, the important activities that you as a sales
representative would perform in the presentation stage are as follows:-
 Introduce yourself and the company by giving a business card
 Create an atmosphere for gaining the attention of the prospect
 Deal ethically with a positive attitude and never give any negative comments like
those who didn’t buy this product/ service are suffering and so on
 If you require more information about the prospect company then state the
reason for the same. For instance, if you want to know the number of staff or the
type of customers handled by the prospect, then provide a reason for the same.
 Ask some interesting questions in between just to check whether the prospect is
really listening to what you say in the presentation
In most of the cases, presentation stage would is not said to be successfully completed
if the objections that arise from the prospect side are not handled properly. So in the
next stage we understand about the objection handling.
3.3.4 Objection Handling

Handling sales objections is as important as making a good presentation for the
prospect. Objection handling is about handling the objections of the prospect when
he/she says no the product/ service stating a reason. The prospect may say no, due to
some of the following reasons:-
 The product/ service which is offered is more expensive than other similar
products in the industry
 Prospect may not interested in particular feature of the product/ service
 Prospect may not have fully understood the benefits
 Prospect might not be interested in making a decision in buying a product in the
first meeting itself
 Prospect might be willing to test you or need more information on the product/
service to be satisfied
It is the job of the sales representative to know the exact reason for the objection and
handle it carefully. “Prevention is better than cure”, it makes sense in this context as it
is better to handle the presentation well, before discussions lead to the above
mentioned objections by the prospect. So it is important that the sales representative
have a check-list of the possible objections which can arise during the presentation. It is
also important that the companies provide the checklist and train its sales persons in
handling situations when the objections arise.
Sometimes even a well trained sales person might go wrong in handling the objections
as he/she might lose temper or may be for some other reason. So it is very important to
know the ways in which the objections can be handled.
Darryl Davis in his book “How to be a power agent in real estate” describes Ten
Commandments of handling objections. Some of them are as follows:-
 Objections shouldn’t be taken personally
 Objections should be looked as an opportunity to increase your skill set in
handling them. As Warren Buffet who is the greatest investor and one of the
richest persons in this world says in his autobiography, “ success is a terrible
teacher, because you only learn from your failures”
 Take your time when handling objections and do not rush into giving an answer
for the objection.
 The better you present, the less number of objections arise in the later stage of
your presentation.
So objections should be thought of as an opportunity in gaining more attention of the

prospect and should be handled carefully. After the objections are handled properly
there should a smooth transition into the next stage “closing the deal”
3.3.5 Closing the deal

After successful presentation and effective objection handling it is time for the sales
representative to close the deal by obtaining a purchase commitment from the
customer. Various closing techniques can be employed by the sales representative in
requesting an order for the product/ service. Sales representative must know the right
time for closing the deal during the presentation. If closing technique is used at an
appropriate time during the presentation, an objection may arise from the prospect.
Sales representative can know the right time by observing the prospect carefully and
looking for some buying signals from prospect such as:-
 Positive statements about the product/ service
 Enquiry about other customers who are using the product/ service
 Willingness to test the product/ service
 Discussion with finance team about the product
 Enquiry about the warrant period, price, installation time, after sale service etc
 Playing with the company order form and a pen
 Enquiry about the discount rates
 Enquiry about the terms, mode of payment and any installments provided.
 Enquiry about any loan facility is available with the product
The list can include many more items and it is the job of the sales representative to
know the right time for closing the deal. After identifying the right time, we can apply
some of the closing techniques as described by Ralph W Jackson and Robert D Hisrich
in their book “sales and sales management". Some of them are as follows:-
 Trial close: This technique can be used at any stage during the presentation.
Once some buying signals are identified, the sales representative should attempt
a trial close and see if a positive response is received from the prospect. If a
positive response is received then he can go for closing the deal. If he is selling a
car to the customer, the trial close can be “Would you be interested in buying a
Maruti Alto or Zen”. If the prospect says any one of them, you can proceed with
the actual closing and discussing the terms and payment methods of the product.
 Asking for an order: This includes directly or indirectly requesting the prospect
to make the purchase.
 Assumption close: In this the sales representative assumes that the decision to
buy is already made by the customer and proceeds to close the deal. For
example he can say “Having found the product/ service to be beneficial, when
would you like it to be delivered?”
 Summary-of-benefits close: Here the sales representative summarize the
benefits of the product/ service and then go for the sale.
 T-account close: This includes describing the advantages and disadvantages of
the product/ service by putting them side by side in a T-table format. This form
can help the prospect easily understand about the product/ service.
 Special deal close: Here the prospect would be given a one-time special offer
on the product/ service such as “We would like to offer a 15 percent discount if
you place an order for the product/ service today”.
If you are interested in various other closing techniques, you may refer to the books
listed in references and suggested readings. Various problems might arise during
closing, such as the sales representative having no idea of how many times does
he/she have to attempt a closing technique. Another problematic situation would be a
“No” from the customer after using a closing technique. After using a trial close, if you
find the prospect is not giving enough response or says no, then try to use another trial
close. There isn’t any fixed number but another two to three times can be reasonable
after the first trail close. This wouldn’t offend the prospect if it is done professionally.
Most of the sales wouldn’t happen in the first closing, especially if it is for B2B markets.
So, maintaining a calm and positive attitude would work for the sales representative in
closing the deal.
After closing the deal, the next activity in the personal sale would be follow-up
after the sale.
3.3.6 Follow-up activities

If you are a sales representative, your duty doesn’t finish once the deal is closed and
the order is received by the customer. It is your job to ensure that the customer is fully
satisfied with the product/ service. If there are any problems faced by the customer, it
has to be resolved by identifying it and referring to the right team in the company. We
face such problems a lot when we deal with technical products. You might have
promised certain features of the products and those features might be interpreted
differently by the technical team in the company. As a result, some of the features
wouldn’t be made as per the customer requirement, resulting in low customer
satisfaction levels. It is your duty as a sales representative to ensure that these
problems are resolved and make sure the customer is satisfied. It is very important to
understand that customer satisfaction is very important, because it has direct effect on
loyalty and trust. Low customer satisfaction levels may make it difficult for you to have
future sales possibilities and repeated business.
Companies do know the value of a customer when he/she is lost. In most of the
businesses, making a sale to a new customer is a costly affair when compared to
making the sale for an existing customer. So the follow up techniques plays an
important role in maintaining the relationship between the customer and the company.
Repeated calling to know how the products/ services have benefited the customer
would work in keeping up the relationship. During these calls, you can describe the new
products/ services launched by your company and try to get a sales opportunity.
Let’s understand with an example, some of the important follow-up activities that can be
associated after closing the sale. If you are selling a software product to the telecom
company, like a billing management software which would help in managing the bills of
the subscribers, various follow up activities may include as follows:-
 Checking the date of delivery and ensuring the product is delivered.
 Ensuring that the product is installed properly in the required number of systems
 Making a call to find out how comfortable are the employees with the product
 Identifying if any training is required for the employees in handling the product
 Providing necessary information on who to contact if any technical problems
arise in future
 Repeated calling after some period as per the company guidelines, to know for
any problems and try to describe about any new products/ services launched
SAQ 2
1) Explain various pre-approach activities you would perform, in selling a post paid
mobile connection to a corporate employer.
2) If a customer says that he/she would consider buying the product/ service, if the
price is decreased, then as a sales representative what type of closing
techniques would you use?
3) If customer appreciates the product and has some problem with the high price of
the product, then what type of closing techniques would you use as a sales
representative?
4) Having successfully closed the deal for a washing machine with the customer,
what type of follow-up activities would you perform?
3.4 Summary
In this unit, we have understood the importance of personal selling as a communication

tool for the company. We have understood how advantageous it would be in improving
the customer relationships with personal selling. As every communication tool has
certain disadvantages, we have looked into various disadvantages of the personal
selling. It is essential that every sales person would follow certain steps in making a
sale, so as to create standardization in the sales method. Hence, we have understood
step by step, the various activities that involve in a personal selling.
We studied how pre-approach and approach activities would help in getting an

appointment for presentation. During the presentation, it is important to grab the
attention of the prospect in the first few minutes and handle objections carefully. We
have discussed various objecting handling techniques and then discussed about closing
techniques which help in closing the deal. Getting an order doesn’t end the job as follow
up is very important to gain the customer trust and loyalty which would help a repeat
business. We have finally understood the importance of existing customer to the
company, as it would be difficult and costly to sell the product to the new customer
rather than selling to an existing customer.
3.5 Keywords
1) Prospect A prospective buyer in short a prospect, is an

individual or a company who has the potential
to become your potential customer if handled
properly by the sales representative.
2) Public Relations (PR) Activities that are performed by the company to

maintain relationship with its employees,
investors, customers and general public.
3.6 References
1. Darryl Davis (2003), “How to be a power agent in real estate”, Tata McGraw-Hill,
USA.

1. William L. Cron, Thomas E. Decarlo (2006), “Dalrymple’s Sales Management

(9th Ed.)”, John wiley & Sons, New Delhi, India.
2. Douglas J. Dalrymple, William L. Cron, Thomas E. DeCarlo (2004), “Sales

UNIT 4 COMPUTER APPLICATIONS IN SALES
MANAGEMENT
Structure
4.1 Introduction
Objectives
4.2 Customer Information Management
4.2.1 Traditional ways of maintaining information
4.2.2 Contact management softwares
4.2.3 Sales Force Automation
4.3 Customer Relationship Management
4.3.1 Microsoft Dynamics CRM
4.3.2 Open Source CRM Applications
4.4 Summary
4.5 Keywords
4.6 References
4.1 Introduction
In the previous unit, we understood the advantages of personal selling and its various
activities involved in making a sale. We understood the importance of knowing the
customer before approaching him for a presentation. We also discussed about the
various steps which can ensure a successful closing of a sale. In this unit we examine
how computer applications can improve the effectiveness of the sales method and
generate more leads to the business.
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. Various
technologies have been discussed in this chapter to give you an idea of what are the
current practices followed up in using technology as an important tool in sales process.
We shall also discuss what type of computer applications are used by the sales
representatives in the field, while interacting with the customers and types of
applications that are used by the sales managers in monitoring their sales team and
measuring the goals.
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. We shall discuss how computer applications can help in resolving of
the problems which arise when a sales representative leaves the company. Finally we
shall identify if there are any disadvantages associated in with use of these computer
applications that to help sales activities.
Objectives
1) Identify the importance in maintaining the updated database of the customer

2) Understand the role played by contact management software in improving
customer relationships.
3) Explain the role of SFA in managing sales activities
4) Explain the benefits of the CRM software with the help of Microsoft Dynamics
and Sugar CRM.
4.2 Customer Information Management
Maintaining customer information is an important task to every business. Customer

information may include some of the details like:-
 Name of the customer
 Address of the customer
 Mobile/ landline/ fax numbers, e-mail, website address etc
 Last date of meeting
 Minutes of meeting
 Future meeting schedules or follow up activities
 Products/ services used
 Products interested in future
 Preferred time of calling
 Any problems faced in the past
 Customer rating about your company products/ services if provided
The list can be much more depending upon the customer, so maintaining such list is an
important task of the sales representatives. Let us understand some of the
disadvantages and preventive measures to be taken in the case of improper
management of customer information. Some of them include:-
 Address of the customer: If the address is not properly updated time to time,
the sales representative might find difficult in locating the customer when needed
to send some promotional offers or information about the new products/ services
launched by the company. So he should try to get both the residential and office
addresses.
 Mobile/ landline/ fax numbers, email: This information helps us in giving choice
to the customer for contacting him the customer. The sales representative
should try to get as many contact details as possible, so if mobile numbers is
changed then we can use landline as an alternative in contacting the customer.
 Minutes of meeting: Improper entry or no entry about the minutes of meeting

can create many problems such as frequently asking the same questions for
customers which you have already discussed in previous meetings or you may
try to sell the same product/ service which the customer refused earlier. So
maintaining proper minutes of meeting can resolve such problems.
 Preferred mode and time of contact: Nowadays customers are too busy and
prefer to interact in a particular time on a particular number. Some of the
customers prefer only emails. It is your job to maintain such information to avoid
any contact during their inconvenient times and places. These mistakes can be
very serious which can make you lose the customer permanently.
4.2.1 Traditional ways of maintaining information
The way how customer information is maintained may vary from business to business.
The traditional way of maintaining customer information is by noting it down on a paper.
This way of recording the information worked well when the business were small,
having few customers and few competitors. But today as the business grows with both
customers and competitors increased in the market, companies can’t just rely on the
traditional way of maintaining information. Some of the problems which can arise by this
method are:-
 If you are having the data of customers, it would take lot of time in converting that
data into information such as who is my potential buyer? By the time you identify
them, customers might be using your competitor’s products/ services.
 There is every chance of misplacing the papers containing customer information

and to add for this problem, if your sales representative quits, then the contact
information would be difficult to retrieve
 More and more sales force would be required to maintain the database as the
customers increase. Hence it’s important to find an alternative way to for
maintain the data.
Customers expect faster processing of their requirements. So, it would be better to use
the computer applications that are available to speed up the sales process and maintain
the customer information effectively.
4.2.2 Contact Management Software
To decrease the workload in maintaining customer information, various contact

management softwares are available in the market. These softwares help the sales
representatives in getting a complete picture about the customer with a single touch.
You get access to all the critical data of the sale such as customer contact information,
minutes of meeting, relevant technical documents if any, partners associated with the
sale, future meeting schedules, important deadlines etc. in a single screen.
These softwares provide easy updating and avoid any discrepancies in data such as
multiple entries. These softwares can help in minimizing the mistakes that can happen
during the customer interaction and help in building stronger, long-lasting relationships.
If you are interacting with customer on the phone, you may use simple contact
management software in your computer, such as the address book provided by
windows. Sometimes it wouldn’t be practical to carry your computer especially when
you are at customer premises. Keeping this in mind, many software vendors providing
software applications which can be used in your mobile or PDA. Contact management
software can be used by the off-site sales representatives who are in the company and
also who are on-site at the customer premises. Most of the times companies buy
contact management software which would suit for their requirements. Some features
which you must check while buying such software products are:-
 User friendly screens
 Faster access to customer information
 Easy-to-understand the functions by sales representatives i.e. less training

requirement for adoption
 Having multiple views of the data, such as the total customer list, elite or platinum
customers, prospect list, recent customers list etc.
 In today’s world every customer is having an email facility, so it is important that

the software would support email, fax, and call facility as per the scheduled time
with customer, group mailing when new products/ services launched etc.
 Required information access in a single touch
The picture below helps us in understanding how a contact management application

looks like. This is Microsoft outlook new contact entry screen when you can enter
customer information like name, phone numbers, mailing address and much more.
You can see the call facility provided where you can call the customer, business card
and pictures can also be updated, you can add up reminders and schedules with the
customer in the follow up tab, you can locate the customer address suing the “map”
button and so on. This interface provides you a clear picture how contact management
software looks like. There are also many custom made contact management softwares
where you can approach the software vendors and create one for you.
4.2.3 Sales Force Automation
In today’s competitive world, managing the sales representatives is as difficult as

managing the customers. Contact management softwares can be very useful if the
customer is handled by the same sales representatives all the time. In reality this is not
the case, as companies face high attrition rate due to more opportunities for sales
representatives in the industry. Some companies have 100% attrition within a year.
What would happen with the customer if the sales representative leaves the company
and the customer is handled by other sales representatives? The problem can be
severe if the sales representative leaves the company without notifying and company
has no idea with the latest customer information the sales representative was handling.
Many problems may arise when the customer faces a new sales team. Customers
would have to state all the requirements, budgets, features, payment details to the new
sales team, a process which can be time consuming and creates dissatisfaction among
customers.
This scenario demands a computer application which will not just maintain the customer
information in the sales representative computer, but can also report the latest
information to the sales manager in the company. This is where the implementation of
sales force automation (SFA) software is required.
SFA connects all the sales representatives contact management software with a central
database for reporting. Various advantages of SFA include:-
 Centralized data base for retrieval and updating customer information
 Information sharing is the biggest advantage
 Company has access to all the latest information about the customers
 Sales team can be more responsible in entering right data, as company can track
when the data was updated and by whom
 Data can be accessed anywhere irrespective of the location either using wired
networks like LAN, WAN or wireless networks like Wi-Fi.
 Sales team can work from home whenever required as data can be accessed
anywhere
 Since all the customers data stored at one place, it would be easy to know the
efficiency of the sales teams, status of the targets and less duplication of the data
 Due to centralized data, many departments can access the customer data so
multiple sales to the same customer by different teams can be avoided thereby
using the time more efficiently.
 Matching the new products/ services to the entire customers can be done easily
as the data is centralized
Having discussed with many of the advantages, let’s look at some disadvantages
mentioned below:-
 Complex screen may not be user-friendly for all the sales representatives and
they may find it difficult to work
 Require continuous management and back-up facilities if the data crashes.
 SFA applications may be costly for the company where the investments need to
be justified implementing one.
 May be difficult to integrate with other legacy systems in the company
SFA applications are integrated and became a part of another system namely customer
relation management system which aims to be the ultimate solution to manage the
entire sales process.
SAQ 1
1) Explain the benefits of using contact management software over traditional ways
of maintaining information.
2) Explain how SFA car help your company if attrition rate is high
4.3 Customer Relationship Management (CRM)
SFA can be thought as a subset of CRM. SFA deals with data of the customer during
sale interaction where as CRM deals with automating all the customer related data
related to the sales, marketing, customer care, technical, finance, human resource
departments. CRM systems highlight the importance of integrating sales with other
business functions.
“Sales force management” written by Johnston and Marshall (2009) provides more
insights into the use of CRM systems for an organization. In their book CRM is defined
as “ any application or initiative designed to help your company optimize interactions
with customers, suppliers, or prospects via one or more touchpoints such as call
center, sales person, distributor, store, branch office, web or e-mail for the purpose of
acquiring, retaining, or cross-selling”.
Sales and marketing have goals in common, yet marketing blames sales for not
performing duties effectively, in turn sales blames marketing for their poor strategies
and lack of knowledge about the situations in real world or it may blame HR department
for not providing sufficient man power. So, it is time to stop this blame game and work
collectively to deliver growth by focusing on the customers. CRM aims at putting the
customer at the center of the business process. In a client meeting you see not only the
sales representative but also may see members from marketing, finance, technical
departments participating. A system is required to be in place where all these business
operations need to be aligned. This is where the CRM applications come into picture.
Let’s now look at some of the CRM applications which are used by the companies.
4.3.1 Microsoft Dynamics CRM
Source: http://en.wikipedia.org/wiki/File:Microsoft_Dynamics_CRM.gif
Microsoft Dynamics CRM provides applications which focuses on sales, customer
service and marketing departments. Let’s understand the benefits of these applications
in brief as stated in their website http://crm.dynamics.com:-
a) Sales Department: The CRM application for sales department is the SFA which
provides the following benefits:-
 Improved sales planning and management
 Automating the lead system
 Managing sales opportunities effectively
 Streamlining account management
 Boosting sales productivity
 Enhancing sales pipeline management
 Simplifying workflow processes
 Mobility in accessing customer data in real-time
 Analytics for improved decision making
b) Customer care: The CRM benefits provided for customer service include the
following:-
 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
 Mobility features for data
 Analytics for customer service
c) Marketing Department: Some of the CRM benefits provided for marketing

department include the following:-
 Streamlining campaign planning
 Managing events efficiently
 Improved response management
 Automating workflows
 Analytics for marketing
 Pinpointing the marketing efforts by instantly segmenting customers or prospects
 Managing data effectively
 User - friendly
 Require continuous management and back-up facilities if the data crashes.
For more information you may refer the website. We have discussed this Microsoft
Dynamics CRM to give you a clear idea of benefits of the CRM in general.
Disadvantages of CRM would be in similar with SFA systems as SFA is the heart for
CRM of sales. Some disadvantages include:-
 CRM applications may be too costly for an organization to implement
 It might take time to implement the system
 Difficult to integrate with legacy systems
Since cost can be a major factor for most companies in implementing CRM, let’s now
look at some open source softwares which are there in the market.
4.3.2 Open Source CRM applications
Open source is defined by Cambridge dictionary as “software that is free to use, and the
original program can be changed by anyone”. Many opensource applications flooded
the market promising better CRM applications than the proprietary softwares. According
to David Hakala (2008), Top 10 CRM applications designed in opensource platform are
as follows:-
i) Sugar CRM Inc
ii) SplendidCRM software Inc
iii) CentricCRM
iv) Hipergate
v) Compiere Inc
vi) Vtiger CRM
vii) CentraView Inc
viii)XRMS CRM
ix) Cream CRM
x) Tustena CRM
More details about these products can be refereed from their respective websites.
Let us now understand about various uses of Sugar CRM for the organizations:-
a) Sales Force Automation
Sugar CRM applications helps the sales manager in handling various functions such as
contact management, forecasting the revenues, managing accounts etc. The following
diagram is a snap shot of how the contact information such as name of the employee,
his/her designation or title, the account name handled and the contact information about
the account.
Source: http://www.sugarcrm.com/crm/products/capabilities/sales/contacts.html
This is just one of the view in which the data is represented and there would be multiple
views such as arranging the list by the account name which displays the list of
employees who are handling the account. The information can be viewed by the region
or area wise which would display the list of customers according to the region and so
on.
b) Marketing Automation
Sugar CRM provides several functions to handle the various marketing activities like
campaign management, email marketing, lead management, marketing analytics etc.
The following picture would help us in understanding how the leads are managed. In the
figure we can see that the entire leads the organization generated is categorized into
different categories by the lead source like cold calling, purchases from existing
customer, public relations, direct mail etc. This sort of representation would gives us an
idea of which lead source is more profitable and identify the lead source which is
generating lowest revenue and plan according to improve the operations at that lead
source. Opportunities by lead source by outcome would help the manager in
understanding what part of the revenue is in qualification stage, proposal stage, closed
or won stage, negotiation stage etc. Such a view will help us in understanding the
performance of the lead source better.
Source: http://www.sugarcrm.com/crm/images/content_images/screens/marketing.jpg
Apart from sales and marketing automation sugar CRM also helps in providing and
developing the customer support, reporting, platform and collaboration capabilities. For
more information you may refer to the Sugar CRM website.
SAQ 2
1) Explain the importance of CRM in creating a customer centric organization.

2) Which one would you prefer among proprietary or opensource if you have a
small organization and explain the reasons for the preference
4.4 Summary
In this chapter we have understood the traditional ways of maintaining customer data.
This way of recording worked perfectly fine when there were few customers and the
business is small. With growing customer base, companies looked for computer
application which can manage the customer information and present it back in a single
touch. As the job opportunities improved, attrition became the major problem with some
companies having 100 percent attrition rate within a year. In order to maintain customer
information more effectively, companies started using sales force automation
applications which as contact management software at its heart. In SFA the customer
information is maintained at a central database rather than just in the computer of the
sales representatives. This increases accountability as any wrong entry of data can be
traced. We have discussed several advantages of SFA over just using contact
management applications. Later on, the need for integrating all the business operations
started with the use of CRM applications, which transformed the way how we used to
see various departments like sales, marketing, human resource, finance, customer care
and technical separately. Customer has become the center for all the business
operations and we see today that in a sales meeting with customer, we find employees
not only from sales teams but also from technical, finance, customer care, and
marketing whenever necessary. We have finally understood clearly the benefits a
Microsoft Dynamics CRM and opensource software Sugar CRM for the organizations.
4.5 Keywords
1) Analytics It is the science of analyzing the data to arrive

at meaningful decisions with the existing data.
2) Legacy systems It is old or traditional methods, technology or

computer softwares continued to be in use and
are outdated as per today’s standards.
3) Proprietary Software According to Cambridge dictionary proprietary

means “relating to ownership, or relating to or
like an owner. So, proprietary softwares are
those made by the company and are sold
under the legal rights of the owner.
4.6 References
1. David Hakala (2008), “The top 10 Open-Source CRM Solutions”,

http://www.insidecrm.com/features/top-open-source-solutions-121307/
2. Haag, Stephen; Maeve Cummings, Donald J. McCubbrey, Alain Pinsonneault,

Richard Donovan (2006), “ Management Information Systems for the Information
Age (3rd Ed.), McGraw-Hill Ryerson, Canada
3. http://crm.dynamics.com
4. http://dictionary.cambridge.org/dictionary/british/open-source
5. http://en.wikipedia.org/wiki/File:Microsoft_Dynamics_CRM.gif
6. http://www.insidecrm.com/features/top-open-source-solutions-121307/
7. http://www.sugarcrm.com/crm/products/capabilities/sales/contacts.html
8. http://www.sugarcrm.com/crm/images/content_images/screens/marketing.jpg
9. Mark W Johnston, Greg W Marshall (2009), “Sales force management (9th Ed.)”,
Tata McGraw-Hill, New Delhi, India.
1. Bryan P. Berg(2002), “Essentials of CRM: a guide to customer relationship

management”, John Wiley & Sons Inc, New York, USA

UNIT 5 COMMUNICATION SKILLS
Structure
5.1 Introduction
Objectives
5.2 Communication Defined
5.2.1 Definitions of Communication
5.2.2 Forms of Communication
5.3 Communication Process Models
5.3.1 Aristotle communication model
5.3.2 Lasswell’s Communication model
5.3.3 Shannon and Weaver communication model
5.3.4 Schramm’s Interactive communication model
5.3.5 Transaction communication model
5.4 Effective Communication Process
5.4.1 Identifying the sender
5.4.2 Identifying the receiver
5.4.3 Identifying the right messages
5.4.4 Identifying the right channels
5.5 Summary
5.6 Keywords
5.7 References
5.1 Introduction
In the previous four units, we have understood functions of the sales manager, activities
that are performed by a sales person in handling the sale, comparison between various
types of sales and the computer applications which assist the sales person in handling
sales effectively. An important factor which can improve the efficiency of the sales team
and increase the chances of successful closing of the sale is the “Communication Skills”
of the sales person. Good communication also helps in faster relationship building with
the customers. We all know how important communication plays in making the
customer knowledgeable about the products/services. We ourselves end up many-a-
times buying the products/services when felt satisfied with the communication of the
sales people without even looking for all the advantages and disadvantages about the
products/services. A lot of excellent products/services end up with not many customers
when the sales people lack the required communication skills. Hence, for the sales
manager it is advisable to know the good communication skills that are required by the
sales people for selling the product/services and provide necessary training. However
small or big the product/service is, in terms of cost or features, communication skills of
the sales people will play a major role for success in the market place.
In this unit, we shall identify different forms of communication that are used in today’s
world by the sales representatives. We shall do a study on advantages and
disadvantages of using various forms of communications. We shall examine what
constitutes an effective communication process. We shall also discuss various
communication models described by various scholars.
Objectives
1) Understand the definition of communication

2) Understand the advantages and disadvantages of verbal and nonverbal forms of
communication.
3) Explain various communication models
4) Identify various issues in selecting the right sender and receiver
5) Identify various issues while creating the right message for the receiver/customer
6) Explain the importance of selecting the right channel during the communication
process
5.2 Communication Process
Communication is the process in which the sender tries to convey a message to the
receiver. Let’s see some of the definitions of communication from oxford dictionary and
by various scholars as mentioned by Sri Jin Kushal (2009).
5.2.1 Definitions of Communication
1) Communication as explained by “Oxford dictionary” is the imparting or

exchanging of information by speaking, writing, or using some other medium.
2) According to Louis A. Allen, “Communication is the sum of all the things which a
person does when he wants to create understanding in the mind of another. It
involves a systematic and continuous process of telling, listening and
understanding.”
3) According to Newman and Summer, “ Communication is an exchange of facts,

ideas, opinions or emotions by two or more persons”
4) According to Theo Haimann, “ Communication is the process of passing

information and understanding from one person to another….It is the process of
imparting ideas and making oneself understood by others”
What we understand by the above definitions is that the communication is a process of
exchange of the information between sender and the receiver. In sales the
communication would be between the sales representative and the customer.
5.2.2 Forms of Communication
Sri Jin Kushal (2009) explains that there are two main basic forms of communication,
namely Verbal communication and the non-verbal communication.
Basic forms of communication
Non-Verbal Verbal
Communication Communication
Oral Written
a) Oral Communication & written communication
There can be many forms of oral communication as mentioned by the author, namely:-
face-to-face conversation, lecturers, meeting and conferences, interviews, telephone
talks, grapevine, social and cultural affairs, seminars, radio and television. In sales call
we mostly make use of meetings and conferences, face-to-face conversation,
telephone, seminars etc.
On the other hand written communication deals with sending letters, emails, faxes, sms
on phone etc. Each form of verbal communication has its advantages and
disadvantages and so it is advisable to use the right mix of both oral and written
communication during the communication process for the sale.
b) Advantages and disadvantages of verbal communications (Oral and Written)
Some of the advantages of verbal communications include:-
 The ideas can be conveyed easily with oral and written communication
 The ideas can be expressed without any misunderstanding between the sender
and receiver using oral and written communication
 Lengthy messages can be stated out accurately with the help of written
communication
 The feedback can be very quick while compared with non-verbal communications
 It works well for technical presentations which involve lot of communication

between the sender and the receiver
c) Disadvantages of verbal communications (Oral and written)
Some of the disadvantages include:-
 Oral communication will not be suitable for lengthy messages, in such cases we
have to make use of written communication
 Oral communication may take long period of time
 Oral communication may involve a lot of expenses
 Oral communication cannot be performed when the sender and receiver are not
available personally
 Written communication cannot be deemed fit for visually challenged people and
uneducated people
 Feedback would take a lot of time in written communication

d) Types of Non Verbal Communication
As mentioned in the book by Sadhana Gupta (2008), G.W.Porter divides non-verbal

communication into four broad categories as shown below:-
Non-Verbal
Communication
Physical Aesthetic Signs Symbolic
 Physical category includes facial expressions, voice tone, sense of touch, sense
of smell and body motions
 Aesthetic includes conveying message through creative art like painting, music,
dance movements, dramatics, sculpture
 Signs include the sign language which is used for disabled people.
 Symbolic implies making use of religious or status symbols
e) Advantages of Non verbal communication
There are various advantages and disadvantages of using the non verbal form of
communication. Some of the advantages include:-
 This form of communication works well with the hearing disabled people
 The communication process can be done in brief and in shorter time
 This form of communication will be useful if there are any language barriers
 During this communication process, we can easily judge the personality of the??
 This communication process helps to convey emotions easily by facial

expressions
 If performed well using this communication process, there is a high chance of
building a long-lasting relationship with customer
f) Disadvantages of Non verbal communication
Now let us look at some of the disadvantages of this non-verbal form of

communication:-
 If the sale is a technical product or service which involves lot of explanation, you
may not do it just with the non-verbal communication process
 The customer may misinterpret your communication process in non-verbal

communication
 This type of communication cannot be used everywhere
 Customers might not be interested to communicate with you in the non-verbal

communication process
 It would be difficult to follow when there are cultural differences between the
sender and the receiver
 This form of communication can only be done when both the sender and receiver
are engaged in personal communication. It would be possible on the phone or
mail
For more information on forms of communication you can refer to the books mentioned
in reference section at the end of this unit.
5.3 Communication Process Models
Various models have been designed to understand the communication process and to
identify any areas of improvement by reducing the errors that occur in the process. Let
us understand some of the models:-
5.3.1 Aristotle Communication model
This can be considered as the basic and simplest communication model which has only
three components as show below:-
Speaker Message Audience
This model mainly considers communication as a one way process from the speaker
who tries to convey the message to the target audience.
5.3.2 Lasswell’s Communication model
Lasswell introduce two concepts namely channel and effect into the model when
compared with Aristotle model. This model is same as Aristotle which is delivered to the
multiple audiences. This communication model has five major components as shown
below:-
Who Says In what To whom With what

What channel effect
In the model Lasswell included other channels apart from speech as the communication
channel. Another new term is added “Effect” which acts like a feedback mechanism in
which the receiver reacts to the message sent by the sender.
5.3.3 Shannon and Weaver communication model
This communication model helps us to study the communication scientifically. It has five
components as shown below:-
Received
Signal
Signal
Information Transmitter Receiver Destination
Source
Noise
source
This is a one way transmission and reception of messages. This model explains that
during the process of sending the message from the sender to the receiver some
distortions may takes place in the message, which is referred to as Noise. This model
aims at knowing the source of such distortions and tries to minimize them for effective
communication.
5.3.4 Schramm’s Interactive communication model
In this model the communication process is described as an interactive process where

the feedback from the receiver helps in altering the message accordingly by the sender
and this process is endless. This model defines communication process as a circular
process.
Source: Julia. T Wood (2010)
Even though this model is an improvement over linear models, it still assumes that the
sender and the receiver are different persons from each other.
5.3.5 Transaction communication model
This model states that both the participants during communication process can be the
sender and the receiver. It also explains that the level of communication varies over
time when participants face new experiences and changing relationships during the
communication process. It can be understood further with the following diagram:-
Source: Julia T. Wood (2010)
For more information on various other communication models you may refer to the
books mentioned in the further reading section. Let’s now understand the various
components of the communication process in detail.
SAQ 1
1) Define Communication
2) Write short notes on non verbal communication explaining its advantages and
disadvantages.
3) Explain what are the advantages of verbal communications over non verbal
communications
4) Explain Lasswell’s Communication model and its drawbacks
5.4 Effective Communication Process
We have already studied various communication models and understood various

components described in those models. Let’s now understand them in detail with the
help of following communication process diagram:-
Sender Message Receiver
Sender Message Becomes

receives feedback Sender
Fig: Communication model incorporating feedback
Source: Chris Rose (2005)
Here we must understand that the message and the feedback message are sent by
some appropriate channel.
Channel
Message
Message
feedback
5.4.1 Identifying the Sender
In business scenarios, sender can be an individual, group or the company who want to
convey some message to the receiver. In a communication process, the first step would
be to identify the sender. It appears that a sender will be sales representatives for the
sales process, but identifying the right sales persons for the customer is a difficult task.
Depending upon the nature of sale, the sender will vary as follows:-
 If the sale is for an individual customer and low priced product like FMCG good
like shampoos, cooking items etc., then the company may appoint individual
sales representatives as the sender in the communication process.
 If the sale is for high priced products like washing machines, laptops, LCD TV’s
etc, then the sender can be a single or team of sales representatives.
 If the sale is for a high net worth individual like CEO of the company, then the
sender will be a highly qualified person or team who can handle all sorts of
objection handling during the communication process
 If the sale involves an IT product for the company which may run into millions of
rupees, then the sender will be mostly a team of members from various
departments like technical, marketing, sales, finance, HR etc.
Hence it is understood that the sender can be a single person or a team depending
upon the complexity and value of the sale.
5.4.2 Identifying the receiver
The receiver in business is audience which the company would be targeting to make the
sales. In sales management, identifying the right audience is a complex task. Several
steps will be followed by the company in identifying the receiver for the communication
process.
 The first step is to identify the market place i.e. the state or country or continent
in which the company wants to do business.
 After identifying the market, the next step would be to segment them into various
categories appropriate to the product/service.
 Customers or target audience are identified from the preferred segment and are
involved in the communication process.
Often, companies end up giving promotional offers, advertising, sales calls to the wrong
target audience/receiver in the communication process and end up with poor sales
results. So identifying the right customer will be a challenging task. Once the right
customer is identified he/she can be involved in the communication process for
successful closing of the sale.
5.4.3 Identifying the right Message
Message is the information which will deliver your idea to the receiver/customer.
Message is what you communicate to the customer which will be explained during the
communication process. The right message should be able to address the needs and
wants of the customer. Various issues have to be addressed in creating the right
message. Some of the issues include:-
 Identifying the needs of the customer/receiver
 Planning for the ideas which can resolve the customer/receiver issues. For
example, if the customer problem is increasing printing costs in the company due
to inkjet printer in use, then the idea would be why not upgrade the printer to a
LaserJet which save time and cost per page.
 After the idea generation, it is time to fabricate the idea into messages. In the
above example, once you have identified installing LaserJet as an idea, you need
to create appropriate presentations or any documents proving that it is the right
solution for the problem of the company. This would be the message creation
part of the communication process.
 Now in some models you identify encoding as a part of message sent by the
sender. Here encoding involves identifying the right amount of slides and text for
the presentations, using the right amount words in the slides, appropriate number
of slides in presentation, avoiding any words which can create misunderstanding
due to any language and cultural gaps etc. We shall learn more about this in the
next unit “Presentation Skills”.
 Try to design the message in such a way that you will make use of both the
verbal and nonverbal communications.
 While creating the message, it is important to understand the decoding part at

the receiver end. When you convey the message to the receiver, they use their
own style of decoding the message. It will be better to anticipate and know the
thinking process of customer and move according while creating the message.
For example, if you come to know that customer is looking more into the
reliability and multi-functional capability in the printer like scan, automatic dual
printing etc, then when you create the presentation or documents on the
capabilities of your LaserJet printer it would be better to incorporate such details
which the customer is interested and will be looking for.
5.4.4 Identifying the right channel
You will come across two terms namely medium and channel in some communication
models. The medium and channel in the communication process refers to the method
and means by which the message will be communicated between the sender and the
receiver. For example, if the message is to be conveyed by a written document, then
the letter becomes the medium and the fax or postal service becomes the channel. In
general channels can be fax, email, postal service, PowerPoint presentation, telephone
etc.
Identifying the right channel is very important as improper selection might lead to the
complete failure of the communication process. Some of the issues that need to be
addressed include:-
 Before selecting the channel, try to find out whether the customer/receiver has
the necessary facilities to use that channel. For example, if you plan to send a
letter by email, check out whether the customer is having internet facility in
his/her premises.
 The right channel selection should depend upon the type of message you want to
convey. For example, if you want to convey a very detailed technical document
which runs for more than hundred pages then the PowerPoint presentations
would be a very bad choice. So in such cases it is advisable to use the written
documents and send them through appropriate channels like email or postal
service
 Nowadays, many sales representatives rely heavily on PowerPoint presentations
during the communication process. If this channel is appropriate for the message
then make sure that you use not only the verbal codes but also the visual and
vocal codes. Verbal code means the right text in the slide and vocal code means
the right language you use while speaking and visual code includes any
diagrams, animations or videos in the slides.
 According to Cheryl Hamilton( 2000) , while interpreting the message the
receiver/customer will rely more heavily on visual and vocal codes rather than the
verbal code as illustrated in the below diagram:-
Source: Cheryl Hamilton (2008)
SAQ2
1) Explain various issues which need to be addressed while selecting the sender for
effective communication process.
2) Explain various issues which need to be addressed while creating the message
for effective communication process.
3) Explain various issues which need to be addressed while selecting the channel
for effective communication process.
5.5 Summary
In this unit, we understood the various definitions of the communication as stated by

different scholars. We identified various basic forms of communication namely verbal
and nonverbal communications. We have also studied the advantages and
disadvantages of these forms of communication. Hence it is advisable to use the right
mix of appropriate verbal and nonverbal forms during the communication process. Later
we have studied how the communication process models have evolved from a linear
way into an interactive process to take care of the changing level of relationships and
communications over time.
Later in this unit we have examined how an effective communication process can be
implemented. We have understood the critical nature in selecting the right sender to
take part in the communication process. We also studied how the right
receiver/customer will be identified by the company. We understood the role the
message creation plays in the communication process and various issues that need to
be addressed in his stage. We also understood that the comfort level of the
receiver/customer should be kept in mind while designing the message. Finally in this
unit we have identified how an improper channel can make the entire communication
process a failure and identified various factors that need to be taken into account while
selecting the communication channel.
5.6 Keywords
1) Channel It is the means by which the message will be

transmitted from the sender to the receiver and
vice-versa.
2) Grapevine Grapevine means “Gossip”. It is an informal

way of communication which exists in every
organization in almost all the departments.
3) Noise Noise in communication is any wrong
interpretation of the words and phrases used
during the communication process by the
receiver or sender. Noise distracts the actual
meaning of the messages during the
communication process
5.7 References
1. Cheryl Hamilton (2008), “Communicating for results: A guide for business and the
professions”, Thomson Wadsworth, USA.
2. Chris Rose (2005), “How to win campaigns: 100 steps to success”, Earthscan,
USA.
3. Julia T. Wood (2010), “Interpersonal Communication: everyday encounters (6th

Ed.)”, Wadsworth, USA.
4. http://www.oxforddictionaries.com/definition/communication
5. Sadhana Gupta (2008), “Communication skills and functional grammar”,

University Science Press, New Delhi, India.
6. Sri Jin Kushal, Sunitti Ahuja (2009), “Business Communication”, V.K. Enterprises,
New Delhi, India.
1. Uma Narula (2006), “Communication models”, Atlantic publishers, New Delhi,

India.
2. Lesikar, Flatley (2005), “Basic business communication: Skills for empowering

the internet generation (10th Ed.)”, Tata McGraw-Hill, New York, USA.
UNIT 6 SALES PRESENTATION
Structure
6.1 Introduction
Objectives
6.2 Pre-presentation activities
6.2.1 Knowing about your company
6.2.2 Knowing about your customer
6.2.3 Knowing your competitors
6.2.4 Defining the presentation objectives
6.2.5 Other essentials activities for presentation
6.3 Presentation design Guidelines
6.3.1 Guidelines for preparing your PowerPoint presentation or paper slides
6.3.2 Guidelines for preparing a word document
6.4 The sales presentation process
6.4.1 Sales presentation methods
6.4.2 Objection handling and closing the sale
6.5 Summary
6.6 Keywords
6.7 References

6.1 Introduction
In the previous unit we have understood various definitions of communication and the
communication models. We have also analyzed the issues that need to be addressed
for effective communication. We saw that presentation skills are one of the important
factors which determine the success of the sale. In this unit we shall understand about
what are the issues that need to be addressed in making a successful sales
presentation which helps in building a long lasting relationship with the customer. The
quality of presentation is an important factor which will determine how well the prospect
will understand your product/service. Presentation should be motivating enough to the
prospects to make them participate in the process. In this unit we shall understand that
before going for the presentation there are some pre-presentation activities that one
must follow. One has to keep in mind that his/her presentation should be better that the
competitors and therefore, some background work needs to be done in deciding what
goes into the presentation to make it look better than the competitors.
In this unit, we shall understand that knowing your company should be the first task
before knowing your customers. Many-a-times prospect may not know what the
problem is and so identifying the problem is the first task for the sales representative.
Once the sales representative and the prospects understand the right problem, it would
be easy to concentrate on the solution part of the presentation.
This unit also highlights the basic concepts on how to make a better looking
presentation in terms of presentation of content. Finally in this unit, we shall understand
that the presentation wouldn’t be complete if the objections aren’t handled well. We
shall also look at about some of the objection handling techniques where you can
handle the objections effectively.
Objectives
1) Importance of Knowing your customer, company and competitors

2) Various functions of sales team and pre-sales team in preparing an effective and
efficient presentation
3) Define the presentation objectives
4) Enumerate various guidelines for preparing slides and documents
5) Explain various presentation methods and scenarios where they can be applied.
6) Address various objections and use appropriate objection handling techniques
6.2 Pre-presentation activities
Pre-presentation activities include all the activities that are performed to ensure a
successful presentation design. The list of pre-presentation activities would generally
include the following:-
Knowing about
your company
Knowing about
your customer
Pre-presentation
Knowing your
activities
competitors
Defining the
presentation
objectives
Other essentials
activities
Several issues have to be addressed such as the objective of the presentation, content
that goes into presentation, gathering information about the customer, your company
and the competitors and so on.
6.2.1 Knowing about your company
Knowing about your company is vital because during the presentation customer may
ask you anytime about your company and the products/services. Anytime if the
customer is interested to know about your company, you should be able to explain
about your company in not more than 30 sec to 1 min during the presentation. So it is
important for you to write a brief summary about your company which includes the
following:-
 Company’s objective
 mission and vision statement
 List of product/services
 Areas of expertise
 Previous and present customers of your company
 Number of employees working
 Company turnover and growth
 Your seniors and heads in your department
Knowing your company’s employees or various domains of expertise would be very

important when you are responding to the customer requirement. In situations like when
the customer sends the problem and request you for the solution, you should be able to
know whether your company will be able to handle that problem. For example, if the
customer is in a telecom company and the problem is low network connection speed,
then the solution would be to upgrade the entire network to a faster platform which
requires huge amount of investment. As a part of your sales team it’s important for you
to know the following before making the presentation for such customer:-
 whether your company has such expertise in handling big projects
 If yes, are there any customers in the past where such projects have been
implemented
 What should be the profit margin in such projects
 What could be the time-limit for project completion
 How many number of employees would be required to work in such projects
 What are the other resources required by your employees (travel tickets, internet
bandwidth, laptops, living expenses in other countries etc).
In many companies, there would be a sales team and a pre-sales team to handle huge
volumes of customers. The main function of the sales team would be to meet the
customer, take the requirements of the customer and make the necessary sales
presentation. Most of the times, the sales team will be on-site i.e. at the customer place.
The pre-sales team will be mainly at the company’s office which may not necessarily be
at customer premises. The pre-sales team would be responsible to address all the
questions which we have discussed earlier and make the presentation. It is the job of
pre-sales team to correctly optimize the profit margins and the number of employees
required to implement the solution for customer.
If you are a part of the presales team it is very important to know that the customer
solution may not be handled by a single technical team. For example, if there is a
telecom problem of low network speed, the solution team may involve the
networks/hardware team, software team, testing team etc. It is important to know that
every team will try to put as many employees as possible in the projects so that their
employees will have maximum work and profits. As a part of pre-sales team it is your
job to keep optimizing the number of employees such that not too many or too less
employees are involved. Coming to the cost part, it is always advisable to check the
number of days employees need to stay at on-site with the customer and try to optimize
these days so as to reduce some of the living expenses in other countries.
The important objective apart from developing a long-lasting relationship with customer
is to have a decent profit margin in the project. It is the job of the sales team to get a
clear picture of the profit margin and then decide to go on with the presentation or not.
You cannot make the presentation for the solution which brings loss instead of profit for
the company. Most of the time sales team may have to get approval from the finance
team who monitors the financial status of the company before going ahead with the
presentation with the customer. Even in door-to-door sales, most of the times the sales
representatives will be instructed by the sales manager about the maximum discount
he/she can give to the customer in order to close the deal effectively.
Now let’s look at the information that is necessary to known about the customer before
the presentation process.
6.2.2 Knowing about your Customer
Customer is the key to any business, hence knowing the customer will be an important
task for any business. Your customer may be a multi-national company or a government
institution or even a single customer in door-to-door sales. A due diligence would be
required to know your customer well. If it’s a door-to-door sale, some of the parameters
you should be willing to look are:-
 Income level of the family or head of the family
 Gender and age of the family members
 Educational level of the family members
 Occupation of the family members
Most of the parameter can be known easily except the income level. One can never ask
the customer what his income is esp. when selling some door-to-door products like
chimneys, water purifiers and some other household items. If it is a loan product or
insurance products you may ask the customer directly to fill the income in the required
column in the application. Age can be known approximately when you look at the
customer. The important thing to know is who is the decision making authority in the
home, is it the male head or the female head or the children.
If the customer is the Government or Institutional organization some of the parameter

you should be looking at include:-
 When was the organization established
 How many employees or departments there in the organization
 Who is the decision making authority or individual in the organization
 What are the areas which the organization serve
 How good is the organization in clearing the payments in time
 What can be the future sales opportunities with the organization
In Government and institutional sales the important task for sales people would be to
get timely payments. Since the organization deals with many other responsibilities your
payments may get late, so knowing the credibility of the organization for timely
payments is important task. One way of finding this is by looking at the previous
customers and any problems they have faced. You cannot go and ask directly your
competitors about the organization but what you can do is to take a look at the growth of
the organization over time.
Finally if your customer is a big multinational, then the list of parameters you must have
a look are:-
 Time of establishment
 Number of employees and departments
 Turnover and the profit margin of the company
 Year-on-year growth of the company
 Rank of the company in the market place

 Previous experiences with the company if any
The biggest problem with big multinationals is to know whether the customer will be
able to fund the project successfully in time. If necessary funds are not released in time
then the time period will increase and so do the costs. So it’s very important to look at
the financial health of the customer and then proceed for sales presentation.
6.2.3 Knowing your Competitors
Customer prefers the company who serves them according to his needs. However, if
there is more than one company which is able to serve the customer according to his
needs and expectations, then the customer will choose the best one according to
his/her criteria. This leads to the competition between the companies to prove
themselves that they are the best according to the customer criteria.
Hence it is an important task for any company or you as the sales representative to
correctly analyze the competitor movements towards the customer. Your presentation
may fail if the analysis of your competitors is not done well. We have already discussed
that there exists two functions in sales namely sales and pre-sales in the company. The
competitor analysis is primary function for sales rather than pre-sales. It is the duty of
the sales team who is on-site to know who the competitors are and what are their
strength and weakness? Once the information is known it can be passed on to the pre-
sales team who will prepare the presentation accordingly to reflect that they are much
better than the competitors.
No matter how well the presentation is prepared, it won’t close the deal unless the sales
teams have a clear idea about their competitors. For example, let’s assume that you
have prepared a wonderful presentation which clearly highlights the benefits of your
products/services to the customer. But if you have quoted the price much higher than
your competitors, your solution may not be preferred by the customer. You must
understand that in today’s competitive world there is a pressure on profit margins and
growth of every company and so your customers too.
You customers always look for the company which provides best or reasonably good
solution at the least cost for the solution. So as a sales representative it is very
important to know approximately how much cost the competitors would quote for the
solution. This cannot be known easily as every company maintains the bid amount
secretly and will be given strict instructions to the employees not to disclose it. But you
should be able to get an approximate idea by looking into their past project costs. So
the important parameters which you should be looking in knowing the competitors
include the following:-
 Domain of expertise and the number of employees
 Years of expertise i.e. is the competitor a new entrant or an established player in

the market place
 Type of solution offered to the customer i.e. the product/services
 Amount quoted for the solution in the bidding process for the customer
 Competitors advantage areas over your company’s products/services
Having discussed much about knowing your company, customer and the competitor, it’s
time for us to look at some of the other pre-presentation activities in subsequent
sections.
6.2.4 Defining the presentation objectives
Many sales presentation ends up without any results due to improper planning of the
presentation and no measurable results. It is always better to have the list of objectives
that you want to achieve by the sales presentation. One must remember that the
objective of the first sales presentation with the customer shouldn’t always be the
successful closing of the sale. Initiating a dialogue to involve the customer in the
presentation and help in decision making should be the first objective. We see lot of
presentations where the customer doesn’t take part much or remains to be a silent
participant. So, one should plan the presentation such that necessary dialogues would
happen between the customer and the sales representative which will help in building
the rapport. Some of the general objectives one would look for the presentation would
be as follows:-
 Developing a good rapport with the customers
 Explaining about your company expertise
 Building trust in the customer
 Creating enough interest to make the customer participate in the presentation

process
 Identifying problems of the customer
 Identifying the right products/services for the customer
 Successfully handling objections
 Setting the stage for next meetings
 Maintaining the time allotted for the presentation
 Closing the deal effectively whenever it’s appropriate
Most of the sales presentation starts with the introduction of the company. You should
be able to clearly highlight the strengths of your company like a strong workforce,
various domains of expertise, level of employees i.e. the educational and experience
levels of the employees and so on. Once you have created a positive image about your
company, the next objective would be to develop a good rapport where the presentation
process would become a two way communication between the customer and the sales
representative rather than a one way communication with only sales representative
involvement. A two way communication process will always helps in quickly identifying
the problem and then identifying the right solution for the problem. Following the time
limit is very important as the customers will be busy with their daily work and may not
show enough interest if presentation takes too long. The final objective before ending
the presentation should be to set the stage for the next presentation. You should be
able to get another appointment where you can carry on with your further presentation
activities which can help in closing the deal effectively.
It is very important to have a check-list of the objectives such that they will be followed
by all the sales representatives during presentation. It is important to measure the
objectives in terms of their level of achievement and should plan better in future
presentations. For e.g. if the objective of maintaining the time limit is not achieved as
the time for presentation overshoots, then it’s important for you to ensure that at least
from now onwards in next meetings you will take care of that objective with utmost
importance.
6.2.5 Other essential activities for presentation
Till now we have discussed about a lot of pre-presentation activities like maintaining an
objective check-list for every presentation and important parameters in knowing your
company, customer and the competitors. Now let’s look at some other issues which
must be addressed before going for the presentation. Some of them include as follows:-
 Having sufficient number of hard copies of your presentation, preferably with the
name of the customer on it.
 Dress appropriately
 Have your own tools for presentation
 Ensure your tools are working perfectly fine
 Choose appropriate team for presentation
 Ensure every team member is present for the presentation
 Have the necessary check-lists
You may never know how many people from the customer side will participate in the
presentation. So an important requirement in any sale, it door-to-door or institutional or
industrial sale, it is advisable to have adequate number of hard copies of your
presentation and any other supplements like company brochures, previous customer list
etc. It is always better to have individual copies in decent folders with the names of the
customers.
The next issue is about the dressing for the presentation. It is better to have a formal
dressing in any sales presentation with or without a tie depending upon the
circumstances. Make sure you have a tie with you if you see everybody wearing a tie in
the presentation. For door-to-door sales tie may not be an important requirement.
Dressing should be in such a way that you are not over dressed or neither under-
dressed. In absence of any clue a plain blue shirt and black trousers are recommended
for use.
The next issue would be having tools for your presentation. Make sure that you have
necessary tools which make the presentation process easier without any interruption. If
it is a PowerPoint presentation, the tools may be your own laptop with the necessary
software to run the presentation, your own project and your own audio system. You will
never know whether the customer premises will be having all these facilities. So it is
better to carry one yourself. Nowadays you get projectors with audio system embedded
in them.
The next task is about choosing the appropriate team for presentation. If it’s a door-to-
door sale of some FMCG products or consumer care products, then there would be no
team as it will be handled by one sales representative most of the times. But in case of
institutional or industrial sales, generally a group of sales team goes for the
presentation. In such cases it is important for you to choose the appropriate team which
has the technical, financial, HR and sales persons whoever is required for the
presentation. Most of the times, the presentation may happen over the video-
conferencing or over the phone where the sales person will be with the customer and
rest of the team members on the call. So it’s an important task to ensure that every
team member is committed and be present in the required time, keeping their regular
daily duties of their departments aside. In companies lot of time it happens that one of
the team members will be busy in his/her department activities and may not be able to
participate in the presentation. So, it is very important for you as the part of the sales
team to keep reminding the other team members about the sales presentation. Again in
many companies this work of engaging all the team members in right time is the duty of
the pre-sales team in the organization.
The final task is to have necessary check-lists for every activity that leads to a
successful presentation in time. For example, preparing the presentation itself is a
biggest task that needs regular monitoring and feedbacks. For example, we have
discussed the problem faced by the customer in Telecom Company due to low network
connection speed, and then the solution team involves various departments like the
networks/hardware team, software team, testing team etc. So getting the appropriate
solution slides from these teams and checking for the compatibility between these
solutions is a time taking process. The solution given by the software team may not be
compatible according to the networks or hardware team. Hence such complications
have to be resolved and the presentation should be prepared with involvement of all the
team members. So maintain the check-list and monitoring the progress is important for
presentation preparation. Any other required check-lists must be in place before the
presentation process.
SAQ 1
1) Explain various issues you have address to know your competitors better in an
industrial sale
2) Explain the important objectives you will layout for your sales presentation
3) If you are in door-to-door sales selling a vacuum cleaner, then what information
you would like to gather from the customer
6.3 Presentation Design Guidelines
In the earlier times, sales representatives had presented their products/services on a

paper slides which were either printed or hand written. But now with advances in
computer technology and print media, many of the companies prefer the PowerPoint
presentations in industrial and institutional sales and printed slides in case of door-to-
door sales. PowerPoint slide are considered as an excellent way of communication
since you can easily incorporate the graphics, pictures, videos in it and make the
presentation interesting enough. But there are some limitations to it in terms of content.
A lot of content in terms of text make the presentation cumbersome, hence any text
matter it is advisable to give the customers in a printed word document format, so that
they can refer to it whenever needed.
We often wonder what makes the presentation to be presentable to the audience, (i.e.
customers). Are there any steps which we can follow so that the presentation would be
appealing enough to draw the attention of the audience? Even in case of word
document the audience should be willing to read it rather than preserving it for later use
or just misplacing it. So in this section, we shall understand some basic guidelines
which will help you in preparing effective presentations and word documents which are
presentable enough to the audience. Remember these are general guidelines which
can not only be used to the sales presentation but most of the guidelines can also be
used for your project presentations in your class.
Let’s look at the guidelines proposed by Krieger (2007) and some other guidelines as
well for the PowerPoint or paper slides and as well as word document.
6.3.1 Guidelines for preparing your PowerPoint presentation or paper slides
The main objective in preparing a PowerPoint slides or paper slides presentation is to

grab the viewer’s attention. The challenging task is to decide the appropriate number of
slides you will be presenting in the given time limit by the customers. The presentation
should be in such as way that it doesn’t complete too early or too late that the
prescribed time by the customers. We often find that presentations may be prolonged
up to 50 percent of the time limit of even finish when 50 percent of the time is still left.
So how to decide how many slides to present in the given time? A simple rule can be
that “the number of slides <= the number of minutes”. If you have been given the 30 min
time to present in the class or the company, then the ideal number of slides will be 30 or
less. This rule can be applied to PowerPoint or paper slides. Having discussed about
the number, it’s time for us to decide how that number of slides will be designed.
Remember the guidelines apply to both the PowerPoint slide and the paper slides as
well. So let’s take a look at some of the guidelines as stated below:-
a) Select or create your own theme
Themes refer to the design template of your slide. It includes the background colour and
the design of each slide. Themes in PowerPoint mainly consist of a master slide and lay
out slides. Master slide is the starting slide where you enter the presentation topic and
the name of the presenters. The layout slides follow the master slide where you design
the material to be presented. Some of the guidelines here include:-
 Select carefully the theme which has the appropriate background which suits to
your topic
 Always try to follow the theme which your company recommends
 Show the company logo on each slide
 On each slide with the company logo it is better to include the catch phrase of the
company. For example, on Wipro Logo you will find “Applying Thought” and on
Infosys you will find “Powered By Intellect Driven By Values”
 Make use of slide layouts to save time in formatting
b) Use video and audio to convey your message more effectively
Using video and audio will be possible in a PowerPoint slide and not in a paper slide,
but you can show some images and messages from the video and audio in the paper
slides to convey the message. Again you must ensure that the number of slides doesn’t
overshoot than the required number. Some guidelines you should follow are:-
 Use video and audio only when required
 Use video and audio when you want to convey a very important message such
as company values or the statements of the previous satisfied customers etc.
 Don’t use more than a couple of video and audio in the presentation
 Excessive use of video and audio might dilute the presentation effect and also
eat up much of your presentation time
 Play a video when you feel that the audience shows signs of losing attentiveness
towards the presentation
 The best time for video would be in the middle or at the end of your presentation
c) Use graphics to emphasize key points
Graphics here refers to using images, tables, textboxes, and flow charts in your
presentation. Some of the guidelines are:-
 Use images instead of text when you want to convey a lot of information
 The expertise in your company and the list of employees who works and their
hierarchy can be shown in the form of a flow chart rather than text
 Better to use bullet point wherever necessary
 Keep changing the graphics every three to four slide so that the presentation
doesn’t look monotonous
 Be cautious to use appropriate graphics and don’t over burden the presentation.
For e.g. don’t keep on showing images or flow charts or tables on every slide.
Use them wisely whenever required.
d) Use animations and transitions wisely
There are lot custom animations and transition of slide you can learn in PowerPoint
slides. Unfortunately you may not be able to show them in paper slides. Some of the
guidelines to be followed are:-
 Use animations only when required.

 Don’t use multiple animations in one slide i.e. the animations in any given slide
should be uniform. For e.g. If the animation for the first text in the presentation is
“Blinds”, then the following text or pictures or any graphics should use the same
animation.
 Try to use the same slide transition thought out your presentation. Avoid using
multiple transitions
 Remember the animations and transitions are used only to grab the viewer’s
attention. Use them only if they are required.
 In serious topics, such as budget presentations or some high level technical

presentations avoid using many animations as it would distract the attention and
the audience might feel uncomfortable.
e) Consider difference between print and on-screen presentations
The presentations that appear excellent on screen may not necessarily look good on
the printed slides. The backgrounds or the themes may be printed dark when compared
to the actual text in the slide. This makes the printed slide difficult to read. Some
guidelines to be followed include:-
 Make sure that the presentation design and the text looks good both on computer
screen and on a printed paper
 Better to have two different designs of your presentation so that one suits for
your computer screen and one for the print
 Make the necessary adjustments in the theme and make sure that print looks fine
by taking the actual printout.
 Most of the times sales representative might be give black and white copies, so
make sure that the presentation is designed to look good in gray scale prints too
f) Other general guidelines
Some of the other general guideline which we haven’t covered earlier include:-
 Don’t use more than 5-8 lines of text in any slide
 Make use of any note pages in the slide so it can be used as a reference in case
you forget some concepts during the presentation
 Make sure you have a printed copy of the slides with you during the presentation.
You may have handouts which have 4 or 6 slides per page.
 Always make sure that you don’t deviate from the topic of your presentation or
the objective of your presentation in any slide
 Avoid using colours which are too dull or too bright
 Always choose the colours so that they are visible from a appropriate distance
say from the member in the last row of your room
 Don’t keep changing the font on every slide. Make sure you follow the same font
on every slide. Size of the font may vary from text to text, but make changes
appropriately.
 Make sure that the picture or the text doesn’t over shoot the boundaries of the
slide. This may result in breaking of the picture or text during the presentation.
 Make sure that the text in the pictures, flow charts, tables etc are readable from
the appropriate distance
 Try to use the same theme for all the presentations you present in the meeting
 Make sure the company logo is visible in all the slide clearly enough
 Make sure that the important points are highlighted in the presentation so that the
audience can easily see them. For example, important points can be the cost of
the project, number of employees, domain expertise etc.
 Be careful that you don’t over highlight every other text which is not very
important
 At the end make sure you give appropriate references and a thank you note
Let’s now look at some of the guidelines that have to be follow in a word document
preparation for the customers.
6.3.2 Guidelines for preparing your word document file
Most of the times we see that presentation wouldn’t be complete without giving the word
document containing detailed information of various topics or issues discussed in the
presentation. Due to the time factor or the limitations of a slide presentation, we may not
be able to convey detailed information about the product/ services. In such case all the
information related to the product/ service including the Service level agreements
(SLA’s) will be provided to the customer for review. Documents should be created in
such a way that it grabs the viewer’s attention. Documents would be big and run into a
lot number of pages, hence we need to follow some guidelines so as to make them
more appealing. So let’s take a look at common guidelines which should be followed
while creating a word document.
a) Choose your content carefully
Since the documents has a lot of information per page and may run into 20-25 lines per
page, there is every chance that the viewer will get lost while reading it. In order to
make the document easy to understand it is very important that you choose only that
content which is very important. Some of the guidelines are:-
 Choose the content carefully
 Try to put a concise summary point in the first page such that it gives necessary
impetus for the viewers to read the entire document.
 You may highlight some of the problems the customer is facing in the first couple
of pages. Like you may say most of the companies are facing the problem of low
network speeds and are not able to carry out daily transactions effectively with
increasing number of customers day-to-day. So what is the solution for this
problem? Then you can keep on continuing with your company solutions in the
subsequent pages.
 Always give some information about your company and its key strengths in the
first page.
 Give a suitable heading such that it reflects your objective of the word document
 Try to use a picture or table or a chart every couple of pages so that the
document will be interesting enough to read
b) Select or create a document theme
A document theme will describe how the background of every page in the document
looks like. It also deals with the style of border, header text and footer text in the
document. Many a times the company will be having its own theme with its logo water
marked at the center or top of every page. Some of the guidelines includes:-
 Choose the theme which suits your company
 You may have the same theme which you used for your PowerPoint slides so
that the uniformity is maintained in terms of font selection, colours and graphics
C) Maintain uniformity in the text
In the document if you have used the font size 16 and bold for the heading in the 1st
page. Then in any other pages if you want to keep a heading use the same font as used
earlier in 1st page. Some of the guidelines here include:-
 Make sure the all the main headings, sub headings, inner sections maintain the
uniform font style and size within them as explained earlier. You may use font
size 16 for main headings, 14 for sub headings, and 12 for the text in the
sections and so on.
 Make sure the font used in the text of all the tables are same
 Make sure that font in all the flow charts are same
d) Use graphics to illustrate key points
Graphics are a great way of creating interest while reading the document. Some of the
guidelines include:-
 Avoid using blurred images; always use clear images in the documents
 If you are taking the picture from some other source, clearly give the reference
below it
 The text in the picture should be readable enough
 Avoid using bright colours in the chart, especially in a pie-chart - it would make
the text difficult to read
 Make sure the size and the colour formats looks similar for most of the charts in
the document
e) Other general guidelines
Some of the other general guideline which we would follow for creating a document
include:-
 Make use of an appendix if you have any supporting information to your content
which can be put at the end of the document.
 Make use of a footer and header in the document
 Make sure the header will include the company name and logo and footer
includes the page number.
 When the document is ready make sure that you see the print preview to get to
how it look when printed
 Avoid breaking of tables and flow charts into multiple pages, always try to keep
them in a single page unless they are very lengthy
 If you are copying some text or table or a chart from other document and the font
is changing, try “past special” instead of paste in the document. This command
will preserve the text style and font while coping.
 Finally when the document is ready make sure that you run the spelling check
and clear all the language and spelling errors.
 Give the document for review to you team members and your manager and get
their approval
 Get a copy printed and make sure the colours in the pictures, charts and any
other graphics are readable
 The list of guidelines is not exhaustive and you may follow some others which
may help you in creating an effective and efficient documents and PowerPoint or
paper slides.
SAQ 2
1) Explain various presentation design issues while using animations and

transitions in the slides.
2) Explain the guidelines which you will follow while selecting the content for your
word document
3) Explain the uses of video and audio in your presentation
6.4 The sales presentation process
Having prepared your presentation slides and documents, it’s time for you to
understand how to carry on with the presentation process. Let’s us now look at some of
the presentation methods as suggested by Koekemoer (2004) in the following section.
6.4.1 Presentation methods
There are many ways in making a presentation which can be understood by the
following:-
Presentation
Methods
Stimulus- The formula The need The problem

response selling satisfaction solution
approach presentation presentation approach
a) Stimulus-response approach
Stimulus refers to any statement which will create a response from the customer. We
know that the ultimate objective of all the presentations is to develop a long-lasting
relationship with the customer and to close the deal successfully. The sales person in
this method makes some statements that will act as a stimulus to the customer and in
response, the customer will like to make a purchase. Most of the times in this method,
the presentation will be as brief as possible and the sales representative will try to close
the deal. The sales representative may offer discounts or lowest price in the market or
extra add on benefits as a stimulus and then in response they will make the customer to
close the deal. This type of method will be useful for new sales representative who are
inexperienced to handle longer periods in presentation. This method would be
appropriate and work well in case of door-to-door sales or sales which include small
revenue per product such as FMCG goods. Normally in industrial and institutional sales
when the product/service value is much higher such type of presentation method may
not work well.
b) The formula selling presentation
This method can be used for similar customers and situations where you have a single
presentation for all the customers. This method follows AIDA approach (attention,
interest, desire and action). Initially you try to get the attention by stating the problem of
the customer and about your company’s capabilities, next you provide the solution to
create interest, then you provide some documents backing up your solution to retain the
interest, then you ask few question to know the desire level of the customer and finally
you attempt few closing techniques to close the deal.
This method will give reasonably time for presentation and will provide more flexibility in
handling the presentation according to customer feedback. A less customized
presentation will be used so that it can be applied to all the customers. This method will
be useful in consumer goods where the sales representative will be handling many
customers per day.
c) The need-satisfaction presentation
This method varies from other two which we discussed earlier which focuses mainly on
the sales representative presentation point of view. In this method we assume that the
sale will happen only when the need of the customer is satisfied. This method focuses
on sales interaction from the customer point of view. This method is approached in
three different phases namely need development phase, need awareness phase and
need fulfillment phase.
Need-development phase: In this phase, the customer need will be identified. Many a
times the customer may not know what does he require for solving his problem. So the
sales representative asks a series of questions to identify the customer needs
Need-awareness phase: In this phase, once the need is established by the sales
representative, it’s time to confirm it by explaining the needs to the customer and check
whether the customer is satisfied or not. During this discussion the customer may
discover other needs which he/she may not have thought of earlier.
Need fulfillment: In this phase the sales representative will identify the right
products/services for the customer needs and present necessary presentations
explaining the features and benefits and tries to close the deal.
This method is especially suited for industrial and technical sales.
d) The problem-solution approach
This method will be used for high value products/service which can bring a significant
change in the company’s working environment. For example, implementing a CRM
system can be approached by this method.
To implement a CRM system the sales representative have to understand the

organization fully so that to estimate what changes will be made in the organization
processes and system. Sales representative may not be able to do this big task all by
himself, so he will be requiring a team to identify various problem areas and give the
appropriate solutions. For the sales presentation the sales team may require not only
the presentation but also the catalogues, brochures, sample booklets, testimonials,
various order forms etc. The sales process may into weeks or even months before
finalizing a solution. You may require multiple approvals from various departments in
the organization to effectively implement the CRM system across the organization. This
process also involves handling the written proposal for the presentation in getting the
permission to do the sales presentation. So whenever the sale includes a lot of
activities, it is appropriate to follow the problem-solution approach.
Having discussed enough on the presentation methods, it’s time to look at some of the
objection handling techniques during the sales presentation.
6.4.2 Objection Handling and closing the sale
When the entire presentation goes well and it’s time for closing and the sales
representative uses the closing technique, then the customers may respond positively
or negatively by raising objections. So it is very important know how to handle
objections you may prefer to address as and when an objection is raised. If there are
many objections you may inform that they will be taken after the presentation. Most of
the times customer raises objections to show his/her intelligence or to test the behaviour
of the sales representative or to get more benefits from the product. It’s your
responsibility as a sales representative to handle the objections without any negative
effects on the sale. We have discussed some of the ways how to handle objection in
unit 3 “Personal Selling”. In this section let’s find out some of the objection handling
techniques as described by Claudyne (1994):-
a) Ask an open question: When you are not sure how to handle an objection it is better
to ask an open question so that you can get some views from the customer which will
help you in handling the objection. For e.g. If the customer says the budget for the
project is too much, then you may ask an open question like “How come do you feel the
budget is too much?”
b) Ask a closed question: Closed questions can be answered with just a yes or no. If the
customer objects that the funds cannot be cleared in such a short period of time, and
then you may respond by saying “Do you want us to start the project in a quarter or a
couple of quarters later?”
c) Clarify the benefits: If the objection is because the customers haven’t understood the
benefits clearly then try explaining them again. For e.g. If the customer says “I don’t find
any extra value creation to the company by your product/service” then you may start
explaining again how your product will create extra value for the organization.
d) Admit when you are wrong: Customer will be more intelligent than you many of the
times. If customer pinpoints any wrong statement by you, and if it true then simply admit
your mistake. For e.g. if customer says that “Industry growth for VOIP service is not
12.5% but its 15%”, then if it’s true then admit that “You are correct, this slide needs to
be updated”.
e) End eye contact: Whenever you feel like one of the viewers is giving many objections
try to avoid eye contact during the presentation so that the viewer will be discouraged to
raise another objection.
f) Ask for help: Whenever you feel that you are not the right person to take an objection,
it will be better to suggest the customer that his/her objection will be addressed by other
person in next meeting. For e.g. if the customer says “Can you explain the various
functions or code used in the software for your product”, then if you happen to be a non-
technical sales representative and have no idea of the code you may inform the
customer that “a technical manager will be able to contact the next day and explain the
functions”.
g) Discourage the objection: This is like a last step for rescue when you don’t have any
choice of using any other technique. For e.g. if the customer says “your company has
posted less revenues when compared to last year and losing out some of the previous
customers” then the better will be not to explain why the company has lost the
customers and the revenue and simply answer that “It is the job of the higher authorities
and they are working on that issue”.
The next process after handling the objections successfully would be using some
closing techniques to close the sale. We have already understood some of the closing
techniques in Unit 3 “Personal Selling”. The sale wouldn’t be completed unless some
negotiations happen between the customer and the sales representatives. We shall
learn about the negotiation skills in the next unit.
SAQ 3
1) Which presentation method you will use in selling a chimney product for the
customers in door-to-door sales? Explain the reason for the same.
2) Explain how will handle the objection when the customers says “Your company is
performance is deteriorating day-to-day in the market place”.
3) Explain the way you handle the objection when customers say “Your product
features are good and will be very useful for our company, but the price factor
seems to be a little heavy for our pockets”
6.5 Summary
In this unit we have discussed the importance of knowing about you company, customer
and the competition for any sale. Without knowing your competitor well and his
strategies used, it would be difficult for you to impress the customer and get the deal
and the various objectives of the presentation. We have also discussed the role of sales
and pre-sales team in making the presentation. We have understood that the
presentation may require multiple teams or departments in the organization and so
coordinating them to ensure the presentation is prepared on time is a critical task for the
pre-sales team. Later we have understood various guidelines we have to follow to
create a good presentation that is appealing enough to the customers. We have
identified separately the guidelines for PowerPoint or paper slides and the documents.
We have understood various presentation methods and the scenarios where they are
applicable. We have recognized the importance of objection handling in closing the
deal. Finally, we have learnt various closing techniques with situations where it can be
applied.
6.6 Keywords
1) Due diligence Due diligence involves investing or auditing. In

this unit it is used in a sense to know the
financial, legal, environment and market
situation of the company.
2) Check-list A list of things which are required us to do to

ensure the process is completed. Having a
check-list reduces the number of errors that
may occur in future due to a neglected issue in
the process.
6.7 References
1. Claudyne wilder (1994), “The presentations kit: 10 steps for selling your ideas”,
John Wiley & Sons, New York, USA.
2. Ludi Koekemoer (2004), “Marketing Communications”, Juta and co. Ltd, South
Africa.
3. Stephanie Krieger (2007), “12 tips for creating better documents”,

http://www.microsoft.com/atwork/skills/documents.aspx

2. Darryl Davis (2003), “How to be a power agent in real estate”, Tata McGraw-Hill,
USA.
UNIT 7 NEGOTIATION PROCESS
Structure
7.1 Introduction
Objectives
7.2 Negotiation Defined
7.2.1 Definitions of Negotiation
7.2.2 Principles of Negotiation
7.3 Effective Negotiation Process
7.3.1 Pre-negotiation process
7.3.2 Negotiation Process
7.3.2 Post-negotiation Process
7.4 Closing techniques
7.5 Summary
7.6 Keywords
7.7 References

7.1 Introduction
In the previous unit we have understood activities that are performed to ensure a
successful presentation. We have discussed the pre-presentation activities, various
guidelines for making presentation and the process of effective presentation. Having
achieved the objective of presentation and successfully handling the objections, it is
time for the sales representative to negotiate and close the deal effectively. Once the
customers are satisfied they would like to negotiate the price and other features like
warranty period, after sales services, discount on add-on products and so on. So,
negotiations are the part and parcel of the sales process before getting an order.
During the negotiation process the customer will like to have the best price for the
product/ service. The customers are always intelligent enough to know that the price
quoted by the sales representative can always be negotiable. Negotiations will happen
until both the customer and the sales representative negotiations comes to an
equilibrium point. It is always important to understand that the customer will try to
negotiate the price to such an extent that there would be no profit left for the
product/service sold. It is the skill of the sales representative to successfully negotiate
the deal such that a profitable relationship can be built both for the company and the
customer. So, let us now understand the negotiation skills a sales representative must
possess to successfully handle the deal. After negotiations, sales representative will use
closing techniques to close the deal and make an agreement of the sale.
Objectives
1) Define negotiation and its objectives
2) Identify the underlying principles of negotiation
3) Explain the pre-negotiation, negotiation and the post-negotiation processes in

handling the deal effectively
4) Understand the objective of closing techniques

5) Use appropriate closing techniques according to various situations in the sales
process
7.2 Negotiation defined
After the sales representative knows that the customer is willing to make the purchase
but has some concern related to price or features then he/she will enter into a
negotiation process.
7.2.1 Definitions of negotiation
Let‟s start this section by identifying by defining the term “Negotiation”. Negotiation can
be thought of as “a process between two or more parties to arrive at a mutually
beneficial agreement or relationship”. Various other definitions given by some of the
scholars include as follows:-
 Steven Cohen (2002) describes negotiation as “the process of two or more

parties working together to arrive at a mutually acceptable resolution of one or
more issues, such as a commercial transaction, a contract, or a deal of any sort”.
 Fowler (1996) describes negotiation as “a process of interaction by which two or

more parties who consider they need to be jointly involved in an outcome, but
who initially have different objectives, seek by the use of argument and
persuasion to resolve their differences in order to achieve a mutually acceptable
solution”.
7.2.2 Principles of negotiation
Flower (1996) describes that there are seven principles to any form of negotiation. Let‟s
look at them in detail:-
a) Negotiation is the process which will require both the parties to reach to a desired
outcome. Both the parties show some common interests in either the subject matter or
in the negotiation context, which shall hold them in the negotiation process. For e.g. If
you are selling a technical software such as anti-virus to the company, then your
objective might be to sell as many copies as possible with a reasonable profit margin
and the customer objective might be to get the copies at the least cost possible. Here
both the customer and the sales representative objective are to get best value from the
deal. This holds them in the negotiation process.
b) The discussion in negotiation process will normally start off with different objectives
which will initially prevent the achievement of the outcome. For example, in the previous
example, the customer who is buying the anti-virus product might say he will be
interested to take 50 copies if the discount is 30 percent. But the sales representative
might say the maximum discount he will consider giving is 15 percent. So, here both the
parties started off with different objectives which don‟t allow them to come to a
conclusion easily.
c) At least initially, both the parties will opt for negotiation as a satisfactory way of
resolving the differences rather than forcing to them to abide by the agreements. For
example, when the sales representative says the maximum discount he can give is 15
percent and the customer is expecting a 30 percent. Then both the parties will proceed
to negotiate further rather than the sales representatives forcing themselves to give the
30 percent discount or the customer buying the product for a 15 percent discount.
d) There is a belief in negotiation that each party can persuade the other to change
his/her stand on the original position. As stated in the previous principle, both the parties
initially look for the negotiations. As per this principle, the customer will believe that he
can get more discount than 15 percent from the sales representative and the sales
representation will proceed with a belief that he can persuade the customer to buy the
product at reasonable profit margin to the company.
e) The next principle states “both the parties feels that there is still some hope left even
if there ideal outcomes are unattainable”. For example, if the sales person feels that the
customer is not going to place the order at 15 percent discount at any cost, then there
can still be some hope left that the customer will buy the product at 15 percent if the
benefits of the product are explained once again to the customer.
f) The next principle states that there is no point to participate in the negotiation
process if one party is having influence or power which is real or assumed over the
other party which is completely powerless. For example, if the customer whom you are
selling the antivirus product is your elite or No.1 profitable customer in the past for your
company, then there is no point in arguing much and sticking to your 15 percent. It
would be better to increase your discount rate may be to 20-25 percent and proceed the
negotiations. On the other way, if your antivirus product is the No.1 in the market and is
the only antivirus which can cater to the needs of the customer, then you shall have the
power or influence during the negotiation process. In this case, you can just stick to your
15 percent or may just give a little consideration and increase the discount to 17 or 18
percent.
g) The final principle states that the negation process is carried mostly by human
element with verbal interactions. Hence, the negotiation is strongly influenced by the
emotions and attitudes rather than the facts in the each party‟s arguments. This is
where the negotiation skills come into play a lot. The sales representative must
understand that he can still win a better deal even if the customer is adamant by using
his/her negotiation skills.
SAQ 1
1) Define negotiation in your own words
2) Explain the principles of negotiation
7.3 Negotiation process
Negotiation is all about give and take with the aim of both the parties getting satisfied. In
this process various issues are to be handled well. Negotiation process can be thought
of as a three step process as shown below:-
Pre-negotiation
Process
Steps in
Negotiation
negotiation
Process
Post-negotiation
Process
Let‟s now discuss then in detail.
7.3.1 Pre-negotiation process
Before entering into the negotiation it is always advisable to be prepared for the
negotiation. You should remember that if the negotiations are not handled properly you
may lose the customer and also his referrals. Hence some of the steps which you need
to follow in the pre-negotiation process involve the following:-
 Identify the customer group
 Collection as much customer data as possible
 Identify whom to involve in negotiation process
 Make a check-list of possible scenarios that may arise during the negotiation
process
 Prepare for the scenarios and alternate ways to handle
 Make sure you and your team members are fully aware of the objectives of the
negotiation process
Depending upon the type of sale, the team for the sales negotiation can be a single
sales representative or many. Normally, in door-to-door sales like FMCG and consumer
care products, only a single sales representative is involved. In such case, he/she must
be fully aware about the customer details and preferences. The sales representative
should be prepared for scenarios where the customer might ask for a more discount or
any add on benefits along with the product/service.
In Institutional and Industrial sales, there will be a team of members who will participate
in the negotiation process. Once the presentation process is completed and the
customer is willing to give an order but express is some concerns and want a
negotiation to be done, it‟s time for the sales team to be prepared for the negotiation
process. Company expects that nothing wrong would happen during the negotiation
process in such big deals with the industrial or institutional sales. So, the first important
step is to choose a team that is capable of handling the negotiation process effectively.
The sales representative team can involve not only the people from the sales team but
may also include members from other departments like technical, testing, hardware,
finance and HR. The team depends mainly on the type of product/service being sold in
the negotiation process.
For example, if the sale is about a multi-million dollar CRM product is being sold, then
the team for negotiations may include the technical, finance, testing and the sales team.
Every team member is associated in the creation of the CRM product. Hence his/her
approval may be required when giving the discounts. One must understand that the
customer may ask discount on some features of the CRM products like the cost for
testing services, then it is important that the testing team member approval has to be
taken to give such a discount.
Knowing about your customer is very important before entering the negotiation process.
This process can be very tedious in big industrial or institutional deals. If it‟s the
previous customer, you may look into the existing past data of the customer and judge
his buying behaviour and interests. Other ways of knowing more about the customer
interests include looking at the financial status, knowing details from some referrals,
browsing the past and present business activities of the customer etc. With the help of
such information you can know whether the customer would be adamant about the price
or choose the best features and cost is a secondary importance.
During the negotiation process, various scenarios may arise from the customer side
such as the customer requesting to increase the warranty periods, decrease the cost,
free add on products/services, and decrease the cost of extra warranty periods and so
on. So it is always better to know about the possible situations that may arise in the
negotiation process by looking at the previous experiences with the same or other
customers in the similar deals. If the deal is new deal, it will be always better to prepare
for all the situations that may arise during the negotiation process. Expert advises can
be taken who may be the industry leaders for knowing the possible scenarios.
Finally, before going to the negotiation process, your objectives must be clear about the
offer or agreement you do in the negotiation process. Let us now look at the negotiation
process.
7.3.2 Negotiation process
Let us understand in this how the negotiation process will proceed in general. Flower
(1996) described the pattern which is followed by most of the effective negotiations.
Let‟s understand the pattern in detail:-
a) Both the parties lay down their issues and decide what they are willing to negotiate in
the process.
b) After the issues are set out then one of the party will set the claim which will be
responded by the other party. Here both the parties will define their initial positions.
c) Then there would be the discussion in order to test the initial positions of both the
parties.
d) During this discussion both the parties try to explore all other possible outcomes.
e) After analyzing all the possible alternatives, formal proposals are made which will be
discussed and modified
f) After several modifications, the proposal will be treated as final and then an
agreement will be made. This agreement phase can be thought of as the post-
negotiation process
7.3.3 Post-Negotiation process
After the negotiation process the sales representative will use the closing technique to
close the deal and prepare the agreement between the parties. It is always better to
have the final proposal which is agreed by both the parties to be presented in a written
format. This printed document is also known as service-level-agreements (SLA‟s).
Some of the issues have to be taken care of so that the agreement may not lead to an
implementation failure. Those issues or concerns include:-
 Be clear on what is going to be written in an agreement
 Take approval from both the parties
 Cross check that any higher authority hasn‟t been missed out for informing about
the agreement
 Ensure that the method of implementation and the level of service are clearly
stated in the agreement i.e. ETA (Estimated time of arrival), number of
employees working on the project, type of resources used, etc.
 Cross check the details in the agreement with all the members before signing the
contract
SAQ 2
1) Describe various objectives of the negotiation process.
2) Explain the need of a well documented SLA after the negotiation process
3) Explain the need for understanding the customer group before starting the
negotiation process
4) Explain the pattern which is generally followed during the negotiation process
7.4 Closing Techniques
A close refers to end the process and in sale it means to end the selling process after
the negotiations are completed. The main objective of the closing technique is to
successfully close effectively and get an agreement signed between the parties. Most of
the times customer might show some resistance to make the decisions fast enough,
hence closing technique serve the purpose of helping or assisting the customer to make
the decision quickly and close the sale. It is the skill set of the sales representative to
know when and what closing techniques are to be used. There are many closing
techniques which can be applied depending upon the situation in the presentation
process. A sales representative may use a single or multiple closing techniques to
effectively close the deal.
We have already learnt about some of the closing techniques in the 3 rd unit „Personal
Selling”, let‟s now look at some more closing techniques which are given in the website
changingminds.org:-
a) 1-2-3 close: In this closing technique the sales representative will try to summarize
the benefits of the product in a sentence with three items. For example “This product is
hassle-free, faster and efficient in removing viruses from your computer” or “this service
is the cheaper, reliable and has a plenty of features than the competitors”. In this closing
technique the main aim is to give a great impetus to the customer to feel that the
product/service is the best in the market. This type of closing technique is used widely in
the sale of low value products where the sales process may take place within a day. For
larger sales where the discussions run over weeks, this might not be the only technique
used.
b) Adjournment close: This type of closing technique assumes that the customer will
not be able to make the decision right away and will require some time. So here you will
ask the customer to take his/her own time in making the decision and you will adjourn
the meeting to follow up on some other day. This closing technique is ideal when:-
 The deal involves a lot of issues and value where the customer has to discuss
with his/her higher authorities
 When the deal is done during the budgetary period or when the funds are low
 You have a feeling that customer will definitely come back and make more
purchase. During the time given to customer he/she may do an analysis of other
competitor‟s product/services and will return to you
 You are the market leader and provide the best service
c) Affordable close: This type of closing technique is used when you know that the
price of the product is way too high for the customer pocket and you need to do
something to reduce the price or offer some other alternatives. This type of closing
technique is used very common in both the door-to-door sale and the institutional or
industrial sale. Some of the situations in which you may use this technique are:-
 When you feel that the customer doesn‟t have budget to buy the software or
hardware, then you may give an option to the customer that the software need
not be purchased fully but can be taken as a service, paying rent for every month
or quarter while using. This is a wide trend which is used now a days and the
concept is known as software-as-a-service.
 If you are selling the car or a house to the customer, then you may help the
customer in making the payment through some loans or in easy-monthly-
installments. Always try to find out the best installments or loan facility which
doesn‟t make the customer to go in debt and will not be able to make the timely
payments.
 If the customer feels that your product cost is very high, you may inform him that
the price is justified because the maintenance cost is very low. Try to make the
customer feel that the price is affordable for long term usage
d) Alternative close: This type of closing technique is used when you have a feeling
that the customer is willing to make the purchase and then you may present some
alternatives which the customer can choose according to his preference. For example, if
you are selling the laptops then you may ask the customer “would you like the laptop to
have a 2 GB Ram or 3GB RAM?” or “Would you like to have the Intel i3 processor or i5
processor?” and so on. This can make the customer to make the decision faster and
close the deal.
e) Assumptive close: In this closing technique the sales representative will assume
that the customer has already made the decision and the next step is to take the order.
For example, the customer may be asked “Where do you want the product to be
delivered to the head office or at your branch office?” or “Will one year license be
enough for your product?” and so on. This technique is closely related to the alternative
close and often used along with it during the sale.
f) Best time close: In this closing technique the sales representative will explain the
customer how this is the best time to make the purchase. Some of the statements used
in this technique are:-
 We have this stock only in this festival season

 This is the first time the product/service is sold at 20 percent concession
 This is a limited offer where you get extra one year free onsite service
 Having the summer approaching it would be the best time to have an AC
 Having got recently married, it is the best time to think about having your own
apartment
These are some of the closing techniques which might help you in different situations in
the sales process. For more closing techniques you may look at the website address
given in the reference section. Many-a-times negotiations and closing techniques go
hand in hand to close the deal effectively. If the closing technique is not working then
the sales representative might negotiate the price or other features and will try again for
closing the sale using an appropriate technique.
SAQ 3
1) Explain any two scenarios where you would use assumptive close
2) If the customer says that they are having tight budgets in this quarter, then which
type of closing technique would you apply? Justify your answer.
3) If the customer is not sure which laptop model to select, then which closing
technique would you find appropriate to use?
7.5 Summary
In this unit we have understood the various closing techniques which can be applied to
know the willingness of the customer to close the deal. We have also understood that
most of the sales process wouldn‟t be completed without the negotiation phase. We
have defined negotiation and understood the several principles of negotiation. We have
identified the entire negotiation process would be completed in three process namely
pre-negotiation process, negotiation process and the post-negotiation process. Before
any negotiation process it‟s important to be prepared and so we have understood the
various activities that need to be done to ensure an effective negotiation process. We
have understood the six key steps which are followed in most of the effective
negotiation processes. Finally in this unit we have learnt the important issues that need
to be taken care of so that the negotiation agreement of the sale may not lead to an
implementation failure in future.
7.6 Keywords
1) SLA Service Level Agreement is a document which

states the terms and conditions that define the
level of service being provided by the
product/service to the customer.
2) ETA Estimated time of arrival is the time at which

the product/service will be available for delivery
7.7 References
1. Steven Cohen (2002), “Negotiation skills for managers”, Tata McGraw-Hill, USA.
2. Alan Flower (1996), “Negotiation skills and strategies”, Universities Press
Limited, India.
3. http://changingminds.org/disciplines/sales/closing/closing_techniques.htm
1. Lisa J Downs (2008), “Negotiation skills training”, ASTD Press, USA.
2. Chris Newby (2004), “Sales strategies: negotiating and winning corporate deals”,
Kogan Page Limited, UK.
UNIT 8 RETAIL COMMUNICATION
Structure
8.1 Introduction
Objectives
8.2 Importance of Retailing
8.2.1 Necessity of retailing
8.2.2 Advantages and disadvantages of retailing
8.3 Communication Skills in Retailing
8.3.1 Understanding the retailer
8.3.2 Selecting a retailer
8.3.3 Communicating with the retailer
8.4 Retailing in Modern times
8.4.1 Modern retail formats
8.4.2 Role of merchandising
8.4.3 Internet Retailing or E-retailing format
8.5 Summary
8.6 Keywords
8.7 References

8.1 Introduction
In the previous unit we have understood negotiation process and the closing techniques
in the sales process. In this unit, we shall look at the retailing mode of selling and the
various issues that need to be addressed to build a strong relationship between the
company and the retailer. Unlike personal selling, where the sales representative will
visit the customer, in retail mode of selling the customer will visit the retail outlet to make
the purchase. Retailing has two major entities who work for the benefit of the customer.
One is the retailer and other is the sales representative of the product. Relationship
between these two entities is crucial for the successful selling and make profits of the
business. The retailer will be benefited from the sales representative by timely supply of
goods whenever there is a need and the sales representative will benefit from the
retailer in reaching out to the customers who visit the retail outlet. So there is a
necessity to build a profitable relationship between these two entities.
So, in this unit we shall understand the communication mechanisms between the
retailer and the sales representatives which help to improve and build a profitable
relationship. We shall also understand about the information that the sales
representative and the retailer needs to communicate with each other. We shall
examine the necessity of retailing for the company to survive in the market place. Later,
we shall understand the role of merchandising in increasing the sales of the product in
retail outlets. We look at the modern retail formats like shopping malls and super
markets and discuss the reasons for changing customer preference some kirana store
to these modern retail formats. Finally, we shall understand the benefits of E-retailing
and various issues faced by the customer that need to be addressed by the sales
representative.
Objectives
1) Define retailing
2) Understand the necessity of retailing for the company in the market place
3) Explain the advantages and disadvantages of retailing
4) Identify various issues that need to be addressed in understanding, selecting and

communicating with the retailer
5) Examine various modern retail formats like shopping malls, supermarkets and E-
retailing
6) Understand the critical role played by merchandising to increase the sales in

retail outlets
8.2 Importance of Retailing
Let‟s start the unit by defining retailing. Retail is defined by oxford dictionary as “the sale
of goods to the public in relatively small quantities for the use or consumption rather
than for resale”. The origin of this word is from the French word “retaillier” meaning “a
piece cut off”.
8.2.1 Necessity of retailing
The objective of any business is to reach out to the customer and sell the goods or
services effectively. There are three main challenges for the company in making the
sale:-
 Locate the customer group
 Reaching the customer group
 Selling the products/services effectively
The first challenge is to locate the customer group. After creating the product and
service it‟s time to find the customers for it. The customers may depend upon several
factors like the economy, age, sex, culture, location etc. For example:-
 Children will be the customers for toy products

 Rural people would be the customers for Agricultural products like pesticides and
fertilizers
 The people who have the desktops or laptops would be the ideal customers for
software products
 Customers for a medicinal product would be everywhere such as in rural and

urban areas
After locating the customer, the company needs to select a method to reach them. One
method would be personal selling where the sales representative will contact the
customer on a one-one basis. But this wouldn‟t be ideal when there is a larger customer
group. Companies can‟t just rely on personal selling for the product which requires
repeated purchasing. So other channels like retailing should be used in complement to
personal selling. After identifying the channel for reaching out to the customer,
companies have to monitor the selling process so that the sales would be done
effectively. Each and every method like personal selling or retailing has their own
advantages and disadvantages. Let‟s look at them in following section.
8.2.2 Advantages and disadvantages of retailing
Retailing has many advantages when compared to other sales methods. Some of
advantages of retailing to the company include:-
 Better reach to customers
 Decreased costs to acquire the customer
 Easy implementation of promotional schemes
 Easy branding of new products/services
 Ensuring the availability of products for customers at all the times
 Reduced costs for warehousing

Retailing also has some disadvantages. Some of them include:-
 No control over the selling process in the retail outlet
 Customers may be misinformed about the product benefits
 Low quality sales force in retail outlets with poor communication skills
 A lot of competing products exist in the retail outlet
 Customer will be having lot of choices when deciding to buy your product
 Difficulty in keeping constant touch with the retailers on a day-to-day basis
SAQ 1
1) Define Retailing
2) Explain the need of retailing for the company
3) Explain the advantages and disadvantages of retailing
8.3 Communication skills in Retailing
In India, both the organized and unorganized retailing plays a very important role. Most
of retail outlets in India are unorganized i.e. which do not have the license and who
don‟t pay the taxes. For the company to sell its products/services it‟s important to
understand the behaviour of both these sectors. Companies have to analyze the factors
that a retailer looks at in running his business. Retail formats in India can be many and
includes the mobile store on vehicles, grocery shop, Kirana store, departmental store,
super markets, shopping malls etc. Understanding various needs of the different
retailers is very important to develop a good relationship.
Relationship building with retailer involves three major steps as shown below:-
Understanding
the Retailer
Relationship
Selecting the
building with
Retailer
retailer
Communicating
with the Retailer
Let us now understand these steps in detail.
8.3.1 Understanding the Retailer
You will generally find many products of the same category with the retailer. It is
important to understand the influential factors that prompt the retailer to select the
products for keeping in the outlet. Four main factors are observed to be influential viz:-
a) Location: - Location refers to the place where the retail outlet is situated. If the
retail outlet is in a village, you may not expect to get high value products.
Sachets are preferred over big tubes or bottles and the retailer would not keep a
stock of high value items.
b) Community: - Community refers to the group of people who may be categorized

on the basis of their preferences. Retailer may prefer to keep those products
which the community prefers. For example, people at a place may prefer
sunflower or groundnut oil and may not prefer olive oil, hence the retailer may not
prefer to have olive oil in his outlet.
c) Commission: - Retailer may prefer those products which offer him/her the best
commission for a sale. For example if company „X‟ offers a 5% commission and
company „Y‟ offers a 7% commission then retailer might prefer to have more
products of company „Y‟ in outlet than company „X‟ products.
d) Relationship: - Retailer might prefer those products from the company which
has understood the retailer needs well and has helped the retailer in the past for
instance like extending the credit time in difficult situations, ensuring the timely
availability of stock whenever needed and so on.
8.3.2 Selecting a Retailer
Having understood the factors that favour the retailer in choosing a particular product for
his outlet, it‟s important to understand whether the retailer will be useful for the company
or not. Sales representatives have to look at certain issues before selecting the retailer
such as:-
 Understanding the universe of retailer
 Examining the retailer profile
 Analyzing the benefit of the retailer to the company
At the end of the retailing, the relationship between the company and the retailer should
be a profitable one. So it is very important for the sales representative to choose those
retailers for the company who do not create loss and difficulties in handing the sales
process. So, the first step is to understand the universe of retailer for the company
products. For example, if the product is software related then the retailer would include
mainly the shopping malls or markets where the technical items, laptops and computers
are sold. Every city has such markets which are exclusive for selling technical products.
On the other hand, if the product of your company is a tobacco related one like
cigarettes then the retail outlet would be a pan shop which can run into thousands in
number for any city in India.
After understanding the universe of retailers and having the list, it‟s time to examine
their profiles and analyze the benefits. Some of the basics things you should be looking
at are:-
 Time of establishment of the retail outlet
 Average number of customers visiting the outlet

 Size of the retail outlet
 Number of employees in the retail outlet
 Type of products being sold in the outlet
 Type of strategies used by the retailer
These factors can help you in deciding to shortlist the retailers and then examine for the
benefits of building the relationship with them. It is very important for the company or the
sales representatives to know the strategy used by the retailer and analyze it.
Depending upon the type of strategy used by the retailer, Manfred (2010) described
various retailing techniques used by the retailer as shown by the diagram below. This
diagram states that the strategy played by the retailers is based upon the relative price
and the relative offerings.
Fig 8.1 Retail Landscape

In the above figure, if the relative price and offerings are low then the retailer will offer
only those products which are very cheap and will not keep many varieties of the
product in the outlet. If the relative price and offerings are high, then the retailer will
keep all the high value products with many varieties for a product category. Here, the
retailer will use the selling skills to sell the high value products to the customer. If the
relative price and offering are neither too low or nor too high it means that the retailer
keeps a variety of products which are preferred by the middle class customer group and
has with a lot of varieties for a product category. Wal-Mart will fall into this category.
Finally if the retailer is using high relative price with low relative offerings then the sales
representative should understand that in near future it would be time for the retailer to
exit the business. So it is better to avoid such retailers. Hence depending upon the
strategy used by the retailer it is advisable to select those retailers who will fit to your
company‟s objectives.
8.3.3 Communicating with the Retailer
Most of the retailers in India belong to the unorganized sector where modern ways of
communication like email and fax wouldn‟t work. So it‟s very important to understand
the right way of communication with the retailer. Depending upon the retailer sales
representative may use many communication channels like email, fax, telephone, direct
mail and personal communication. For most of the times sales representative end up
using telephone and personal communication channels when other channels are not
effective in communication.
Some of the objectives of communication would be to monitor the sales process on the
retailer end, collecting timely payments, checking for the leftover stock etc. The
frequency of communication depends upon the product and the number of retailers. The
sales representative may communicate daily or once in a month or once in a quarter. If
the retailers are larger in number, then the sales representative may communicate with
the distributor or wholesaler, who in turn communicates with the retailer. For some
products like tobacco and ice creams which are sold by the retailers on vehicles or
small outlets, communication would be on a daily basis. In such cases, where the sales
representative or the distributor will deliver the product in the day and collect the product
in the night or the retailer will come in the day time to collect the product and return
them in the night time at the distributor location. This may happen due to several factors
such as lack of warehouse to keep the stock, risk of pilferage in the night etc.
It is important to know that most of the retailer do not follow stringent accounting
procedures and the accounting period would be mostly on daily basis. It is important for
the sales representatives to ensure that the money is collected on the same day, month
or year depending upon the payment terms agreed earlier. For small businesses,
payments are collected on a daily basis or weekly basis in most cases. There can be
many problems in getting the money later if the sales representative doesn‟t go and
collect the payment on time. Some of the reasons include:-
 No funds to pay
 Personal problems like retailer unavailability for a week
 Disputes in payments i.e. disagreement on the amount to be paid
So it is always better to go in time and collect the payments. One of the important
objectives in communicating with the retailer is to ensure that the retailer communicates
positively about your product to the customer. Various things that have to be discussed
with the retailer to ensure that the sales process will be effective are:-
 Availability of products
 Visibility of products
 Adequacy of stocks
 Payment terms and commissions
 Product benefits and USP‟s
 Importance of appropriate behaviour with customers
 Feedback processes
Sales representative has to ensure the timely availability of the products for the retailer.
There can be several problems both for the retailer and the sales representative if the
product is not available on time such as the retailer might lose the business and the
sales representative loses the sale. Customer might prefer other products if the product
is not available on time. This might lead to losing the customer permanently. So it is
very important to ensure that the sales representative delivers the products on time and
the retailer has adequate stock of it. Visibility of stock also places an important role in
increasing the sales and so the sales representative should see that the products are
kept in the right place where the customer can easily view them.
Sales representative has to clearly communicate the payment terms and commissions
on the products and if possible should make the agreement copy and get signed. This
would remove the discrepancies which may arise in future on the amount to be paid and
time period of payments. Importance of appropriate behaviour has to be explained when
selling your products to the customers. The sales people in the retail outlet should be
well informed about the product benefits and the USPs. This leads to a creation of
positive image about the brand and increase the sales. A proper feedback should be
taken from the retailer to know that the retailer is promoting your product and showing
interest in improving the relationship with the company.
SAQ 2
1) Explain various factors in understanding a retailer
2) Examine the universe of retailer if the product you are required to sell is a “pen
drive”.
3) Explain the importance of timely availability of product for the customer in the
retail outlet.
4) Explain the role of feedback process in developing the relationship between the
retailer and the sales representative.
8.4 Retailing in modern times
Let us understand various retail formats present in the 21st century.
8.4.1 Modern Retail formats
We have understood that in India most of the retail outlets are unorganized and survive
on a strong relationship with the customer. With the entry of international players like
Wal-Mart and many other Indian retail chains the modern retail formats are on the rise.
These modern retail formats include supermarkets, shopping malls which are facing
tough competition with the unorganized sector of retailing. Customers in the urban and
rural areas prefer to buy from the modern retail outlets due to many reasons such as:-
 Best prices in the market place
 Good shopping experience
 Easy payment methods apart from cash like credit and debit cards
 Parcel and delivery services to the door step
 Large variety of products to choose
These retail formats depends upon some rules such as:-
 Self service
 Absence of owner in the retail outlet
 Fixed prices and no negotiations
Even though the prices are fixed and cannot be decreased, the customers prefer to visit
them due to the discounts offered on bulk purchase or due to the availability of various
range of products.
8.4.2 Role of Merchandising
Merchandising is any activity that leads to the sale for the retail customer. It can be
thought of as a practice which leads to the sale of products to the retail customer.
Hiebing (2004) defines merchandising as “the method used to communicate product
information, promotions, and special events and to reinforce advertising messages
through a non-media communication vehicle like brochures, sell sheets, product
displays, video presentations, banners, posters, shelf takers etc. Nowadays we make
use of video displays and interactive media too. Most of the purchase decisions are
made on point of purchase (POP) and hence merchandising plays a very important role
in increasing the sales.
The most common way of merchandising is in shopping malls or super markets are by
the displays. Sales representative must work with the retailer to ensure that proper care
is taken in setting up the display in the outlet. Some of the issues which need to be
addressed while using the display as a way of merchandizing includes:-
 Differentiating clearly between paid and unpaid displays in terms of the space
and number of displays allowed being setup in the outlet.
 Acquiring the right place for displays i.e. getting the place for your posters where
the customers are going to spend more amount of time. One of the best places
would be at the purchase counter or at the entrance where the customer would
definitely notice the display.
 Sufficient posters and point of purchase material are available so that they can
be distributed when customers visit the counters
 Ensure that the retailer works for the display along with you in creating a positive
image for the brand
 Retailer commitment is necessary for ensuring that the sign boards are clean and
well-lighten up, hence try to win that level of commitment from the retailer
 Ensure that the sales promotions are received to the customer. For example, if
free samples are given with the product, ensure that they are given for free and
are not sold separately.
The end result of merchandising is to create a favourable response image in the
customer mind and the customer should be willing to recommend the product to his
friends and family members. This can be measured with the help of feedback forms
making available at the retail outlets.
8.4.3 Internet Retailing or E-Retailing format
Modern retail format would be incomplete without a discussion on the internet retailing
format which is on the rise in the 21st century. Internet retailing is also known as E-
retailing. With the rise in e-commerce activities and increase security levels of online
transactions many customers prefer to shop on the net. Companies are using this as an
opportunity and reaching out to internet retailers who provide shopping services on the
net.
Some of the reasons for the internet retailing on the rise include:-
 Various payment methods with credit and debit cards
 Convenient payment methods like EMI facilities
 The database of products are large so that customer can compare various
products, look at the reviews and make purchases
 More secure payment technologies with increase level of protection from 64 to

128 bit Secure SSL technologies
 Easy and convenient way to shop, at least need not have to walk across the
store and find the product
 24/7 shopping experience
 Better discount rates than retail outlets since companies save cost on the
employees as E-retailing doesn‟t require many sales representatives to handle
the customers
There are various concerns which the customers face when shopping on internet.
Hence it‟s the responsibility of the sales person to address such issues. Some of them
include:-
 The shipping period of the product/service i.e. the time period mentioned during
purchase should be followed
 Offline help whenever needed i.e. customers should be provided with necessary
contact information like email, phone numbers etc. about the retailer or the
supplier in case of any queries
 Payment over the net using credit cards is not preferred by many customers,
hence the sales representative should make sure that the retailer also provides
the option of debit cards or making the purchase on the phone using IVR system
SAQ 3
1) Explain why the customers prefer to shop in modern retail outlets like shopping
malls rather than in kirana stores.
2) Examine the role of merchandising in increasing the sales of the product
3) Identify various issues which the customer face in E-retailing
4) Explain the benefits of E-retailing over retail outlets
8.5 Summary
In this unit we have defined retailing and understood its necessity for the company‟s
survival in the market place. We have also examined various advantages and
disadvantages of retailing for the company. Understanding the retailer and his business
is crucial for the sales representative to establish a profitable relationship with the
retailer. Hence, we have examined various factors that determine the retailer to choose
the products for his outlet. We have understood various issues that need to be looked
into such as universe, profile and benefits of the retailer before selecting for the
company. We have seen the importance of discussing the payment terms and
commissions and the consequences for not collecting the payment on time. We later
examined the various things that need to be communicated with the retailer on a daily or
weekly or monthly basis to ensure a profitable relationship persists between the retailer
and the company. In the final section of this unit, we have looked into the modern
retailing formats such as super markets and shopping malls. We have examined the
reasons for the customer changing preferences towards modern retail formats. We have
learnt about E-retailing and the increasing acceptance by the customers and the
companies. We have looked at merchandising as a practice which will increase the
sales in the modern retail outlets. Finally we have discussed about the various issues
that need to be taken care of while using the display as a way of merchandising for the
products/services.
8.6 Keywords
1) USP Unique Selling Proposition can be a statement

about the product which highlights the benefit
of the product or the unique proposition
created for the customer. USP is considered to
make an impact to a lot of new customers
2) IVR Interactive Voice Technology is a technology

which allows automating the interaction over
the telephone with several keypad inputs on
the phone.
3) POP Point of purchase is the place where the sales

are made. In retailing it will be retail outlet
where the customer makes the purchase.
8.7 References
1. Manfred Krafft, Murali K. Mantrala (2010), “Retailing in the 21st century: Current
and future trends”, Springer, New York, USA
2. Roman G. Hiebing Jr., Scott w. Cooper (2004), “The successful marketing plan:
A discipline and comprehensive approach”, Tata McGraw-Hill, USA.
1. Margaret Bruce, Christopher Moore, Grete Birtwistle (2004), “International retail

marketing: a case study approach”, Elsevier Ltd, UK.
2. Paul Stinson (2008), “Retail, marketing and sales”, Infobase Publishing, New
York, USA.
UNIT 9 JOB ANALYSIS AND DESIGN, RECRUITMENT
AND SELECTION
Structure
9.1 Introduction
Objectives
9.2 Job Characteristic Model
9.3 Job Analysis Activities
9.3.1 Understanding the nature of a sales job
9.3.2 Identifying the skill set for a sales job
9.4 Job Design Activities
9.4.1 Steps for job design
9.4.2 Job designing techniques
9.5 Recruitment and Selection Process
9.5.1 The Recruitment process
9.5.2 The Selection process
9.6 Summary
9.7 Keywords
9.8 References

9.1 Introduction
In the previous module, we have understood that selling skills are essential for the sales
representative to effectively close the sale, communication skills are an important trait of
an effective sales person and having representatives with better communication skills
would ensure success for an organization. However big or small the organization would
be, it’s performance and survival depends upon the employees skill set. Hence
selecting the right candidates for the job is an important task. Identifying the skill set a
candidate requires for doing the job is a part of job design. Knowing various issues
related to the job and the type and level of skill set required will be the first task before
starting a recruitment process. In this unit we shall understand the characteristics of the
job with the help of a job characteristic model and then understand the nature of the
sales job. We shall then understand the steps in job design and the techniques that can
be employed for job design in creating the jobs which would benefit both the company
and the employees.
After performing the job design activity the organization would determine the way in
which recruitment process will be held. Recruitment process should be efficient and
effective in ensuring that a wrong candidate is not selected. The number of stages in
which the candidate will be tested differs from company to company. The method of
testing the candidate also differs from company to company and the nature of job.
Companies would have to test the communication skills and the comfortable level of the
candidate in the sales job. The nature of sales job can make the sales representative
uncomfortable most of the times and hence he/she would require the ability to withstand
the pressure mentally both from the customer side and also from the company side in
meeting the targets. The recruitment process should be able to test clearly the mental
ability and strength which the candidates possess. If this is not done properly and the
wrong candidate is chosen, it would then lead to attrition in future. In this unit we shall
understand about various parameters or qualities that the recruitment process should
be able to evaluate.
Objectives
1) Explain the job characteristic model
2) Explain the nature of the sales job
3) Identify the skill set required for the sales job
4) Understand the role of Job analysis and design in creating the jobs which benefit
both the company and the sales representatives
5) Narrate the significance of a well executed recruitment and selection process on

the organization
9.2 Job Characteristic Model
The aim of any company is to optimize its resources and get the maximum out of them.
Resources may include not only capital, office space, computers, softwares etc., but it
also includes the employees of the organization. Employees are critical for an
organization survival. Taking care of employees is an important task for any company.
The job of the employee must be promising for his/her career growth and if it is not the
employee might leave the company. Let us now look at the Job Characteristic Model
and then define Job analysis and design.
This model aims at describing any job in terms of different dimensions which measure
the nature and requirements of the job. Stephan (1999) describes in his book about the
Hackman and Oldham’s Job Characteristic model which explains five important job
factors which would explain about the job. Let us now discuss them in detail:-
a) Skill variety
Skill variety refers to the usage of different skills which the job requires. It might not
always be essential to use different skill set in every job. For example, if your job
involves fixing an automobile part in the assembly line, you would keep doing the same
type of fitting all the day and this job doesn’t require a variety of skills. In contrast, a
sales representative job demands the use of different skills based upon the nature of
the sale. So the first step in defining or understanding the job would be identifying the
variety of skill set required for the job. Identification of greater variety of skill set is
usually associated with the complete understanding about the nature of job. Therefore,
it is advisable for the companies to prepare jobs which demand greater variety of skill
set.
b) Task identity
Task identity refers to the completion of a whole and identifiable piece of work.
Employees in a job would love to improve their skill set. The only way to improve the
skill set practically is by performing the entire piece of work assigned to him/her. For
instance, if you are the sales representative handling the personal sales, you would like
to complete the entire sales process until the deal has been done. You wouldn’t like to
just describe the product benefits and then handover the selling process to other
representative. Even when you are handling any project in the company, you would like
to take part and work from the start to finish.
It might not be always possible for the companies to assign the entire project from start
to finish to the employees but companies have to design and create jobs with significant
task identity and visible outcome for the employee and organization. In many ways, task
identity is an important factor for job satisfaction of the employees and decreased
attrition rate.
c) Task Significance
Task significance is about understanding the impact of an employee work on the lives or
work of other employees or the organization. Understanding task significance can
immensely motivate the employees to perform their duties effectively and efficiently. For
example, if you are involved in a software project which automates the working of
government hospitals and helps the patients to know about the bed availability, blood
stock, medicines and doctor availability and if the employees working on the project
were informed about the task significance of the project and their work, it would
definitely motivate them to work on the project more sincerely and on time.
The sales representatives must understand that the organization will survive and be
able to provide employment only if they perform their duties well and get more leads to
the company. The work timings for a sales representative would not be fixed many a
times and especially in industrial sales where the meetings would be held according to
the client’s availability. If you have to interact with the clients in other countries like UK
and USA, then the timings to do a teleconferencing or a video chat would be in the
night. The sales representatives should be motivated enough to before his task with
dedication in odd timings. Hence, the sales representative should be informed about
their task significance which can motivate them to work with dedication.
d) Autonomy
Autonomy in this unit refers to the freedom which an employee can have at the work
place. It is the degree to which the employee can schedule his tasks and procedures to
perform according to his/her convenience. It is believed that jobs with higher autonomy
would create a greater responsibility and job satisfaction for employees, although it
might not be true in all the cases. Greater job autonomy might encourage the
employees to bring the work to their home and just not restrict it to work place. This
gives a benefit for the company as the employee will be able to work from home
whenever it is required.
This is common practice nowadays among employees in managerial positions and the
trend of working from home is seen more among sales representatives in the company.
In Industrial sales if the client availability to discuss about the sale is after the office
hours then the sales representative would like to arrange the call from the home and
even the organizations are providing with all the facilities to do a teleconferencing from
the home. Some of the disadvantages of increased autonomy are little control over the
employees work and monitoring their performance. It is the decision of the company
about the degree of autonomy that should be provided to the employees. It also
depends upon the nature and level of job assigned.
e) Feedback
Feedback is the information that is conveyed to the employee about his/her

performance in the job. Feedback may come directly from the job assigned to them or
verbally by his/her manager. A system for giving the feedback must be developed and
be well informed to the employee about the time and procedure to receive the feedback.
Feedback shouldn’t come as a surprise to the employees. It might lower their
satisfaction level when given at times the employees are not expecting. For example, in
many call centers the feedback will be given at the start of the day. All the employees
will be assembled at a place where the previous day’s work will be reviewed and the
level of error rates will be discussed. The employees will be informed about their error
rates and the ways to decrease it. If required the employees will be given some training
before allowing them to work. Every employee knows that the feedback and the
suggestion will be given how to rectify the problems.
In personal sales, feedback might be possible on a day-to-day business. But, in

industrial sales where the sales process can run into months for a single sale, it
wouldn’t be possible to provide feedback daily. Hence the companies have to find out
the right time for feedback may be once in a month or quarter. It is always advisable not
to judge the employee in the feedback but only give the recommendations on his/her
work. Companies take every care while giving the feedback so that it doesn’t become a
de-motivating factor for the employees and their satisfaction levels.
Let us now look at the job analysis of the sales representative and the nature of work he
performs.
SAQ1
1) Explain the advantages and disadvantages of providing autonomy in work place

2) Explain the importance of providing feedback to the employees of the
organization
3) Explain the role of task identity in improving the skill set of the employees in the
organization.
9.3 Job Analysis Activities
Job analysis deals with collection of detailed information about the job. The information
collected would include the necessary skill set, duties and responsibilities a job requires
to be performed. Ram Nath (2004) in his book described various definitions of job
analysis as stated by numerous scholars. Some of them include:-
 “Job analysis is the process of critically evaluating the operations, duties and
responsibilities of the job”,Scott clothier and Spriegal
 “Job analysis is the process of studying and collecting information relating to the
operations and responsibilities of a specific job”, Edwin B. Flippo
 “Job analysis is the procedure by which the facts with respect to each job are
systematically discovered and noted” ,Dale Yeder
Job analysis activities include understanding the nature of the sales job and making the
list of skill set required. Let us look at the nature of sales job as described below:-
9.3.1 Understanding the nature of the sales job
There are many characteristics which determine the nature of the sales job. Some of
them are:-
a) Sales is a lonely job
You would not have a very big team in most of the sales. You as the sales
representative will be alone with the customers most of the times explaining them about
the products/ services. In personal selling the sales representative has to visit the
customers alone whereas a couple of team members may accompany him if it were an
industrial and institutional sale.
b) High level of rejection
Rejection is a part of the sales job most of the times whenever a sales representative
tries to make a sale. It should be understood that high level of rejection doesn’t mean
that you are an incompetent for a sales job. In many companies especially in personal
sales a success rate of 5-10 percent is termed as good job done i.e. 90 calls in 100
have been rejected by the customers. So one shouldn’t take the rejections too
personally and get de-motivated.
c) Sales job require physical fitness
The sales representative is expected to be personally fit to perform the sales job. Most
of the times you will be required to travel to many places and especially in personal
sales you will be meeting a lot of customers in a day and have to travel greater
distances. Hence, the nature of the sales job requires that the representatives are
personally fit for the job.
d) Willingness to work anytime and any day
Most of the times, the sales representative would work on weekends when the
customers would be free and available at their residence. Hence most of the personal
sales will take place during weekends. In industrial sales as discussed earlier in the unit,
there will be instances where you need to take the sales call in the odd timing after
office hours. Hence, sales representatives should be willing to work at all the times and
not restrict themselves to working hours and weekdays only.
9.3.2 Identifying the skill set for a sales job
The degree and variety of skill set varies from one sales representative to another
depending upon the nature of the sales job and the type of product/service handled. But
in general there are some necessary skills which would be useful for most of the sales
representatives in making a sale. Let us now discuss some of such skills which the
sales representative has to posses to perform the sales job effectively and efficiently.
Some of the skills he/she requires are:-
a) Self-motivation: Sales representative should be self motivated. It is a fact that

employees lose their interest in the sales job if sufficient amount of leads are not
generated. It is necessary that the motivation levels are kept high to overcome
any sort of discouragement occurs when the sales get rejected. Companies try to
motive their employees by both the intrinsic and extrinsic motivation methods
whenever required.
b) Fast learner: A sales representative should have the ability to grasp and
understand the new concepts quickly. In a sales job the nature of tasks handled
may keep varying according to the type of sale and the customer. You may not
behave in a funny manner with a serious customer and hence you need to
alternate your presentation style accordingly. Also the sales representative
should be able to quickly grasp and remember the details of the new products/
services.
c) Good communication skills: A sales representative should have a decent level

of communication skills as required by the company. Communication skills
involves not only speaking ability but also includes writing skills and listening
skills. Listening skills are very important as the sales representative listen to the
customer problem. Improper listening might end up in wrong product delivery
which the customer does not expect. Writing skills are also important which helps
the sales representative to write down the customer requirements accurately and
as fast as possible. Customer time is precious and so in the available time the
sales representatives may have to use acronyms, eliminate repetitions and
record accurate information in writing. Verbal skills include ability to speak out
clearly with proper voice modulation and convey what is supposed to. It is always
considered better to speak in a neutral language which doesn’t have the
influence of your mother tongue.
d) Positive attitude and behaviour: It is said that attitude is one such skill set
which unfortunately cannot be inculcated in the employees through training.
Hence one has to develop positive attitude all by overself. Sales job requires the
employees to have a positive attitude and behaviour towards the customers.
There might be many instances during the sales presentation that the customer
would frustrate the sales representative by asking a lot of questions. It is
important that sales representative doesn’t lose his/her positive attitude and cool
during the presentation.
e) Multi-tasking: sales job involves not only just selling but also involves being in
touch with the customers regularly, knowing about various products/ services
launched by the company and searching for more number of sales opportunities.
Performing all these tasks in a single day throughout your career requires some
level of multi-tasking capabilities. Hence this is an important skill set in present
day in most of the sales job. Some of the companies believe that to achieve
maximum results from a sales representative the level of multi-tasking should be
decreased so that hence they can concentrate just on selling. But employees
look forward for multi-tasking which makes their work a little vibrant rather than
monotonous.
Having discussed about the skill set, let us now look at the job design activities.
SAQ2
1) Explain the nature of sales job
2) Explain the importance of having high motivation levels in a sales job
9.4 Job Design Activities
Job design activity serves the purpose of creating a set of tasks or processes which the
employee has to perform and also deals with aligning the right work to the employees to
achieve the desired level of productivity from them. Aswathappa (2005) defines job
design as “the effort to integrate the work content (tasks, functions, relationships), the
rewards (extrinsic and intrinsic), and the qualifications required (skills, knowledge,
abilities) for each job in a way that meets the needs of employees and the
organizations”.
9.4.1 Steps for job design
Aswathappa (2005) defined three steps that involves in job design. They are:-
1) The specification of individual tasks

2) The specification of method(s) of performing each task
3) The combination of tasks into specific jobs to be assigned to individuals
Let us understand the performance of these steps for a sales representative job design.
The first step “specification of individual tasks” refers to individual tasks the sales
representative will perform. Some of the individual tasks for a sales representative can
be preparing the customer list, gathering necessary material like presentations,
brochures and other material, preparing presentations for the customer and so on.
The second step “specification of methods of performing each task” involves describing
how the individual tasks are to be performed. For example, if we take the task of
preparing presentation, the method of preparing presentation varies depending upon
the sale. For personal sales you will be already having companies printed material or
slides or PowerPoint slides. In an industrial sale you need to prepare the presentation
according to the customer requirement. Here, you have to work accordingly to the
method provided in the job design and complete the presentation task. In case of a
technical product like software, the job design may recommend you to take approval of
various other stakeholders’ i.e. technical departments and their financial heads for the
approval of the cost parameter mentioned in the presentation.
The third step, “combination of tasks into specific jobs to be assigned to individuals”
deals with describing job title and the nature of work to be handled. For example in
many firms which handle industrial sales, it’s important that some of the sales
representatives concentrate only on the development of good relationship with the
customers while others help in assisting the sales representative in preparing the
presentation, solution for customer and arranging the technical meetings with customer.
The former falls under the “Sales Manager” and the latter falls under the “Pre-sales
Manager” job titles. So the combination of tasks like preparing presentations, identifying
solutions within the budgets, integrating the objectives of the internal team members of
the company and the customer would be the work of pre-sales team. In this manner, a
set of activities are combined to create the job titles for the employees.
Let us now look at various methods in which the jobs can be designed that are best
suited for both the company and the employees in meeting their objectives and needs.
9.4.2 Job designing techniques
Jobs which aim at meeting the expectations of both the company and the employee can
be designed in mainly four ways as shown below:-
Job Designing
Techniques
Job Job Job Job

Simplification Rotation Enlargement Enrichment
a) Job Simplification
Job simplification aims at decreasing the complexity nature of job by breaking down it
into various tasks. Each task is assigned to employees to master it and gain experience
in that task. Hence each task acts as a specialization for the employees. This method
aims at increasing the productivity for the company by decreasing the level of mental
and physical effort and executing the tasks appropriately. For example, in telesales the
sales representative will get the list of the customers most of the times and hence
his/her task is reduced in identifying new customers. The only task will be to just dial the
customer and try to make the sale.
Job simplification has its own advantages and disadvantages. Some of the advantages
include:-
 increased productivity
 minimal training requirements

 less qualified workforce can be used as the job is simplified
 decreased salary costs for the organization
Job simplification may not always work for the company as it has some disadvantages
which include:-
 Employees might get bored of repetitive work
 Low satisfaction and motivational levels in the long run
 Increased attrition rates
In order to overcome these advantages and create enough motivational level another
job design technique “Job Rotation” is being employed.
b) Job Rotation
Job rotation aims at shifting the jobs for an employee in required intervals in order to
remove the boredom and create enough motivational levels to work for the organization.
Job rotation also aims at helping the employees in gaining more insight about the
company processes. The employee might be put into an altogether new job in case he
needs to improve his skill set. For example, a sales representative who is in telesales
might be shifted into personal sales to improve his skill set and learn the job. Some of
the advantages of job rotation include:-
 Decreasing the level of boredom or monotony in the job
 Increasing the motivational levels
 Improving the skill set of the employees
 Helping the employees in their career growth and hence more satisfaction levels
 Decreased attrition rates
Job rotation provides more number of benefits but it is not void of some of the
disadvantages such as:-
 Job rotation might leave the employee many challenges in performing and
sometimes may de-motivate them if not performed well
 Training costs go up as new training is required for the new job
c) Job Enlargement
Job enlargement is the reverse of Job simplification which aims at decreasing the
complexity of a job. Job enlargement deals with assigning additional tasks and
responsibilities for the employee and expects them to work better. It is found that job
enlargement would increase the power of an employee which motivates him/her to take
up challenging tasks in the organization. For example, the sales representative who is
handling the personal sales of only technical products might be given the consumer
care products too. Another example would be the sales representative who is handling
the pre-sales of software projects might be given the pre-sales of hardware products
too. The advantages and disadvantage of job enlargement are similar to that of the job
rotation. Another disadvantage which is seen in job enlargement is increased workload
for the employee in future which he/she might not be able to handle.
d) Job Enrichment
Job enrichment is different from enlargement. In Job enlargement additional duties are
assigned which enables different natures of job to be performed. Often Job enlargement
is done to downsize the work force, where as job enrichment deals with improving the
quality of job by assigning new responsibilities and increasing the autonomy. Here the
emphasis is on the quality of work rather than the quantity. For example, the sales
representative who is in presales would be given the duty of sales manager for a certain
period of time providing him/her to meet the customer personally by travelling to the
customer site which would usually be in other countries. Another example includes
giving the employees the flexibility to work from home, allowing the employees to carry
out the work the way they want to, informing the employees about the contributions
he/she made to the organization, providing better working conditions with recreation
facilities etc. Any part of activity which enriches the work place and the job is thought as
job enrichment process. Advantages includes:-
 Increased satisfaction and motivation levels
 Increased autonomy to decide about the execution of work
 Increased confidence levels
 Increased cost in training for new jobs
 Difficulty in monitoring the performance regularly
After the job design activity, it is time to start the recruitment and selection process.
SAQ3
1) Explain three steps of the job design process with suitable illustrations
2) Explain the advantages of job enlargement over job simplification
3) Explain the significance of job enrichment in improving the motivation levels of
the employees
9.5 Recruitment and Selection
The objective of recruitment and selection process is to select the right candidate for the
required job description. There are many ways in performing the recruitment process
depending upon the nature of job description. In this section we shall understand about
the key parameters the recruiter should be looking at in the recruitment and selection
process.
9.5.1 The recruitment process
One of the activities of recruitment process is to select the candidates and short list
them for the interview. The list of candidates can come from many sources. In broad the
sources are referred to:-
a) Internal Sources: Identifying employees within the company who can take care
of job. Here the employees from various departments may shift into the
department where the vacancies are available or a promotion will be given within
the same department and fill the vacancy.
b) External Sources: Here the candidates will be selected from outside the
company i.e. who are not currently working with the organization. Companies
might advertise in newspapers, job portals, magazines etc to attract the talent
available. Most of the times companies go to well known reputed educational
institutes to get the list of candidates who are eligible for the section process.
A successful recruitment process enables the highly talented list of candidates who
could be employees of the organization. Recruitment process should be done carefully
in short-listing the candidates for the selection process. Selection process should be
done in such a way that the candidates skill set is matching with the required skill set as
mentioned by the job description activity. There can be various parameters which the
recruitment process would look at before short-listing the candidates such as the family
background, employment history, educational qualifications, hobbies and interests. All
these factors play important role in judging the candidate for the suitability for the job.
9.5.2 The Selection process
Kujnish (2006) describes a typical selection process which is explained by the following
diagram:-
Preliminary Application Testing Interview

Interview form
Employment Physical Reference

offer examination checks
The preliminary interview is done as a process to filter out the candidates who do not fit
the job description. 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 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.
SAQ 4
1) Describe the ways in which the candidates can be obtained during the
recruitment process for selection.
2) Explain the important characteristics you would like to test the candidates in the
interview for a sales representative job.
3) Explain the importance of reference checks and physical examination in the
selection process.
9.6 Summary
In this unit we have understood the job characteristic model which describes any job in
terms of different dimensions which measure the nature and requirements of the job.
We have also understood the job analysis by describing the nature of the sales job and
the identifying the skills required. We understood that sales job is a challenging work
and requires good communication skills, fast learning capabilities, positive attitude and
behaviour, multi-tasking abilities and the ability to self motivate. We have later
discussed about the steps that involve in creating a job design and understood these
steps in the context for sales representatives. Later we have studied various job design
techniques such as job simplification, rotation, enlargement and enrichment in creating
the job which are beneficial for both the company and the sales representative
economically and in career growth. In the last section of the unit, we have examined the
critical nature of the recruitment process in identifying the right candidates for the
selection process. We have understood the basic model of selection process and
looked into various ways in which the selection process will be handled for a sales
representative job. We have also examined the skill set that needs to be evaluated in
the interview phase of the selection process.
9.7 Keywords
1) Extrinsic motivation It is the motivation that is driven by external

factors apart from the nature of work like the
money, awards, recognition etc
2) Intrinsic motivation It is the motivation that is driven by the nature

of the task assigned in the work place.
9.8 References
1. K. Aswathappa (2005), “Human resource and personal management: text and
cases”, Tata Mc-Graw Hill, India.
2. Kujnish Vashisht (2006), “A practical approach to sales management”, Atlantic

Publishers and Distributors, India.
3. Ram Nath Sharma, Rachana Sharma (2004), “Guidance and counselling in

India”, Atlantic Publishers and Distributers, India.
4. Stephan P. Robbins (1999), “Organizational behaviour: concepts, controversies

and applications”, Prentice Hall, India.
1. Darin E. Hartley (1999), “Job analysis at the speed of reality”, HRD Press, USA.
2. Thomas N. Ingram, Raymond W. LaForge (1989), “Sales management: analysis

and decision making”, The Dryden Press, New York, USA.
UNIT 10 TRAINING THE SALES FORCE
Structure
10.1 Introduction
Objectives
10.2 Training process and objectives
10.2.1 Sales Training Process
10.2.2 Training program objectives
10.2.2.1 Imparting attitude skills
10.2.2.2 Notifying organization policies
10.2.2.3 Bestowing organization culture and values
10.2.2.4 Understanding the goals and objectives
10.2.2.5 Developing the team working skills
10.2.2.6 Developing the product/ service knowledge
10.3 Training process and analysis
10.3.1 Source and type of training program
10.3.2 Program Design
10.3.3 Action Planning
10.3.4 Feedback and Follow up
10.4 Summary
10.5 Keywords
10.6 References
10.1 Introduction
In the previous module we have understood about the characteristics and the skill set
required for a sales job. We have understood the significance of carrying out a well
defined job analysis and design in creating the jobs that best suits the profile of the
candidates. We have also understood the importance of recruitment and selection
process in identifying and selecting the right candidates for the job. In this unit we shall
understand the importance of training program in shaping up the employees to perform
their job effectively. In this unit candidate means the employee who is undergoing the
training program.
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. In this unit,
we shall 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. We shall
understand also understand the program design for the sales representatives in terms
of contents, logistics and the feedback process. 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. In this unit we shall understand about the importance of the follow-up
activity for a sales representative training program.
Objectives
1) Understand the steps in sales training process
2) Define the objectives of sales training program
3) Identify the importance of attitude skills for the sales representative
4) Identify the type of training program required
5) Explain the design of the training program
6) Understand the importance proper action planning
7) Highlight the need of feedback and follow up
10.2 Training Process and objectives
After the successful recruitment process you will have the best talent your organization
requires. It is now the duty of the organization to conduct the necessary training
program and make use of the talent in increasing the revenue for the organization.
10.2.1 Sales Training Process
Let us understand the typical sales training process as explained by Ingram (2009):-
Asses Set Evaluate Design Perform Conduct

Sales Training Training Sales Sales Follow up
Training Objectives Alternatives Training Training and
Needs Program Evaluation
Fig: Sales Training Process

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.
We shall learn more about the individual steps in the training process in subsequent
sections in this unit.
10.2.2 Training Program Objectives
Training is a continuous process in the employer’s career. Training might be required

whenever a new designation is given in the appraisal system. So having the set of
objectives in place for any training program is an important task. Let us now look at
some of the common objectives which most of the training programs would try to
achieve:-
10.2.2.1 Imparting Attitude Skills
We have already studied in the earlier units about the importance of positive attitude for
a sales representative. Sales job is a challenging one which requires positive attitude
and continuous self motivation. For a candidate who has passed out from college,
imparting attitude skills is a significant task. Apart from positive attitude, there will be a
necessity to impart professional behaviour skills as well. Sales representatives may
notice other employees advance in their career by shortcuts. It is therefore very
important that the training program highlights the importance of hard work. Hence, in
brief some of the objectives in imparting the right attitude skills would include:-
 Imparting positive behavioural attitude
 Encourage the candidates to depend on hard work rather than shortcuts
 Inculcate the willingness to work even in difficult times
 Recognizing the importance of self motivation
 Understand the importance of value system
 Improving the leadership qualities i.e. ability to take challenges
10.2.2.2 Notifying organization policies
Clear understanding about the organization policies will decimate any future
misunderstandings between the employees and the organization. Every training
program should make it clear about the organization policies to the employees. In brief,
Organization policies may include the following:-
 Dress code of the employees
 Work schedules and facilities when working overtime
 Logistics provided like internet, telephone connections, faxes etc.
 Rules and regulations as per the government laws for proper behaviour with
employees, smoking regulations etc.
 Salary structure, designation, employment type i.e. regular or contract and other
benefits like Insurance, LTA etc.
10.2.2.3 Bestowing organization culture and values
It is important that the employees/ candidates who have joined the organization are
imparted with the organization culture and values. This is done as an attempt to
increase the loyalty towards the organization. During the training programs a lot of
importance is given in this activity. The main objective in doing so is to create a sense of
feeling that the company is for the employees and the employees are an important
asset for the company. The candidate unless is a fresher, might have worked with
several companies and will have a mixed feeling of self belonging with the present
organization. The previous company might be the competitor of the present organization
and he/she might have to compete with their friends to make the sale. So, for a sales
representative it is very important that he/she shows a lot of dedication towards the
work in the present organization and would overcome any personal relationships in
making the sale. Hence, imparting the organization culture and values is very important
for the sales representatives.
Another important reason for inculcating the organization culture and beliefs is to
convey that:-
 Employees are working in a positive organization which cares for the employees
all the time
 The group in which the employee work will be a positive group
10.2.2.4 Understanding the goals and objectives
Before getting into any work it’s is important to understand the goals and objectives of
the work. In any training program the goals and objectives should be clearly stated so
that the employees can be mentally prepared to face the challenges in the work. For
example, if you are the pre-sales representative and if you have been promoted as the
sales representative for the Asia Pacific Region, then you should clearly know the
objectives of the work and the goal that is to be achieved every quarter. Objective might
be to gain some customers in the countries of Asia Pacific region where the presence of
company is null. The goal may be to increase the revenue or sales by at least 15% of
what it is in the previous quarter. Hence the employees must be given realistic goals
and objectives for each training program. For the newly joined candidates, he/she must
be explained about the expected objectives from the work and the goals to be achieved.
10.2.2.5 Developing the team working skills

The nature of work will vary upon the type of sale you make. In personal selling, the
sales representative will be alone most of the times, hence there would be the needs of
a team work. But when you come to the industrial/ institutional sales, team work plays a
significant role. For example industrial sale can be selling a network platform to the
telecommunication company or installing the technical product like servers in the
customer company. In such cases, the selling process may involve the sales team, pre-
sales team, technical team, finance team, testing team and many more depending upon
the sale. Hence the sales representative should know how to perform in the team and
perform and effective sales process. Some of the team working skills include:-
 Identifying the coordinator for the team
 Caring for the opinions of the entire team members
 Effectively managing the time available among team members
 Monitoring the performance of the team members and checking for any lag in the
action plan
 Clearly assigning the duties among team members
 Ensuring a proper and timely feedback mechanism among the team members
It is very important that the coordinator for the team has the leadership qualities to
ensure proper functioning of the team in making the sale.
10.2.2.6 Developing the product/ service knowledge
The basic requirement to sell a product/ service is to know completely about them. The
training program must take care that the entire description and features of the product/
service is conveyed to candidates. The basic thing which the sales representative must
know before going for a sale includes:-
 About the company of the product/ service
 The list of competitors and their similar products/ services

 The complete set of features of the product/ service
 The benefits the product/ service provides to the customer
 The key competitive advantages of the product/ service over the competitors
 The price and the maximum allowable discount for the product/ service
 The installation time and after sales service available with the product/ service
In this section we have understood the training objectives and the necessary skill set
required by the sales representatives. The following diagram helps in understanding
SAQ 1
1) Explain the sales training process with a neat diagram
2) Narrate the importance of notifying the organization policies to the employees
3) Explain the need of developing organization culture and values in the training
program
4) Identify the necessary product/ service knowledge required by the sales
representative before going for a sale
10.3 Training program implementation and analysis
The training objective might be excellent, but the outcome mainly depends upon the
way the training process is implemented. The success of many training programs
depends upon the trainer i.e. the source for training. Selecting the best trainer is a
challenging task. Let us now examine the various sources available to train the
candidates.
10.3.1 Source and type of training
The sources for training can be internal and also the external to the firm. It depends
upon the availability of the right trainer for the program. If there is no availability of the
well qualified internal trainer within the organization, then the HR department may
consult an external company who specializes in the training programs. The type of
training program for the newly joined candidates depends upon the recruitment process
as stated below:-
 If the recruitment process selected already well qualified candidates with work
experience relevant to the job description, then only an induction program which
is common to all the applicants would be enough
 If the recruitment process selected the fresher who doesn’t have any experience
about the job, then a detailed training program would be required explaining
about the job the candidate needs to perform
 If the recruitment process selected the candidate within the company as a part of
the appraisal system, then the induction program may not be required and the
training has to take care of the additional duties that have been assigned to the
candidate
 Most of the times if the candidates have no time for training or the nature of job
demands gaining expertise in the field rather than like a classroom setting, then
the best way to train is by “on the job training”. On the job training involves
training the candidate by assigning the actual work in the workplace with the real
resources he/she would be using in the job.
On the job training has many advantages and disadvantages too. Let us look at some of
the advantages as stated below:-
 Economical Way: On the job training may not require external training classes
and may not incur the expenses for a good trainer and the logistics. Right from
the day1, candidate will be presented with the job to do under the guidance of a
supervisor who may be his/her higher authority at the work place
 Better test environment: This training process gives the opportunity to test the
candidate’s performance in the real test environment throughout the training
program. This might be very helpful for the supervisor to known the candidates
key strengths and weakness and will be able to provide proper feedback for
improvement
 Proper Feedback: Since the trainer is the real candidate who has experienced
the nature of work and faced challenges in the past, you as the candidate would
get the right feedback that might help you to face the challenging tasks
Some of the disadvantages of the on the job training program includes:-
 Time consuming: Unlike in the regular training programs where the trainer will
be available all the time, in on the job training program you may have little time
spent per day with the supervisor as he/she may not be available all the day to
train you since they have to perform their regular daily work.
 Lack of theoretical knowledge: A regular training program will provide the

necessary theoretical knowledge which might be helpful for the candidate in
his/her job when faced with unexpected challenges which he has not
experienced in the past
 Monotonous way of cognitive development: The candidate may start thinking

like the supervisor all the time when facing with the challenges in the job. It is
important to know that the supervisor view point in handling a challenging
situation may not be true all the time, hence the candidates have to use their own
cognitive abilities to judge the problem and arrive at a solution
 Suited for a small group: This type of training might not suitable if the
candidates are in larger numbers. A separate training program would be best in
such a scenario
10.3.2 Program Design
Program design deals with designing the program with necessary content, logistics and
feedback mechanisms. Fortunately or unfortunately in most of the training programs the
trainees are not involved in the design process. Some of the guidelines while designing
the training program includes:-
 Training program must be designed according to the time available

 Feedback of previous participants must be taken into account to improve the
current training program
 Desist the desire to pack in everything in a single program i.e. not more than a
couple of skill set must be imparted in a training program
 Have multiple training programs at regular intervals to add on the required skill
set, for example have the separate training programs for presales, sales and post
sales activities for the sales process
 Design should be done in such a way that the candidate is not over burdened
 Training program should have a mechanism for obtaining the feedback from the
candidates after their field work
10.3.3 Action Planning
Action planning the training program deals with the actual implementation process.
Action plan should deal with the program design in a manner to make it interesting and
encouraging the participant to learn more from the training program. Some of the
guidelines include the following:-
 Training program should be a combination of lecturers, exercises, cases,

simulations, role plays/ mock sessions etc., whichever is necessary to enhance
the training program
 The training program shouldn’t be monotonous
 Make use of anthropological approach in handling the training program i.e.

understanding the training needs of the candidates from the candidates
perspective rather than your own judgments
 Treat the candidates as adults i.e. they have the necessary level of training
requirements and only a proper direction in implementation is required
 Don’t wish away the candidates objections in the training program i.e. the
objections of the candidates are mostly real as they are from the field and have
faced it in the past
 Training process should encourage a two way learning process between both the
trainee and the trainer
 Don’t be penny bound while conducting the training program i.e. provide the best
trainer even if it cost a little high for the company
 Identify a trainer who can go off the topic have discussions, bring in the mode of
the candidates and then start the topic again. This is very useful in long training
programs which may run into weeks or months.
 Provide decent logistics to the candidates as studies reveal that candidates learn
faster in a better environment
 Training program should aim at developing the candidates to take responsibility

and challenges, as in good organizations the sales employees take the target as
compared to weak organizations where the targets are given
 Necessary training technologies should be used for example, if the sales

representative uses CRM softwares then training program must use the actual
application and handling techniques
 Avoid the classroom setting i.e. make use of a circular setting which favours
group discussions
 Make use of outdoor training whenever required i.e. making the teams with the
experienced employees and going on for actual sale process i.e. if you are in a
training program for a personal sale then you and the experienced employee can
go together and make a sale
10.3.4 Feedback and Follow up
Training program should have a proper feedback process to know about how
informative the training process is? The feedback mechanism also provides about the
necessary changes that are required to be done in order to enhance the training
programs in the future. Feedback process may also include the feedback given to the
candidates by the trainee. Follow up activities are very important in the training process
because of the following reasons:-
 Training programs might be effective only for a limited period
 Employees might fall back to their own work style
 Employees might face new problems in the field and a follow up is required to
remove such problems
SAQ 2
1) Explain various types of training provided to the employee in an organization
2) List the advantages and disadvantages of on the job training method
3) Illustrate various guidelines to be followed while designing a training program
4) Identify various issues to be dealt with during the action planning stage
5) Explain the importance of feedback and follow up in an effective sales training
program
10.5 Summary
In this unit we have learned the various steps in performing the sales training process.
Sales needs should be identified and the candidates for training are selected. Once the
candidates are selected the training objectives should be set. We have understood
various objectives of the training program like imparting positive attitude, self motivation
capability, leadership qualities and many more which are essential for the sale
representative to keep mentally fit in the challenging sales career. We learned that it is
important for the candidate to know about the organization policies, culture and values,
goals and objectives, product/ service knowledge etc. before working in the job. Hence
the sales training has to acknowledge all these and make the candidate aware of his
duties and responsibilities. We have examined that the industrial sales need a lot of
team work and hence sales training have to take care of imparting the team working
capabilities among the candidates. In the latter half of the unit, we have want about the
source and type of training required for candidates. We have understood the merits and
de-merits of on the job training for the candidates. We have also examined various
guidelines in the program design and the action plan to ensure an effective and efficient
sales training program. We have observed the importance of selecting the best trainer
and the facilitation of two way learning process on the candidates performance. We
have seen that every objection from the candidates have to be acknowledged and
cleared in the training program. Finally, we have understood the importance of the
feedback and follow up to ensure that the candidates are applying the knowledge
gained in the training period in their field.
10.6 Keywords
1) Anthropological Approach Understanding the training needs of the

candidates from the candidates perspective
rather than your own judgments
2) Simulations The act of stimulating the behaviour of a

situation or a process in a suitable way i.e.
performing the field situation in a training hall in
a suitable manner
10.7 References
1. Thomas N. Ingram, Raymond W. LaForge, Ramon A. Avila, Charles H.

Schwepker Jr., Michael R. Williams (2009), “Sales management: analysis and
decision making”, M.E. Sharpe Inc., New York, USA.
1. Mark W Johnston, Greg W Marshall (2009), “Sales Force Management (9th Ed.)”,
Tata McGraw Hill, New Delhi, India.

UNIT 11 COMPENSATION AND MOTIVATION OF THE
SALES FORCE
Structure
11.1 Introduction
Objectives
11.2 Role of the sales manager
11.3 Motivational factors
11.3.1 Compensation scheme/ package
11.3.2 Role of Incentive systems
11.3.3 Non-monetary reward systems
11.4 De-motivational factors
11.5 Summary
11.6 Keywords
11.7 References
11.1 Introduction
In the previous unit we have understood the importance of a well planned training
program in incurring the benefits both for the sales representatives and the company.
We have understood that the performance of the candidate is a result of the type of
training program employed. Once the training is finished, the candidate will be assigned
the duties and responsibilities in the company. We have learnt already that the sales job
is a challenging one and requires constant self motivation. Motivation can depend on
several factors. In this unit we shall understand the relationship of motivation and
various factors which facilitate the candidate to be motivated all the time.
Motivation is mostly seen as the direct outcome of the relationships between the sales
manager and the representatives. In this unit we shall understand the role of a sales
manager in keeping his/her representatives motivated all the time. We shall understand
that compensation is only one of the factors which motivate the sales representatives to
work.
In the unit we shall understand that the sales representatives who newly join in the
organization have enough motivational levels, but during their course of work various
de-motivating factors results in low enthusiastic levels to work. Hence, the role of a
sales manager includes identifying such de-motivating factors and eradicating them. In
this unit we shall learn about various de-motivating factors and means to eradicate them
from the work place.
Various systems can be used such as monetary and non-monetary to develop the
enthusiasm to work better. In this unit we shall discuss various monetary rewards like
bonuses, commissions, profit or gain sharing etc. and various non monetary rewards
such as stock options, better working facilities, recognition and awards.
Objectives
1) Understand the role of a sales manager in developing the motivation levels of the
employees in the organization
2) Understand the guidelines to be followed in developing a better compensation

package
3) Examine the role of incentive systems for keeping up the motivational levels in
the employees
4) Explain the benefits of non-monetary reward system in sustaining the motivation
levels in the employees
5) Identifying the de-motivational factors and steps to eradicate them from the work
place
11.2 Role of a sales manager
The sales for a product or service are carried out by different sales representatives.
Hence, a sales manager is required to monitor the growth of sales, achievement target
in time, coordinate various sales activities and controlling the staff to perform as
expected by the company. Yet another important duty or responsibility of the sales
manager is to take care of his employees at all times.
Sales monthly involve field work i.e. going to the market place or to the customers and
making the sale. Sales job involves less work at the office and more work in the field.
Hence the level of interaction between various employees is quite less while compare to
other job like software, testing etc. To keep up the team spirit within the company, it’s
important that the sales manager interacts with all the employees socially after the office
hours at regular intervals.
He should be a boss in office, and a mentor/ philosopher outside office. Most of the
sales people run into problems like family or health. A good sales manager should be
able to understand the problems which the employees are facing and help in solving
them.
In most of the good organizations the sales manager would behave like one of the team
members and help in leading the team to reach the targets and demonstrate leadership
skills whenever required. Sales manager should also help in facilitating a proper
feedback mechanism among employees and keep updating about the situation in their
department. Sales manager has to find any training requirements required for the team
and help to be provided with the same.
The challenging task for the sales manager is to keep up the motivation levels of his
employees. As we have already understood sales job is mostly a lonely and challenging
job; it requires a lot of self motivation to sustain. Sales manager has to indentify the
motivational factors for the employees. Since these factors can be different for different
employees identifying the right factor is an important task. In next section we shall learn
about various motivational factors such as incentives, awards, recognition etc. and the
way they alleviate the motivational levels of sales representatives.
Another important task of the sales manager apart from finding out the right motivational
factor for the representatives is to find out the various de-motivating factors which are
prevailing at the work place. The ultimate objective of the using the motivational factor
like incentives, recognitions, awards etc. is to ensure that the sales representatives
work with enthusiasm all the times.
It is observed that the employees are having enough motivation levels when they join
the organization and as the time progresses, due to various de-motivating factors they
lose out their enthusiasm to work irrespective of the decent salary structure and
incentives. Hence, identifying the de-motivating factors and eradicating them from the
work place is an important task of the sales manager. In the subsequent sections we
shall understand various de-motivating factors which can lower the enthusiastic levels of
the sales representatives.
Hence, in brief the role of a sales manager would include the following:-
 Leading the team from the front on every challenge faced by the sales
representatives
 Facilitating proper communication channels either in the work place or off the
work place to ensure that at least minimum level of interaction taken place
between the sales representatives
 Understanding the problems and needs of the employees and help in resolving
them
 Keep up the motivational levels of sales representative all the time

 Indentifying the de-motivating factors
 Identifying training needs and areas of improvement for the sales representatives
11.3 Motivational factors
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.
11.3.1 Compensation scheme/ package
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.
Jackson (1996) described a five step approach in designing a sales compensation

package as mentioned below:-
a) Prepare job descriptions

b) Establishing sales and other objectives
c) Determine appropriate general categories of compensation
d) Develop and pretest the compensation plan
e) Implement and evaluate the plan
The 1st step “preparing job descriptions” states that an elaborate job description should
be prepared to take care of all the job responsibilities that the sales representative will
perform. Some of the sales representatives may actively involved in selling like the
onsite sales manager in the industrial sale and some of the sales representative involve
more in a support role like the presales function. After preparing the job descriptions
they to be analyzed in terms of difficulty level and the compensations should be planned
accordingly.
The 2nd step “establishing sales and other objectives” highlights the importance of
measuring the sales targets achieved and also other objective in determining the
compensation package. This step clearly states that compensation package should not
be prepared based on only the volume of sales made. In fact other objectives like the
number of new customers increased the difficulty levels in the sale, the efficiency
parameters like the conversion rates etc have to be taken into account. This step
highlights the fact that not only the volume but also the effort that has been put in
generating the leads have to be taken into account while awarding the compensation
package.
The 3rd step “determine appropriate general categories of compensation” states that the
compensation packages have to be categorically prepared depending upon several
factors like education, experience, skill set required, nature of work etc. This process
will help to align the people of similar abilities or skill set receive the same
compensation packages thereby eliminating certain level of bias.
The 4th step “develop and pretest the compensation plan” highlights the importance of
developing the structure of the compensation package and pretesting it before actual
implementation in the organization. Developing the compensation package should take
care of the basic package which meets the living expenses of the sales representatives
and the variable component should be reasonable enough i.e. at neither too high or too
low percentage of the entire compensation. Developing the compensation plan has to
take care of the commissions too.
The 5th step “implement and evaluate the compensation package” deals with the actual
implementation of the compensation package for the sales representative and
monitoring the effect of the compensation package in maintaining the required
motivation level and attracting the talented pool to the organization
11.3.2 Role of Incentives
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. The same can be depicted by the following diagram:-
Fig: Effects of sales incentive plan
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.
11.3.3 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.
SAQ 1
1) Explain the role of the sales manager in maintaining the motivation level of the
employees
2) List out the advantages of bonuses in maintain the motivation level of the
employees
3) If you are the CEO of the organization and have to select a reward system for the
state level heads of the organization. List out the type of reward systems you
would employ to motivate the employees.
4) Explain the advantages of stock options over monetary reward systems in
improving the motivation level of the employees
5) Explain in brief the five step process of creating a well planned compensation
package
11.4 De-motivating factors
After learning about the various motivating factors, it is necessary to identify various de-
motivating factors at the workplace too. However good the motivating factors be, de-
motivating factors can cause damage to the employee motivation. Some of the de-
motivating factors include:-
a) Assigning two employees the same role and tasks when their pay scale vary
enormously
This is one of the main reasons for reduced productivity of the employees. The
employees with less salary might do less work leaving the rest of the task to the one
drawing higher salary. This can increase the time of completion or produce
unsatisfactory results and also leads to extension of deadlines.
It is good practice to place the employees with same salary structure under the same
job description. This trend is highly followed in the call centers. No matter whatever your
education background and skill set are, you will be always placed within the group of
same salary structure for a particular job. Whenever your performance improves your
salary would be increased and you might be assigned various other tasks.
This trend is seen quite less when it comes to IT companies who try to get the best
talent by awarding varying salary according to the skill set or the educational
background.
b) Appraisal system failures
Whenever the appraisal system fails to perform as per the employee expectations, it
leads to the lower satisfaction levels. For example, if the company policies states that a
minimum of 10% per year, then the appraisal system has to stick to the policies. If the
company profits are decreased due to low demand in the market, this should not be
reflected in the appraisal system by decreasing the salary hikes unless there is a
situation that company won’t be able to survive if the hike percentage is not decreased.
The appraisal systems shouldn’t be affected just to make the balance sheets to look
better.
c) Improper or poor facilities
Whenever the working conditions are not good the employee may not be motivated
enough to work. Working conditions may include the following:-
 Poor infrastructure at workplace like old computers, desks, lack of air

conditioning, no proper power backup facilities, lack of hygiene conditions etc
 Lack of better supervisors who can take care of their employees needs at the
work place
 Poor planning and facilities for working at odd timings i.e. if you work for an extra
time you are supposed to get the transport facilitates. If there is no transport
facilities available after the regular working hours this might discourage the
employee to work overtime and complete the work before deadlines.
11.5 Summary
In this unit we have understood that the sales manager hast to take care of the sales
representative needs and lead them in facing the challenges effectively. Sales manager
has to understand various motivational and de-motivational factors of the sales
representatives. We have learnt that it the duty of the sales manager to keep up the
motivation level of their employees by identifying the right compensation packages. We
have understood that a good compensation package can be designed in a five step
process which takes care of preparing job descriptions, establishing sales and their
objectives, identifying categories of compensation, developing and pre-testing the
compensation plan and finally implementing and evaluating the compensation plan.
In the later part of the unit, we have discussed various incentive plans which include
the monetary benefits like bonuses, commissions and profit sharing to keep up the
motivation levels and give a sense of feeling that company would always take care of
their employees. We have understood the benefits of non-monetary benefits in
improving the motivation levels. We have also discussed various guidelines to be
followed while given monetary or non-monetary benefits among the sales
representatives. Finally in this unit we have looked into various de-motivating factors
and steps to avoid or eradicate them from the work place.
11.6 Keywords
1) Call Option The stock options where the buyer has the
right to buy the option but not an obligation to
buy at a expiry date of the option at a certain
price as stated in the agreement
11.7 References

2. John H. Bernardin (2008), “Human Resource management”, Tata McGraw Hill,
New York, USA.
3. Andris A. Zoltners, Prabhakant Sinha, Sally E. Lorimer (2006), “The complete

guide to sales force incentive compensation”, Amacom, New York, USA.
1. Terence Jackson (1989), “Evaluation: relating training to business performance”,

Kogan Page Ltd, London
2. Earl D. Honeycutt, John B. Ford, Antonis C. Simintiras (2003), “Sales

management: a global perspective”, Routledge, New York, USA
UNIT 12 MONITORING AND PERFROMANCE
EVALUATION
Structure
12.1 Introduction
Objectives
12.2 Role of a job description in objective settings
12.2.1 Direct sales force
12.2.2 Indirect sales force
12.3 Role of sales manager in monitoring and performance evaluation
12.3.1 Sales force monitoring guidelines and objectives
12.3.2 Quantitative and qualitative factors of monitoring
12.4 Building better team working skills
12.4.1 Advantages of team work
12.4.2 Ten step process in building better team working skills
12.5 Summary
12.6 Keywords
12.7 References

12.1 Introduction
In the previous unit we have understood the importance of motivation in performing the
sales job and the role of a sales manager in identifying the motivating and de-motivating
factors of the sales representatives. In this unit we shall understand about the
importance of monitoring and performance evaluation of the sales force performance in
both the direct and indirect sales.
The main objective of monitoring the sales force is not about finding faults in the
performance of the sales team but the process of monitoring and evaluation should be
used as a mechanism to identify the problems and areas of improvement. Once the
areas of improvement are identified they have to be inculcated into the sales force
through the proper training methodologies.
The ideal question which comes to every sales manager while monitoring and
performance evaluation is “what factors need to be measured to identify the true
potential of his/her sales force?” In this unit we shall identify the two ways of measuring
the sales force efforts in terms of quantitative and qualitative factors. We shall also
understand the advantages and disadvantages of measuring only quantitative factors.
Ultimately at the end of the day it is the sales target which matters to most of the sales
managers. We shall understand the relationship between the efforts and the sales
target achieved in this unit.
It is ideal that the sales force is well informed about the monitoring factors and the time
periods of evaluation well in advance. It would be much better if they are mentioned in
the job description so that the employees would perform well to meet the performance
parameters. In this unit we shall understand the job description of the sales force and
the ways of improving the job performance activities.
Finally in this unit we shall understand about the importance of a good team work. We
shall discuss about various advantages for the organization by helping the sales force to
work in teams. We shall also understand various steps that help in facilitating a better
team work in the organization.
Objectives
After studying this unit you will be able to :-
1) Identify the role of job description in objective settings
2) List the factors that affect the performance of sales force in direct sales
3) List the factors that affect the performance of sales force in indirect sales
4) Explain the importance of identifying the true performance of sales force for the
organization
5) Explain the procedure for evaluating the sales force
6) Understand the objectives and guidelines in sales force monitoring process
7) Explain the list of Qualitative and quantitative factors in monitoring and

performance evaluation
8) List the advantages of good team working skills and explain the steps in creating
better team working skills
12.2 Role of job description in objective settings
Job description as discussed earlier units informs the employees about their duties and
responsibilities at the work place. One must identify the set of tasks he/she needs to
perform according to the job description. Objectives have to be set and employees have
to work towards achieving them. In most of the job descriptions the nature of work and
various accountability factors will be mentioned. In some of the job descriptions you
may find the working conditions also such as extensive travelling, working on the net all
the time, taking continuous phone calls etc.
In this section let us understand about the job description which helps in setting the
objectives for the employees. Company makes a practice that monitoring and
performance evaluation would be on the objectives set according to the job description.
Let us now look at the direct and indirect sales force job description or activities they
need to perform.
12.2.1 Direct sales force
Direct sales force involves mainly a one to one selling scenario. Several tasks need to
be performed in order to effectively handle the sales such as:-
a) Contacting the prospect
b) Communicating with the prospect
c) Ensuring logistics during the sales process
d) Performing after sales service activities
e) Building rapport and keep in touch
It can be observed that no where the objectives indicated to generate revenues to the
organization. It is intrinsically implied that when all the objectives are performed well, it
leads to the maximum revenue generation. Hence the main objective of evaluation
process should be to identify the efforts rather than the revenues. The main objective is
to create demand for the products/ services by performing all the tasks in an efficient
and effective way possible.
Whenever the sales force doesn’t perform well, various factors needs to be analyzed.
Less revenue generated need not be exactly due to the inefficiency of the sales force.
Various internal and external factors might be responsible for the low revenue
generation. Some of the internal and external factors that can be responsible are:-
 Poor performance by the marketing department
 Change in market dynamics
 Change in the customer preferences
 Inefficiency of the MIS division

Marketing division plays with the tools of marketing mix in creating a demand for the
product by identifying the right product, place, place and promotion strategies for the
target segment. If the marketing department couldn’t perform well in identifying and
executing the right strategies, then it can be a difficult time for the sales force in
generating leads for the product/ service. Hence marketing department can influence
the sales figure considerably. This factor should be analyzed before determining the
performance of a sales force.
The next factor is change in market dynamics. Market dynamics as discussed by

businessdictionary.com states that it is “interaction between forces of demand and
supply and the pricing signals they generate. In most free or open markets any
significant part of market dynamics is beyond the control of any firm or group”. Hence it
should be understood that the change in market dynamics such as the supply-demand
changes may sometimes lead to a decreased sales revenue and the sales force
couldn’t have fore-fended it by any means.
The third factor “changes in customer preferences” might affect sales revenue. The
reason might be due to the presence of many alternatives to the customer. Whenever a
product/ service are launched for the first time by your company, it may result in good
sales revenue. But in today’s world the competitors copy your strategy and introduce
similar products/ service leading to the presence of many alternatives. This can happen
both in direct and indirect sales. Another reason might be that the customer is offered
prefers much better services. For example, if you are the sales representative who sells
an ozone purifier and if the customer prefers the “RO+ UV+ ozone” purifier, then you
may not have much to do to convince the customer rather than getting the similar
product from your company.
The final factor is about the “Inefficiency of MIS division” within the company. MIS
stands for Management Information System which helps the company employees in
taking strategic decisions before the start of any product/ service. MIS helps in
formulation of marketing strategies. When effective MIS systems are not in place then
due to insufficient information generated by such systems might lead to the improper
strategy implementations and finally in lesser lead generation by the sales force.
Hence we have understood that the sales revenue shouldn’t be the only factor for
evaluating the sales force performance and external factors have to be analyzed too in
order to know the true performance of the sales force. Now let us look at some of the
factors that need our attention in indirect sales force monitoring and evaluation process.
12.2.2. Indirect sales force
In direct sales, the sales force are not directly employed by your organization but are
entitled by a contract to sell your product/ services. Indirect sales force can be resellers,
whole sellers, retailers etc. to whom your company sales force sells the product. Let’s
us now understand some of the factors which needs to be analyzed in making up the
conclusion on performance evolution of the sales force who sell the products/ services
to the indirect sales force. Some of the factors are:-
 Availability of stock
 Visibility of stock
 Stock piling in the pipeline
The first factor to be analyzed is the availability of stock. There can be many situations
where the demand for the product is high and the availability of the product is less.
Nothing can be done by the sales force if the manufacturing department doesn’t supply
with necessary product stock. In such cases the competitor may gain the customer.
Hence comparing your sales figures with the competitor doesn’t help in correct
evaluation of the performance of the sales force.
The second factor visibility of stock refers to the efforts made the sales force in shelves
making the product/ service visible to the customer. In retailing the products end up in
shelf’s where the customer will be looking for them. If the product is placed in such a
way that it is not at all visible to the customer, it may result in decreased sales figure.
Most of the times, the sales force wouldn’t be having any control on the way the retailer
places your products. Hence such scenarios have to be identified and the sales force
must negotiate with the retailer to get better placement of the product in the retail store.
Hence this factor should also be analyzed before analyzing the performance evaluation
of the sales force.
The third factor stock piling in the pipeline is an important factor which the sales
manager has to take into account for proper evaluation of the sales force. Let us look at
a typical scenario how the goods move in the indirect sales before reaching the final
customer by the help of following diagram:-
Primary Secondary
Company Distributor Retailer
Tertiary
Customer
Fig 1: Indirect sales force pipeline
In the above diagram it can be understood that in indirect sales the company produced
goods will reach the distributor through the company sales force. The distributor is
known as the primary customer, the retailer as the secondary customer and finally the
customer who consumes the product/ service is known as the tertiary customer. The
distributor distributes the goods among various retailers who in turn sell the goods to the
final customer. In such cases the sales figures are determined by the number of
products sold to the distributor. In the start the sales might be less but as time progress
the sales figure might improve drastically showing almost double or triple figures in
sales volume. This increase might be due to the efficient work done by the sales force
and can be used to determine the performance of the sales force.
But sometimes the increase in sales might be just due to the piling of the stock. When
the products are sold to the distributor they might get piled up at that level and may not
move to the retailer due to various reasons. Sometimes the good might get piled up at
the retailer in his/her store due to low sales. Hence it is important to analyze these
situations before arriving at a conclusion about the sales force performance. Sales
manager has to look at how many products/ services have be sold to the tertiary
consumer rather than just looking at the sales to the primary consumer.
In some other models of the indirect sales, you might also have the whole-seller within
the pipeline. Irrespective of the number of intermediaries in the sales process, the sales
figure should be arrived by looking at the sales done to the final customer who
consumes the product/ services.
SAQ 1
1) Explain various factors that affect the performance of direct sales force.
2) Explain various factors that affect the performance of indirect sales force.
12.3 Role of a sales manager in monitoring and performance

evaluation
One of the main objectives of the recruitment process is to hire a sales team which
performs well as per the organization expectations. Once the recruitment process is
finished it is the role of the sales manager to duties to various sales representatives
within the team. Once the jobs are assigned, they need to be monitored and evaluated
to identify the true performance of the sales representatives. Identifying the true
performance of the sales force is an important task because of the following factors:-
 Identifying the performance helps in identifying the areas of strengths and

weakness in the sales force
 Proper training can be provided to improve the performance of the sales force
 When performance evaluation identifies the true potential of the sales force, it
would be easy to identify the ideal goal setting
 Unrealistic goal setting can be avoided and the motivation levels can be kept
high
 The attrition rate of the organization can also be decreased if realistic goals are
set and the sales force could achieve them with their efforts
Hence 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 Select Set Compare

basic Evaluation performance performance
Policies bases standards to standards
Discuss
results with
sales people
Figure 2: 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.
Let’s us now understand certain guidelines and objectives the sales manager should be
looking at in the monitoring and performance evaluation process.
12.3.1. Sales force monitoring guidelines and objectives
Sales manager has to be clear about the objectives he/she wants to achieve through
the monitoring process. Monitoring process may vary from company to company, but all
the monitoring processes have some common guidelines and objectives. Let us look at
some of them in the following:-
a) Don’t monitor too closely and frequently
Monitoring would be done at regular time intervals by the sales manager. The time
interval depends upon the product/ service, the frequency of sales and organization
policies. Most of the companies make a habit of reviewing the performance at least
once in every quarter. Quarterly reviews would be done and performance sheets will be
prepared for every department. We have discussed in earlier units the salary
component includes a variable component whose amount is determined by the
individual/ team/ department performance. In many companies the quarterly linked pay
performance is determined and given once in every quarter.
Apart from quarterly reviews, many companies adopt even monthly, weekly or daily
reviews. The sales manager might adopt one of the intervals for monitoring and
performance evaluation. The guideline for the sales manager here includes not
monitoring too closely and frequently. Frequently may be everyday or every week or
every month depending upon the business. For example, the sales force for insurance
product will be given mostly monthly target such as 20-30 customers per month for each
sales representative. In such cases daily monitoring is considered as frequent.
Whereas, if the sales representative who sells the mobile connections may be involved
with higher targets and hence more sales figures. It would be ideal to monitor the sales
daily. Sometimes the sales manager would monitor two times in a day, once in the
afternoon and verify the sales figure and might push for better performance by evening
if the sales are low.
Too close monitoring might result in a decreased motivation levels when the target are
not achieved by the sales representatives. Such cases of decreased motivation levels
are seen frequent in telephone sales at the call center. Mostly the sales representatives
at the call center will be monitored at the end of the day and their performance chart will
be prepared and reviewed in the morning next day. Any representative who misses the
target by small margin shouldn’t be treated as a low performer. Hence too close
monitoring should be mostly avoided and the sales manager has to work with the sales
force for improvement in the sales process.
b) Identifying the gap in skill set
After identifying the low performers in the sales force by monitoring and performance
evaluation, the next is to identify the real problem for low performance. One of the main
reasons could be lack of skill set required to perform well. In such cases a proper
training process should be identified to improve the individual skill set.
For example, the sales force in a call center would be evaluated daily for their
performance. If the sales representative cannot perform well and the reason for his low
performance is poor communication skills, then the sales manager has to work on it and
provide proper training. Many a times the communication skills are poor due to the
influence of one’s mother tongue, hence it has to be worked out and develop a neutral
accent which is acceptable by the company need to be developed.
If the reason for low performance is lack of attitude and behavioural skills, then the
sales manager has to remove him/her from the work force and put into a training
program and evaluate his/her performance in the training process. Once the trainer is
satisfied about his/her improvement then the sales manager might induct him back into
the workforce.
Hence, identifying the gaps in skill sets is a very important objective of the monitoring
and performance evaluation process. Converting the process to mentoring or training
should be the primary objective in such cases.
c) Identifying other problems at the work place like poor working conditions,
trade conflicts etc.
The reason for low performance might be due to several de-motivating factors as
discussed in the earlier unit. The sales manager should have to work in identifying such
factors and try to remove them.
One of the important factors for low performance in direct or indirect sales is “trade
conflicts”. This is a major problem in many companies and the sales manager has to
clearly identify them and resolve. The entire region such as city of a country would be
divided into different regions for easy monitoring. Every region will be assigned a sales
force for selling in that region. As per the company policies, most of the times the sales
force are not allowed to get into another region and promote sales activities. Whenever
such cases arise where the sales representative of one region entering into another
region and sells, it might lead to the higher sales figure for that representative and also
the conflicts between the sales representatives who are authorized to sell in that region.
This result in the following problems such as:-
 Improper performance evaluation of the sales force
 Unethical practices
 Trade conflicts
Hence the sales manager has to identify such reasons in the monitoring process and try
to resolve them to identify the true performance of the sales force of different regions.
The sales manager should identify the points of sale and look for any violation in
following the terrestrial jurisdiction by the sales force.
12.3.2 Quantitative and qualitative factors of monitoring
To determine the performance of the sales force, sales managers make use both the
qualitative and quantitative factors. Most of the time quantitative factors play a major
role in deciding the performance of the sales force. There are many reasons why the
sales manager prefers the numbers. One of the reasons is that the quantitative factors
lead to an unbiased way of performance evaluation process. It should be understood
that the evaluation process shouldn’t just rely on the quantitative factors and we also
need to analyze certain qualitative factors as well in determining the true performance of
the sales force.
a) Qualitative factors
Some of the quantitative factors monitoring and performance evaluation include the
following:-
 Number of sales
 Revenue generated
 Expenses incurred
 Percentage growth in sales compared to last week, month, quarter, year etc.
 Net profit generated
b) Qualitative factors
Some of the qualitative factors monitoring and performance evaluation include the
following:-
 Improved customer satisfaction levels
 Improved team management skills like taking responsibilities, being accountable

etc.
 Improved behavioural skills within the team
 Decreased conversion rate i.e. improved success rate in gaining the customer
 Improved time management skills
It is important that both the qualitative and quantitative factors must be analyzed before
making a conclusion about the performance of the sales force. It is observed that the
team management skills and better team work would have a direct affect on the
performance of the sales force. Hence, let us understand in the final section of the unit
about the steps in developing a better team work in the organization.
SAQ 2
1) Explain the procedure for evaluation sales people.

2) Explain the importance of identifying true performance of sales force for the
organization
3) List various quantitative and qualitative factors and explain their significance in
understanding true performance of sales force
12.2 Building better team working skills
One of the main success factors in sales is the ability to work in teams. This is a very
important skill set especially in industrial and institutional sales. The team working
capability posses a lot of advantages which help in improving the performance of the
sales force. In brief, let us understand some of the benefits of team work.
12.4.1 Advantages of team work
Following are the list of some advantages of a team work for the organization:-
 Improvement in the speed of operations due to collective efforts
 Decrease in the error rates due to collective decision making
 Improvement in the problem solving capabilities in the sales process
 Better way to learn the process for the fresher
 Development of team managing capabilities
 Generating enough enthusiasm in the work place
 Leads to an increase in motivation levels
 Ability to handle bigger sales in terms of revenue since the workload would be
distributed
12.4.2 Ten step process in building better team working skills
Now let us take a look at the steps which will ensure better team working skills among
the sales force. They are:-
a) Clear goals and objectives within the team
b) Meaningful appropriate leadership for the team
c) Motivation and empowerment
d) Facilitating effective communication process within the team
e) Monitoring the team performance on a regular basis
f) Taking care of individual development within the team
g) Developing the support and trust among team members
h) Giving fair rewards and incentives to individuals within the team
i) Establishing a sense of belonging and pride of association among the team

members
j) Regularly identifying problems within the team and resolving them in time
This ten step process will help in improving the team working skills and every sales
manager should help in developing excellent teams within the organization.
SAQ 3
1) Explain the advantages of working in a team for the individual and the
organization.
2) List the ten step process in creating a better team working skill set
12.5 Summary
In this unit we have understood the importance of job description in objective setting of
the sales force. We analyzed various internal and external factors that affect the
performance of the sales force. We understood the role of the sales manager in
handling the performance evaluation process and discussed a standard procedure for
evaluating sales people. Later we have looked at various guidelines and objectives of
the sales force monitoring and evaluation process. We have learnt that identifying the
gaps in skill set and other problems like trade conflict and resolving them is very
important to improve the performance. We also looked at various qualitative and
quantitative factors in determining the true performance of the sales force. We finally
agreed that the better team working capabilities will facilitate in better performance and
examined various advantages of working in a team. Finally in this unit we looked at the
ten step process in building better team working skill set.
12.6 Keywords
1) MIS MIS stand for “Management Information

Systems” which provide the information which
is needed to run the business effectively. It
helps to provide information to respective
departments for strategic decision making.
12.7 References
1. Spiro Stanton Rich (2003), “Management of a sales force”, Tata Mc-Graw Hill,
New York, USA
1. Andris A. Zoltners, Prabhakant Sinha, Sally E. Lorimer (2006), “The complete

guide to sales force incentive compensation”, Amacom, New York, USA.
2. Mark W Johnston, Greg W Marshall (2009), “Sales Force Management (9th Ed.)”,
Tata McGraw Hill, New Delhi, India.
UNIT 13 SALES PLANNING
Structure
13.1 Introduction
Objectives
13.2 Sales planning process
13.2.1 Elements of sales planning
13.2.2 Types of sales planning
13.3 Role of sales plan for B2B and B2C markets
13.3.1 B2B markets
13.3.2 B2C markets
13.4 Summary
13.5 Keywords
13.6 References
13.1 Introduction
In the previous unit, we have understood about the sales force monitoring and
performance evaluation. We have also looked at the advantages of team work and
steps in creating better team working skills. In this unit we shall understand about
planning the sales and the sales team. The objective of planning the sales and the team
is to carry out the sales process in an easy, accurate and profitable manner for the
organization. Sales planning should ensure that the resources are used to the maximum
capacity such as the sales representatives, CRM systems like office automation tools,
IVR, analytics etc. for the benefit of the organization. Sales planning activity should be
able to take care of all the present customers needs and also work for generating leads
from them in future.
In this unit we shall understand about various elements of sales planning. Sales plan
starts with sales objectives which are to be attained at the end of sales planning
process. Forecasting plays an important role in laying down the objectives for the sales
team that are attainable within the given time period. Sales policies, procedure and
rules help the sales representatives to handle day to day situations in sales. Sales
programme provides the necessary training needs to develop the required skill set to
make the sales. We shall also learn about the various types of sales plans depending
upon market, selling functions, customers, products and time period.
Sales planning process varies for B2B and B2C markets and hence in this unit we shall
understand various activities that the sales plan has to perform to manage the sales in
these markets. Handling distribution channels, warehouse, retail stores and price
changes are very important to ensure sales in a profitable manner. We shall discuss
about various issues that needs to be planned and executed properly and monitored at
regular intervals in B2B and B2C markets.
Objectives
After studying this unit you will be able to :-
1) Explain the objectives of the sales planning process
2) Understand the importance of forecasting in objective setting in the sales

planning process
3) Explain the role of policies, programme, rules and procedure in the sales
planning process.
4) Identify the role of a sales plan for B2B and B2C markets and explain the need
for handling warehouse, retail, distribution channels, and price changes to make
sales in a profitable manner.
5) Explain the importance of sales strategy in winning the market place in all times
6) Explain the various types of sales plans
13.2 Sales planning
Sales planning process includes a set of activities that needs to be performed to

achieve the goals or objectives of the sales force. It is the duty of the sales manager to
create a plan that is well documented and which ensures proper management of
logistics, finance, manpower, inventories and purchases. Sales planning document is
the single most important document which ensures a proper direction on how to handle
the sales functions. Let us now understand the various elements and types of sales
planning as described by Mukesh (2006) in the following section.
13.2.1 Elements of sales planning
The main elements of sales planning include the following:-
Selling Objectives
Sales Policies
Sales Programme
Elements of Sales Procedures

Sales
Planning Sales Rules
Sales Forecast
Sales Budget
Sales Strategy
a) Selling objectives
This includes the list of objectives that need to be attained after the completion of the
sales planning process. The objectives should be realistic and attainable. For example,
if the sales representative is selling insurance products to the customer, a target of 20 to
30 insurance product sales per month is mostly an achievable or realistic target. If the
sales planning document sets the objective as 100 insurance products, then it might not
be achievable most of the times by many sales representatives. Hence the objectives
must be achievable and be completed in time.
The objectives may be short term or long term in nature. Short term objection include
those that have to be achieved in a quarter or a year and long term may include several
years. Some examples of short term objectives include improve the sales figure by 15%
as compared to the previous year. Long-term objectives may be to establish the
company presence in new countries or continents in the next 2-3 years.
Another important objective is to maintain a contact with all the key customers on a
weekly or monthly or quarterly basis. Since we have already discussed that attaining a
new customer would be costlier than trying to retain the existing customer, it is very
important to contact the customer and take his/her feedback or problems on a regular
basis. The time period of contact may vary from company to company and from sale to
sale.
Once the objectives are created it‟s time to look at the overall sales policy.
b) Sales Policies
Sales policies provide the guidelines to the sales staff to help them in performing the
sales activities. Policies help the sales representatives in achieving their targets. For
example, when a sale gets returned by the customer, the refund policy will guide the
sales representatives how to deal with the situation effectively, so that the customer will
be handled with care rather than getting into an argument. The sales policies also help
in clearly identifying the right pricing for the customer depending upon the relationship
the customer shares with the company. For example, if the customer is loyal to the
company and is doing sales from several years, the policy would inform the sales
representative about the maximum discounts that can be given to such customers.
We encounter may such cases where the sales representative look at the previous
transaction and gives discount to make customers stay loyal to the company in future.
For instance, when you renew the existing software like educational software or anti-
virus for another year, then the sales representative would give you a discounted price
most of the times.
Hence the policies would help in achieving the targets easily and help the sales
representative in handling the day to day sales tasks effectively. After the sales policies
let‟s now look at the next element namely sales programme.
c) Sales Programme
Sales programme are essential to ensure the sales representative can handle any sales
situation which they are entitle to perform. Sales planning should clearly mention the
required skill set in handling the sales and the programme appropriate to incur those
skills in the sales representative.
Sales programme may be necessary whenever the a new product/ service is introduced
by the company. Sales programme is also necessary when the sales representatives
handle sales from new territories which they haven‟t sold any product/ service in the
past. Cross-cultural training would be given most of the times, when the sales include
the customers other than the native country.
Sales programmes help to develop the necessary skill set in achieving the sales
objectives effectively and in given time period. Let us now look at the next element of
sales planning namely “sales procedures”.
d) Sales Procedures
Sales procedure is the sequence of various activities that need to be performed for
different sales functions. The sales procedures vary from sales to sale and from market
to market. Sales procedure for a business to consumer sales varies greatly from
business to business sales. The sales procedure may include meeting the customer,
explaining the product / service through slides, use closing techniques, take the order
and following up. The procedure for B2B sales may indicate to take a complete team
from various departments who are the stakeholders in the project to carry out the
explanation of the product/ service. The procedure for the B2C sales may indicate that a
single representative is enough to handle the task. Even the time intervals for follow-up
activities are mentioned which vary for B2B and B2C sales.
Let us now look at the next element “sales rules”.
e) Sales Rules
Sales rules indicate the set of actions that need to be performed and not performed
depending upon the situation. For example, in credit card payments, if the customer is
asking for the refund of the late payment fee, then the rule says clearly not to refund if
the amount is received after the due date. Hence, the sales staff is not permitted to
refund the amount no matter how loyal the customer is with the company. In some
cases, refund could be done. For example, when there is some genuine reason for the
late payment, such as the due date is on a non-working day for the bank due to festival,
curfews or any other natural disasters etc. In such cases the sales staff would refund
the amount if the rule mentions to refund the amount.
Even in personal sales, the sales representative would be given rules that the maximum
discount to be given on the product and the maximum amount of credit that the sales
staff can give to the customer to pay the dues. Hence, it‟s the duty of the sales staff to
contact the customer within the stipulated timeframe and collect the dues.
Let us now look at the next element “Sales Forecast”.
f) Sales Forecast
Sales forecast lays the foundation of sales planning and objective setting. Based on the
sales forecast the sales manager would know the sales that could be attainable for the
coming period (next quarter or year). Various time series analysis tools such as trend
estimation, moving average, weighted moving average, exponential smoothing etc may
be used to forecast. Forecast can be also done based on the predictions done by the
industry experts. Methods can be many but the aim of forecasting is to identify clearly
the demand and plan the sales activities to generate more leads to the business.
Sales forecast also help in identifying the strategies to gain the market share. If the
forecast turns out to be negative i.e. the industry sales are going to dip, then the
company may execute their operations effectively to retain the existing customers and
attract the new customers. Hence, forecast is a very important element in sales
planning and we shall discuss more about this in the coming units.
Now, let us look at the next element “Sales Budget”.
g) Sales Budget
Sales budget identifies the necessary expenditure that is occurred in making the sales.
The sales budget estimates the revenue based on sales that would be generated and
identifies the profit for the organization after subtracting the operation costs of the sales
staff. The sales budget would clearly set the standards for the sales team in terms of the
expenditure that is permitted to incur upon the sale. For example, when the sales staff
goes for selling the product, the maximum expenses that can be incurred would be
mentioned and the sales representative has to maintain his travel expenditure and other
costs within that limit.
Maintaining the operations within the budget becomes a complex task in B2B sales
where the sales team had to travel to the customer site many times before the sale
happens. Hence the sales manager has to see that the operation costs are under
control and provide some mechanisms like video conferencing to reduce the travelling
costs. Once the operational costs are under control, attaining the profitable level in
sales would be a little easier to achieve.
Let‟s us now discuss the next element “sales strategy”.

h) Sales Strategy
Sales strategy involves how the company is going to act in the market place with the
products/ services. The market is dynamic and competitive in nature which makes the
companies alert all the times with their pricing and position strategies. Positioning the
product is very important since in the past many excellent products have failed due to
improper positioning. The product/ service which need to be sold have to be properly
priced when compared to the competitors. The strategies have to be in place to justify
the price if it‟s higher than the other similar products in the market.
The sales staffs have to be given proper training before employing any strategy in the
market place. If the product/ service price is not changed even when the rivals have
dropped their prices, then the sales staff have to make sure that they can explain to the
customer clearly about the reason for high price stating any competitive advantages of
the product/ service over the rivals.
Acting smart and ensuring that the sale is generated is the part of the sales strategy.
The company, who can handle the sales strategies in the market place, is likely to be
the winner.
Hence the sales planning process contains the above discussed elements and helps in
attaining the sales objectives in the required time period. Let us now discuss the various
types of sales plans that can be created to ensure the sales staff works effectively for
the organization at all times.
13.2.2 Types of sales planning
Let us look at various types of sales plans in an organization:-
a) Sales plan on the basis of market area
Whenever the sales are done in the entire country, then the entire region would be
divided into several areas depending upon certain characteristics. A simple segregation
would be dividing the entire country sales into different states and assigning a head for
each state. For example, the in the telecommunication business, the telecom plans
varies from state to state and within the state it remains the same. There are some
services which are applicable for the entire country too. Even the promotional offers
vary from state to state depending upon the nature of the business in these states.
Some products in FMCG sector are very strong in south and have a little presence in
North and hence the companies may introduce special promotional campaigns which
are available only to the northern states to improve leads. Hence the sales plan would
vary from region to region.
b) Sales plan on the basis of selling functions
Sales team performs several functions such as promotions, follow up activities, pre-
sales and sales activities etc. Hence the company lays out various sales plans for each
activity if necessary.
c) Sales plan based on type of customers
Most of the companies believe that 80 percent of the business comes from 20 percent
of the key customers. Although each and every customer is important to the company,
the survival of the company depends on those 20 percent in difficult times. Hence
following the same sales plan for all the customers wouldn‟t be practical since the key
customer have to be handled more effectively. Hence the companies may have different
sales plan for the key customers. Also the company may have different sales plan for
customer depending upon the markets like B2B or B2C.
d) Sales plan based on the type of products
Every product/ service may not have the same selling activities. Hence having different
sales plan is essential to handle the sales effectively. For example, if the company
produces technical products, services, FMCG goods etc. it needs to have separate
sales plan for the FMCG goods and the technical products and services.
e) Sales plan based on the time period
There are different sales plan for long term and short term objectives of the company.
For example, increasing the sales in the already existing territory and getting sales in
new territories can‟t have the same sales plan. Acquiring the new territory would be a
long term objective where as increasing the sales in existing territory would be a short
term objective which would be a 1 year time period. For the both, strategies would be
different and the operation costs would be different. Hence having a separate sales plan
would be good for both the short term and the long term objectives.
SAQ 1
1) Explain the importance of setting the objectives in the sales planning process
2) Illustrate the importance of sales policies, program and rules in the sales
planning process
3) Identify the problems with wrong forecasting in the sales planning process
4) Explain the various types of sales planning.
13.3 Role of sales plan for B2B and B2C markets
Sales planning process would be different for B2B and B2C markets most of the times.
Hence let us understand the essential activities that need to be performed and
monitored in these markets to make the sales profitable to the company.
13.3.1 B2B markets
B2B markets deals with the business to business deals where the time management is
a critical factor for the customer satisfaction. Since the sales process takes place for
months, maintaining the progress in sales is very important. The sales staff has to stick
with the timings given by the customer and ensure that all the team members are
present at the right time. The sales plan would deal with customers and plan the
activities. There is no standardization of activities which can be applied to several
customers. Since the requirements differ from customer to customer, the B2B sale plan
has to deal with a flexible plan and plan the resources accordingly.
Forecasting plays a very important role in preparing a sales plan for B2B customers.
The customer health in financial terms is very important and hence the customer
business trend is observed time to time. Most of the times the sales are on credit basis
with timely payments in regular intervals. Monitoring the forecast of the customer
business will give a clear picture of the company future sales. For example, if the
company is selling product „X‟ to the customer who in turn sells it to the customers as an
accessory in his product, and if the customer business in future sees a down trend for
the product „X‟ then it clearly indicates that the leads in future will take a downturn. In
such case the company has to use appropriate sales strategies to sustain in the market
place.
Let us now look at B2C markets and some of the sales planning activities.
13.3.2 B2C markets
B2C markets deals with business to the customer who uses the product/ service for his/
her own benefit. Sales plan in B2C market has to deal with several issues related to the
warehousing, distribution channels and retail. Let us look at each one of them in detail:-
a) Handling warehouse effectively
The sales plan has to take care that the stock of goods are ensured at all the times to
handle the demand. Hence the sales plan deals with the right forecasting of the demand
and give it to the manufacturing department at regular intervals so that they have the
clear picture of how much and when to product the products.
Problems may occur when the goods are produced more or less than the required
quantities by the market. In case of over production, goods lie in inventories there by
adding up the inventory costs. In case of low production, companies may lose the
customer to their competitors if the goods are not available. Hence the sales plan has to
ensure that the correct information is being supplied to the manufacturing department
which meets the demand and supply effectively for the organization.
Another important activity which the sales plan has to take care is to plan the
warehouse according to the tax structure. For example, in India if the product in a state
is not selling well and the stock has been lying idle in the warehouse, then taking the
idle stock and selling in adjacent states may incur the tax of that state. Hence double
taxation may take place and the profit on the product may go down to such a level
where it incur loses to the company. Hence knowing the taxation structure is very
important to plan the warehouse accordingly. Having the knowledge about the no tax
zones also helps in decreasing the costs.
b) Handling distribution channels
The sales plan has to ensure that the regular checks are done so that the products may
not end up lying in the distribution channel i.e. with the distributors due to less demand.
Sales plan has to take care that the goods are distributed in necessary quantities only
and are not pushed excessively into the market when the demand is less. Excessive
distribution of good may damage the relationship between the distributors and the
company.
This process is very critical in case of perishable goods like fruits, vegetables etc. If they
lie more time in the distribution channels then the chance of them getting sold to the end
customer gets decreased. It is the task of the sales plan to ensure that proper checks
are done to remove excessive stock of perishable goods from the distribution channel
and store them appropriately in inventories and sell them when the demand rises.
c) Handling retail stores
The sales plan has to ensure that the sales staff visits retail outlet on monthly basis and
check for the stock of goods. Products that are lying for more time means that more
costs have to be incurred for the shelf space. In organized retail, the shelf space comes
at a cost and in case of unorganized retail, excessive stock means the company might
enter into credit situation with the retailer as he/she will not be able to pay. More credit
in retail may lead to untimely payments and bad relationships.
Hence the sales plan has to deal with such situations and ensure that the stock is sold
properly and any excessive stock has to be removed from the retailer place. Sales plan
also has to ensure that the stocks are made available all the times incase when the
demand rises. Retailer interests have to be taken care of and ensuring required supply
will improve the relationships.
d) Handling the price changes
Since the tax rate may go up in developing countries in small time periods and also
issue of inflation, the cost of the product needs to be increased to meet the operating
costs and profit margins of the company. Hence the sales plan has to handle any such
situations where the price needs to be increased. As on date the government allows 10-
15 days time to sell the old stock above the MRP. Hence necessary sales activities
have to be performed to deal with the price changes in the market place.
SAQ 2
1) Explain the role of sales plan in B2B markets
2) Explain the role of sales plan in handling the warehouse, distribution channel and
the retailer to make sales in profitable manner.
13.4 Summary
In this unit we understood that the sales planning process helps in achieving the sales
in a profitable manner. We saw that the sales planning process consists of several
elements. The selling objective deals with setting realistic and attainable objectives
which the sales team would work for. We learned that forecasting plays a very important
role in predicting the future sales and setting the realistic objectives. We understood that
the sales procedures, rules and policies provide guidelines to the sales representative in
handling the sales task effectively. We have understood that sales plan includes the
programme which ensures that the necessary skill set is inculcated to the sales staff to
handle the sales. We have also understood the importance of sales strategy to win the
market place in all times. Later in this unit we learnt about the various types of sales
plan depending upon the market, selling functions, customers, products and time
period. Finally in this unit we have discussed the role of sales plan in managing the
sales in B2B and B2C market. We have also understood that the sales plan has to
effectively manage the warehouse, distribution channels, price changes and retailer in
making the sales in a profitable manner to the company.
13.5 Keywords
1) IVR Interactive Voice Response, is a technology

that allows computer technology to interact
with humans
2) Logistics Management of the supplies and transport

required for an operation
13.6 References
1. Mukesh Trehan, Ranju Trehan (2006), “Advertising and sales management”,

V.K. Enterprises, New Delhi, India
1. Matthew Schwartz (2006), “Fundamental of sales management for the newly

appointed sales manager”, Amacom, New York, USA.
UNIT 14 SALES ORGANIZATION
Structure
14.1 Introduction
Objectives
14.2 Introduction to Sales organization
14.2.1 Need for sales organizations
14.2.2 Sales organizations challenges
14.3 Sales organization structures
14.3.1 Different sales organization structures
14.3.2 Principles of a sales organization
14.4 Summary
14.5 Keywords
14.6 References

14.1 Introduction
In the previous unit we have understood the role of sales planning process. We have
seen a sales plan for B2B and B2C markets and looked at various sales plan. In this
unit, we shall understand about the sales organization and its structure.
Sales organization is important for the organization to ensure that the sales plan is
executed in a profitable manner within the organization. Sales organization defines the
span of control within the organization. It also defines the hierarchy levels among the
employees and decision making system within the organization. We shall understand
the need for a sales organization structure within the organization to improve the
productivity of the sales department.
Sales function is a job that requires to be monitored at regular intervals. The monitoring
process would be done by the sales manager who has the span of control over the
sales representatives. Sales job requires continuous motivation as discussed in earlier
units. We shall understand the role of sales organization structure in improving the
motivational levels of the employees and making them more productive for the
organization.
Every sales organization has some challenges to face internal and external to the
organization that it needs to face. Hence it is important to understand some of the
challenges which the sales organization structure would have to deal with in this unit.
We shall understand that a sales organization is a function of product and selling
method. Depending upon these two factors the sales organization structure would be
different for the organizations. There are mainly two different types of sales organization
structures namely flat and tall sales organizations. We shall understand about these and
examine the advantages and disadvantages. Every sales organization structure lies on
certain principles which results the structure to be more profitable to the organization.
We shall look finally at some of the principles of sales organizations.
Objectives
1) Explain the needs of a sales organization structure
2) Explain various sales organization challenges
3) Explain different sales organization structures
4) Explain the various principles of sales organization
14.2 Need for sales organization
Execution of the sales plan largely depends upon the nature of the sales organization. A
sales organization is essential to plan sales functions. Sales organization provides a
framework to carry out the sales plan in an effective manner. The development of a
sales organization is a continuous process which depends upon changing market
environment and also on the company’s interests.
14.2.1 Need for sales organization
Sales organization is essential for many reasons. Some of them include the following:-
a) Determining span of control
From day to day the organization size grows with respect to growing market size and
demand. In a small organization there could be a single sales manager who takes care
of the entire organization sales and the representatives. But when an organization
grows it would be practical for a single sales manager to monitor the entire sales and
the representative, hence the sales would be divided based on some segments.
Segments can be formed on the basis of area, product or even customers profile. High
value customer may be handled by a separate team of sales representatives or the
country would be divided into north, south, east and west territories and handled
separately by separate sales managers. Hence there is a need for determining the span
of control for the employees in the organization and define which employee is under the
control of which manager.
Another importance of having a well laid out span of control is to build strong
relationships within the organization and establishing proper communication channels.
b) Defining the decision making process
Sales organization also helps in identifying who can take the decisions related to the
sales and the customer accounts. There are two main ways of assigning the power to
make decisions regarding the sales and the customer accounts. They are centralized
decision making and de-centralized decision making.
In a centralized decision making organization, the right to make a decision lies with the
top management of the organization. The top management may or may not consult the
respective sales team and the managers before taking the decision. For example, for an
organization that has twenty branches in the country, but any decision related to the
sales and customer accounts in these twenty branches will be taken by the top
executives who sit in the head office. This type of centralized decision making
organization works well when the size of the company is less.
In a decentralized decision making organization, the right to make decision lies with the
manager of the individual branch and the manager may or may not take the advice of
the top management before making the decision. However any important decision such
as setting up a new sales territory will be informed to the executives in the head office,
but most of the decisions which need to be taken on a regular basis will solely taken by
the manager itself.
c) Assigning specialties
Sales organization structure determines the tasks and roles for the sales people. A set
of activities will be put under a role which the sales representative is expected to
specialize. For an entry level, middle level and the top level the set of activities and
specialties are defined by the sales organization. For an example, in sales organization
the pre-sales executive is responsible for RFP handling, coordinating the team or
stakeholders within the company, monitoring the time, checking for the deadlines for
submission of proposal and establishing proper communication channels among
several team members to carry out the RFP handling process effectively and efficiently.
The role of the sales team will be defined by set of activities such as travelling to the
client side, interacting with client face-to-face, getting the RFP, submitting the RFP,
knowing any issues with the proposal, arranging video/ audio session between the client
and organization employees to better understand the client’s requirement and finally
managing to get the lead for the organization.
Hence the set of activities is known to the employees who join the organization as they
will be assigned some specialty.
d) Making a career path
After the employee or the sales executive is assigned with a set of tasks under the
specialization, he/she is expected to master the execution of duties in an effective and
efficient manner. Once the employee has excelled in the given specialization, he/she
will be promoted to the next level according to the sales organization structure.
For example, in many companies when the employee has performed well in the pre-
sales role which is mostly done in off-site i.e. in the country where the company is
established will be promoted to a sales role where the employee would get the chance
to travel to the client location if the client is in another country. All the expenses would
be taken care by the organization.
e) Motivating the employees
Since the career path is well known to all the employees, they try to work hard and with
dedication to reach higher levels according to the organization structure. Also in the
decentralized organization, due to the increased authority the employees would be
motivated enough to work harder and generate leads that match up to company
expectations.
14.2.2 Sales organization challenges
Sales organization aims at improving the sales operations by defining the span of
control and assigning duties and tasks to the employees of the organization. However,
each and every sales organization structure may not be appropriate to the organization
and may also result in lower productivity in the organization. Hence, there are some
challenges for the organization which have to be taken care before selecting a sales
organization structure which aims at improving the productivity of the organization. Let
us discuss some of the challenges in detail.
a) Selecting the appropriate sales organization structure
In an organization, the sales organization is a function of mainly two attributes namely:-
i) Product
ii) Selling method : Direct or In-direct selling
Same sales organization structure may not be effective for each product or selling
method. Hence identifying the right sales organization structure which is effective for the
type of product and selling method is a challenging task.
For example, if the product involves an indirect sales method, let us say through retail
outlets, having a centralized decision making process may not work effectively in
making day to day decisions in sales. Hence the organization structure may require a
decentralized system. Also for the non-durable goods which are also called as soft
goods, the decisions for sales have to be taken quickly and most of the time the sales
representatives or manager at the small division level would take the decisions and then
inform to the higher authorities. Here also some level of decentralized organization
structure is required.
Some organization like IT companies that create services for their clients follow mostly
a centralized decision making process. Here the clients would be companies who will
invest heavily in acquiring the proprietary softwares and hence any decision regarding
the client account would require higher authority permission. For example, if you are
going to increase the cost for the software, then the permission would be required from
the higher authorities or executives at the head office to implement your decision. Since
these sales fall under industrial sales, it would be appropriate to have a decentralized
system of decision making where the highly qualified and experienced employees make
the decision.
For consumer sales, as discussed earlier a decentralized decision making process

would be beneficial as the real problems would be faced by the lower level employees
at the branch offices and giving the decision making authority to those managers would
solve the problems effectively.
Sales organization also deals with the reporting structure between the employees of the
organization. The same reporting structure may not be applicable for the direct sales
and the indirect sales all the time, hence the sales organization structure needs to be
different for direct and indirect sales.
b) Accommodating the sales management trends
The way how the sales are done differ from time to time. As discussed in previous units,
the sales of the organization initially focused on the product rather than the customer.
Nowadays, the customer has become more important than the product itself. Product is
seen just a single factor in making the sales effectively. Most of the sales functions
involve in managing the customer relationships with the organization. You can refer to
the CRM module to recognize the importance of customer relationships for an
organization.
Thomas (2009) mentions some of the sales management trends that have occurred in
the changing world of sales management. Let us discuss few of them and the way the
sales organization structure have to accommodate those trends in the organization.
Some of the sales management trends include:-
i) Individuals  Teams:
In the changing world of sales management, the productivity for most of the industrial
and to some extent in consumer sales depends on more than one sales representative.
Hence there is a team which is responsible to handle the sales function. In such a case,
the decisions would be appropriate if the entire team advice is not taken into account. In
industrial sales, centralized decision making process exists most of the time, but the
decision making executive has to take the feedback of the team who are involved in the
sales function. Hence, the sales organization structure should be flexible enough to
accommodate that change in its structure.
Another important issue which the sales organization structure has to address is the
span of control. This factor becomes very important and may lead to problems when the
team members are from different departments. Since the team members are from
different departments, their reporting would be to their respective managers in their
departments. For example, an industrial sale may involve the team members from
different departments like sales, technical, testing, finance, marketing etc. In such a
team the sales manager who is looking after the sale cannot force the technical team or
the finance team to do their work within given time frame as he may not have the
authority. Hence the sales organization structure has to clearly mention the span of
control in such situations.
Another important issue is to identity the team manager who can clearly take the entire
responsibility. Lack of leadership may result in many fights between several teams who
don’t want to take the responsibility when the sale fails. The sales team may blame the
technical team for giving a solution which the client was not impressed and the technical
team may blame the finance team for being the project costs too high and so on.
Hence, such situations have to be avoided by creating a proper sales organization
structure.
ii) Local  Global:
The same sales organization structure may not work effectively when the company
moves from being a local player to a global player. For example, let us assume that a
company manufactures consumer goods both durable and non-durable. It also deals
with the industrial and Institutional sales with several products and services in its kitty to
offer. Such a company may follow an organization structure where the local market may
be divided into regions and for each region a sales manager would be appointed. This
sales manager might be given the responsibility to handle all the products that the
company offers to the customers i.e. let us say, the sales manager of the Southern India
is responsible for the sales figure for all the products and services of the company.
Now the company plans to move into markets other than the local country where it
might be the strong player. During globalization the company may not introduce all the
products in the global market and might only introduce only few products/ services
which have been a huge success in the local market and hence the organization
structure may not be the same. A better sales organization structure would be to divide
the products or services and appoint a sales manager responsible to take of only a
particular product or service rather than all the products. Since the company is selling
the products or services for the first time in global market, it is appropriate to have the
sales managers depending upon the product rather than the regions. This leads to the
changes in the sales organization structure.
SAQ 1
1) Explain the needs of sales organization structure for motivating employees in an

organization
2) Explain span of control and various decision making systems
3) Identify the outcomes of selecting an inappropriate sales organization structure to

the organization.
4) Describe some of the management trends that the sales organization structure
has to accommodate.
14.3 Sales organization structures
Depending upon the type of product and selling method the company may adopt the
sales organization structure. Many a times, the market situation also results in changing
the sales organization structure. Let us understand some of the sales organization
structures in the following section.
14.3.1 Different sales organization structures
Sales organization structure differs depending upon the span of control and the number
of management levels. Thomas (2009) defined two types of sales organization
structures as shown below:-
Sales
Organization
Structures
Flat sales Tall sales

Organization Organization
Let us understand them in detail:-

a) Flat sales organization
In a flat sales organization structure the number of management levels tend to be less
while compared to the tall sales organization structure. The organization structure is
explained by the following diagram:-
Fig 14.1: Flat sales organization
In such a structure the span of control is large for each sales manager thereby creating
a de-centralized system. Since the management levels are less, the reporting structure
is also less complicated. Lot of companies try to have a flat sales organization structure
where they can decentralize the system and give more authority to the employees at the
lowest level to take most of the decisions without the influence of the higher authorities
at the head office. There are several advantages and disadvantages of this sales
organizational structure. Some of the advantages include:-
 Increased speed of operations: since most of the decisions can be taken at the
branch level and doesn’t require the higher authority permission, the day to day
activities can be done efficiently.
 Better communication channels: Since the number of levels between the top
management and the middle management are less, this leads to a better and
faster way of communicating the information in the organization
 Decreased costs: Since the number of levels is reduced, the number of

employees to manage the organization also decreases. This leads to the lower
wages to be paid and fewer resources like office space, computers etc. would be
required.
 Lesser control over employees: Due to decentralization, lesser control would

be there on the decision making process which may affect the entire
organization.
 Lesser promotion levels: Due to the decreased number of levels, the

employees at the bottom level have to work hard to earn a promotion. Several
employees work hard and stay in their current positions are there are no
vacancies in the higher posts. This might become a de-motivating factor for the
employees at work place.
b) Tall sales organization
In a tall sales organization structure, the number of management levels tends to be

more while compared to the flat sales organization structure. The organization structure
is explained by the following diagram:-
Fig 14.2 Tall sales organization

A tall sales organization, levels it has a centralized control of decision making and
carrying out daily operations due to more hierarchy. Some of the advantages of the tall
sales organization are:-
 More promotion levels: Due to more management levels the employees can
have a clear idea of to which level they will be promoted next. This leads to
greater satisfaction levels and motivates the employees to work effectively and
efficiently.
 Increased responsibility and control: Due to lower span of control each

employee knows clearly their managers and the manager knows clearly which
employees or sales representatives they have to take care of and control. The
tasks are defined clearly to the employees who will be responsible for the
outcomes.
 Increased costs: Due to the more management levels, more employees need to
be hired and hence more costs would be incurred to the organization.
 Decreased speed of operations: since the decisions have to approved by the

higher authority due to centralized decision making process, the operation might
take place slowly when compared to the flat organizational structures
 More supervision for employees: This might be a good from the organization
point of view to improve the productivity, but from the employee point of view
more supervision may become a de-motivating factor.
14.3.2 Principles of a sales organization
Mukesh (2006) defines several principles of a sales organization. Let us look them in
detail:-
a) Principle of unity of objectives: This principle states that within an organization

there needs to be a unity of objectives. An organization may have several sales sub-
organizations depending upon the product and the selling method. Every sales sub-
organization has a set of objectives that it wants to achieve for the organization. Hence
there would be several sales objectives within an organization. The principle states that
all the objectives of the sales sub-organization must have the objectives linked to the
main objective of the organization. If the main objective of the organization is to grow at
least by 15% every year, then all the objectives of different sales sub-organization has
to work to attain the main objective.
b) Principle of Specialization: This principle aims at matching the employees skill set
to the right set of tasks and in turn the right specialization. If the employees in the
organization are given different set of tasks or specialization in which they have no skill
set to perform the duties may result in low productivity for the organization. Organization
may have to spend more money, resources and staff to train the employees to develop
the skill set. In order to avoid such problems it is the duty of the sales manager and HR
to clearly identify the skill set of the employees and assign those tasks which match the
skill set. This results in more productivity and employee satisfaction.
c) Principle of coordination: In an organization, the sales organization structure

should provide a framework where it can easily integrate itself to various other
departments within the organization. This can ensure that the products/ services are
reached in time to the customer. After the sale, if the technical team were not able to
process the customer requirement, then the technical product may not reach the
customer within the required time period. Hence there should be some sort of
integration between the sales department and the technical department so that the
problem can be identified and the technical team may be reminded to speed up the
operations. CRM systems can be implemented within the organization to seamlessly
integrate the entire department within the organization and ensure the timely information
between various departments.
d) Principle of parity of authority and responsibility: This principle states that if an

employee is given a set of tasks to perform, he/she must be given the required level of
authority to perform those tasks. For example, if a pre-sales executive is asked to
prepare the company competitive advantages presentation for the client to present in
the sales meetings, and then he/she should be given the access to the knowledge
management system of the company. Every company has the KM systems which acts
like a repository of the information about the previous projects executed successfully by
the company. Hence the authority has to be given that is required for the task to
complete.
e) Principle of flexibility: This principle states that there can be many external and
internal factors which might affect the organization operations. Hence the sales
organization structure should be flexible enough to accommodate any required changes
in future.
For more principles, you may refer to the book mentioned in the reference section.
SAQ 2
1) Explain various sales organization structures
2) Explain the principle of coordination and identify the problem due to lack of
coordination to the sales department
14.4 Summary
In this unit we understood about the need of sales organization in improving the
productivity of the organization. We learnt that determining span of control is an
important task which the sales organization structure would determine. The sales
organization would also define whether the organization would follow the decentralized
or centralized system of decision making process. We have understood that the sales
organization helps in assigning the specialties to the employees so that they can master
the set of tasks given under the specialty. Once the employee excels in the given job
he/she will be promoted to the next level. We have looked at how the sales organization
makes a career path for the employees and motivate them to improve the productivity
levels for the organization. We have also looked at various challenges of the sales
organization structure. We have understood that sales organization is a function of
product and the selling method. We have recognized the importance of sales
organization to be flexible to accommodate any required management trends. Later in
this unit we have understood the various types of sales organization structure namely
the flat and the tall sales organizations and looked at various advantages and
disadvantages of the same. Finally in this unit we have looked at various principles a
sales organization must possess to ensure better productivity levels for the
organization.
14.5 Keywords
1) RFP A document which invites the vendor to submit

the bid for the projects including the solution
documents
2) CRM Customer relationship management system is

an information system which integrates the
various sales departments with other
departments within the organization for
information sharing about the customer.
14.6 References
1. Mukesh Trehan, Ranju Trehan (2006), “Advertising and sales management”,

V.K. Enterprises, New Delhi, India
2. Thomas N. Ingram, Raymond W. LaForge, Ramon A. Avila (2009), “Sales

management: analysis and decision making”, M.E. Sharp Inc., New York, USA.
1. Darlene M. Coker, Edward R. Del Gaizo, Kathleen A. Murray, Sandra L. Edwards

(2000), “High performance sales organizations: creating competitive advantage
in the global market place”, Tata McGraw Hill, USA.
UNIT 15 SALES FORECAST AND SALES QUOTAS
Structure
15.1 Introduction
Objectives
15.2 Introduction to Sales forecast
15.2.1 Importance of sales forecast
15.2.2 Preparing for a sales forecasting process
15.3 Sales forecasting methods
15.3.1 Non-qualitative forecasting methods
15.3.2 Quantitative forecasting methods
15.4 Planning the sales quotas
15.4.1 Factors in setting sales quotas
15.5 Summary
15.6 Keywords
15.7 References
15.1 Introduction
In the previous unit we understood about the sales organization structure its challenges.
In this unit we shall discuss about the sales forecast and quotas. Sales forecast is often
seen as an important function in an organization which provides valuable information
about the market potential in future.
We shall discuss the importance of sales forecast for the organization and the benefits it
provides. Planning the sales forecasting process is very important as the outcome of the
entire forecast depends upon how well the planning has undergone. During the planning
stage, the data sources have to be determined and the right forecasting techniques are
to be used. Based on the quality and quantity of the data and the method of forecasting
employed, the accurate information about the market potential and various other
management trends would be determined.
There are mainly two broad categories of forecasting namely non-quantitative/

qualitative methods and quantitative methods. We shall several qualitative methods like
jury of executive opinion, Delphi and scenario methods of forecasting. We shall also
look at various quantitative methods like time series, regression and correlation
methods.
Planning the sales quotas is an important function of the sales manager which
determines the level of achievement of the organization objectives. Several factors
govern the way the sales manager assigns quotas to the employees. We shall
understand that market size, competition levels, organization objectives, skills of the
sales people and several other factors play a very important role in planning the right
sales quota by the sales manager.
Objectives
1) Identify the importance of sales forecast
2) Explain various issues that have to be analysed in the sales forecasting process
3) Understand various non-quantitative/ qualitative methods of forecasting
4) Understand various qualitative methods of forecasting

5) Discuss the importance of a sales quota planning for the organization
6) Explains various factors to be analysed in setting the sales quotas.
15.2 Introduction to sales forecasting
Sales forecasting plays a very important role in setting the objectives of the sales
department. The accuracy in forecasting becomes the backbone for planning the
company operations and business plans. Sales forecast provides the organization the
information about the future sales which can help to plan the marketing mix and
generate required leads. Let us look at the need of sales forecasting and the benefits it
provides to the organization.
15.2.1 Importance of sales forecast
In the earlier times the demand was more and the supply was less. Hence there was
not much need of a sales forecast in the organizations. As the time progressed, due to
the industrial revolution the companies were able to manufacture the goods in an
economic way for the customers. Due to the decreased costs of operations more and
more players have entered into the market to serve the customer needs and wants.
During the present times the number of players for almost every business is more and
the customers are increasing day by day, creating better opportunities for the industry to
expand. More and more companies are increasing their territories through expanding
their business operations and business acquisitions. Hence, planning the operations of
the company and identifying the right sales and marketing strategies have become an
important task for the managers in the organization. Sales forecast would help in better
planning for the organizations in future. The following are some of the advantages of a
sales forecast for an organization:-
 Sales forecast helps in getting information about sales figures for the
organization in future
 Sales forecast help in understanding the business trends from time to time. For
example the Health service industry is increasing adopting the CRM system and
many hospitals and medical institutions are planning to adopt in future to service
the customers in a better way. The increase in sales for the CRM systems would
clearly help the CRM software vendors to understand the trend and plan their
operation accordingly.
 Sales forecast helps us in understanding the customer preferences. For

example, the DVD and CD player sales are increasing but the forecast provides
the information that percentage increase in DVD player market is much more
than the CD player. This provides the information that most of the customers are
going to prefer the DVD player over the CD player and based on this, companies
can align their manufacturing department to produce more DVD and less CD
players.
 Sales forecast helps us to know the health of the industry as a whole. The
percentage increase in sales clearly provides whether the industry is going to
maintain their balance sheets in a profitable manner and according to the
company objectives.
 Sales forecast helps in planning the manpower in the organizations. If the sales
forecast shows that the market for the net books are increasing and the market
for the desktops are decreasing, then the organization can plan to train more
sales representatives to sell the net books rather than the desktops.
 Sales forecast helps in hiring the right number of employees in the organization.
If the sales forecast informs that the industry is going to witness a high growth
rate in next year, then the organization can plan to hire more staff to serve the
demand in future. If the sales forecast predicts bad times for the organizations,
then the organizations may plan to manage the expenses and the balance
sheets.
 Sales forecast helps in planning budgets. Once the organization identifies the
promising businesses in future, it may invest the right amount for advertising and
creating more brand awareness.
Hence we have understood that sales forecast helps the organization in many ways. A
right sales forecast is very important and the sales forecasting errors may prove fatal for
the organization. Let us look at the necessary preparation required to start a better
sales forecast and the way to utilize the information provided by it.
15.2.2 Preparing for a sales forecasting process
Sales forecast helps the organization in many ways as discussed earlier. In this section
we shall understand several issues that have to be analyzed before, during and after
the sales forecasting process. Some of the issues are:-
a) Identifying the data sources: Identifying the data that would be used in forecasting
techniques is a challenging task. The data sources can be primary and secondary.
Primary data can be collected through the market surveys and the focus groups. This
might involve more expenditure as the data collection process is started from scratch.
On the other hand, secondary data can be the data other than the organization sources.
Economic indicators of the region like population figures, GDP growth rates, stock
prices, unemployment rates, growth rate of other related industries who produces
supplement products etc can be used as a secondary data for forecasting. The sales
history within the organization is often considered as the important data source which is
used for forecasting.
b) Deciding the frequency of forecasting: It is good to have the right market potential
in future. Hence so forecasting every month wouldn’t be practical for many
organizations due to high costs that are incurred and the manpower spent. Hence the
organization has to decide the time period of forecasting and planning accordingly
based on the information of the forecast. An ideal time to forecast would be every
quarter or half-yearly or yearly. If the market dynamics and the customer base changes
very fast then having the quarterly forecast would sound good. If the market is having a
constant increase for many years, then a yearly forecast would be better.
c) Choosing the forecasting technique: This is a serious question which every
organization would debate before adopting one. John (2005) describes that there are
too many forecasting techniques available and there are more than 70 different types of
time series techniques for forecasting. However before selecting a forecasting
technique the organization has to look at the advantages and purpose of the technique.
The company may check whether the forecasting technique served the purpose in the
past or else take the recommendations of an industry expert before selecting one.
Choosing forecasting techniques by an organization depends upon the variables of
interest that they would like to monitor in the forecast i.e. whether the organization
wants to know the customer preferences or the sales trends or the market competition
and so on.
d) Planning your efforts after forecasting: After the forecasting process you would
get the information about the regions where the market potential is increasing and
decreasing. You will be able to know your strengths and weaknesses and will plan to
improve the way the business is conducted. The employees have to match the forecast
to the regions of profitability and objectives of the organization. All the regions in the
country may not be equally profitable for the organization. The regions which you pick
up to invest the efforts of the employees would depend upon the following factors:-
 Highly profitable regions
 Easier to gain the competitive advantage
 Ability to monitor the regions easily
 Optimal transportation and management costs
SAQ 1
1) Explain the need of sales forecast for an organization in improving the

productivity levels.
2) Explain various data sources that are utilized for a sales forecast
3) Discuss various factors which help the organization in planning the efforts after
forecasting.
15.3 Sales forecasting methods
As discussed earlier there are a huge number of forecasting methods and so discussing
all of them wouldn’t be possible. Hence let us see at some of the commonly used
forecasting techniques described by Jackson (2000) who categorized under non-
qualitative and qualitative forecasting methods.
15.3.1 Non quantitative forecasting methods
Non-quantitative or qualitative methods of forecast are used when the organizations

doesn’t have sufficient amount of primary or secondary data to measure to conduct the
forecast of the variables in interest. Some of the non-quantitative forecasting methods
include:-
Qualitative
Forecasting
Methods
Jury of Executive Delphi Scenario

Opinion Method Method
Let us discuss these methods in detail.
a) Jury of executive opinion
In this method the organization would ask the senior executive to forecast the sales
figures. After getting the figures from several senior executive the average of those
figures are determined. This will remove any errors to an extent. The average figure is
considered as the forecast information and the strategies are adopted accordingly.
b) Delphi method
This method has been extensively used by companies for forecasting in the past and is
still used in the present. In this method a group of knowledgeable people is formed
where each group member doesn’t have any contact or know the other group member.
From such a group the forecast is requested from each member of the group. The
moderator of the group is responsible to collect the entire replies and collaborate to form
a single document mentioning the group estimations of the forecast and the
management trends. This document is circulated to all the group members and they are
requested for comments. Again the moderator collects those comments and analyzes
them and prepares a document with necessary changes and circulates back to the
group members for comments. This process repeats until the moderator feels that the
majority of the group has reached some consensus. It should be noted that the output
may not have a single forecast figure but can have a set of figures which most of the
members agree upon.
c) Scenario method
In this method the assumptions are made for the possible scenarios that would prevail
in the industry in future. For each possible scenario the indicators or factors are
selected. The behaviour of those indicators or factors in the past is analysed. Based
upon the analysis the future business environment is predicted and sales are estimated.
For example, for the computer industry the sales of newly launched tablet PC’s are to
be forecasted. For this the possible future scenarios are predicted such as increase in
the speed of the tablet PC making them at par to the laptops or net books, decreased
cost of the products, increasing number of players in this business, better technologies
to provide all the features which a laptop posses, improved screen resolutions and
graphics etc. The effect of these indicators upon the sales is understood and the future
sales are predicted under each scenario.
15.3.2 Quantitative forecasting methods
Let us now discuss some of the quantitative forecasting methods. These forecasting
methods make use of the data and perform certain mathematic calculations and provide
the sales forecast. The credibility of the forecast depends upon the quality and quantity
of data that is being provided to the method. Some of the methods include:-
Quantitative
Methods of
Forecasting
Time series Regression and

analysis correlation analysis
Let us discuss them in detail.
a) Time series analysis method
Time series analysis involves examining the organization’s past or historic data and
making the forecast about the future sales. The pattern may be divided among four
basic components such as trend, seasonal variation, cyclical effects and erratic
changes. Trend analysis aims at observing the past trend in sales figures and predicting
the future sales figure. It is assumed that the trend would continue in future. There are
basically three methods to do trend analysis namely percentage change, moving
average and curve fitting. The next component, seasonal variation, deals with the
changes in sales figures during a particular season in the past. Hence, if the same
season runs in future the expected sales figures can be calculated. For example, the
sale of Air conditioners is high in summer as compared to winter season. The next
component is cyclical effects, which deal with any changes in the sales figures other
than the seasonal variation. If a behavior which a repeating every year is observed in
the historic data, such changes can be observed in future too. Finally the erratic
changes are those which are observed in the sales figure without any pattern or regular
time intervals in the historic data. The changes may occur due to market situation like
inflation or less raw materials or poor staff etc.
b) Regression and correlation analysis
Regression analysis is used to find the value of one variable with respect to the
changes in another variable. In sales forecasting, the sales forecast can depend upon
several variables and regression analysis aims at finding out the degree to which the
sales depends upon the other variables. In this context, sales potential is the dependent
variable and the other variables are the independent variables.
During the regression techniques, we would do a correlation analysis to find out the
nature of relationship between the dependent and the independent variables. The range
of correlation co-efficient ranges from -1 to +1 where -1 denotes negative relationship
and +1 denotes a positive relationship. For example, the improvement in literacy rate
indicates that the demand for computer product also increases. Hence the literacy rate
which is an independent factor is having a positive correlation with the dependent factor
sales potential. For many products or services, the price would show a negative
correlation with the sales i.e. increase in price lower the sales figure.
If we know the list of independent factors then using a correlation analysis we can
identify the nature of relationship and using a suitable regression technique we can
identify the sales potential in future. The simplest regression technique is the “Linear
Regression Analysis”. For more information about various forecasting techniques you
may refer to the books mentioned in the reference and suggested reading sections.
SAQ 2
1) Explain the differences between the qualitative and qualitative method of

forecasting and identify situations when you would use them.
2) Explain Delphi method of forecasting
3) Discuss the various components of the time series analysis method

15.4 Planning the sales quota
Setting the sales quotas to the sales representatives is an importance task for the sales
manager. Setting the right quota motivates the employees to achieve them and have
the bonuses. On the other hand, setting the quotas that are too small or too large to
achieve may de-motivate the sales representatives. Hence planning the quotas and
assigning them involves several factors. Let us understand such factors in detail.
15.4.1 Factors in setting sales quotas
Planning the sales quotas involves identifying the right quota depending upon several
factors and assigning them to the sales representatives. We know that sales
representatives of each region or territory may not be assigned the same sales quota.
Let us understand the list of factors which help in setting the sales quotas to sales
representatives. Some of the factors 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 which were discussed earlier. The
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. It
must be remembered most of the times that the sales quotas would be proportional to
the size and potential of the market. The quotas would not only depend upon the size
and potential because various other factors have to analysed which will be discussed in
this section.
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. For example, if the potential for the mobile connections in a
particular region is 1 million, then you cannot assign quotas to grab that 1 million.
Quotas must be realistic in nature taking the account of competition. If there are 5-6
mobile operators then assigning the quotas to generate 30 – 40 percent of the potential
is practical. Again the quotas depend upon another factor current position of the
organization in that region.
c) Current position of the organization
In the previous example, gaining a 30-35 percent market potential is a practical task if
the organization is one of the top players in that region. But if the organization is a low
level player or an entrant, then getting 10 percent of the potential also would be a huge
task. 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.
SAQ 3
1) Explain the role of quotas in managing the sales force
2) How would you plan the sales quotas based on the market size and potential?
3) Discuss the planning of sales quotas based on competitive level and skills of the
sales representative.
15.5 Summary
In this unit we understood the importance of sales forecast for the organization in
improving the productivity. We observed that sales forecast determines the organization
strategies to win the market place and manage the internal resources like man power,
budgets etc effectively. Sales forecasts also help in identifying the customer buying
behaviour and the health of the industry. We later identified that various factors such as
selecting the data source and right forecasting techniques play an important role to
forecast correctly about the market potential. We discussed about importance of
planning the efforts in a right manner after the forecast. Later in this unit we have
discussed the sales forecasting methods. We also discussed several qualitative
methods like jury of executive opinion, Delphi method and scenario method of
forecasting. In the qualitative methods we learned about the time series, regression and
correlation analysis methods of forecasting. We also examined the four components of
time series analysis. In the final section we understood the need of planning the sales
quotas. We studied various factors such as market size and potential, level of
competition, current position of the organization in the market place, skills of the sales
person and organization/ market objectives in planning the sales quota in an effective
manner for the organization and the sales force.
15.6 Keywords
1) GDP It is the indicator of the economy of the country

and is equal to the amount of goods or
services produced by a country over a period
of time, usually 1 year.
15.7 References
1. John T. Mentzer, Mark A. Moon (2005), “Sales forecasting management: a

demand management approach”, Sage Publications, California, USA.

1. Spiro, Stanton, Rich (2003), “Management of a sales force”, Tata McGraw Hill,
New Delhi, India.
UNIT 16 SALES BUDGETING AND CONTROL
Structure
16.1 Introduction
Objectives
16.2 Sales Budgeting Concepts
16.2.1 Financial concepts in budgeting
16.2.2 Issues in sales budgeting
16.3 Monitoring and controlling the sales budgeting
16.3.1 Need for a sales budgeting control system
16.3.2 The need of variance analysis and control in sales budgets
16.4 Summary
16.5 Keywords
16.6 References

16.1 Introduction
In the previous unit, we have understood sales forecast and sales quotas. In this unit
we shall understand about sales budgeting and control. After the successful sales
forecast by the organization we arrive at the sales figures for the next time interval.
Depending upon the sales figure, budgets are created for various departments within
the organization. The marketing department would get more budgets for advertising and
sales promotions if the sales forecast predicts higher sales in the next year. Similarly
the budget allocation for the sales department also depends upon the sales forecast.
Once the sales figures are known, the expected revenue and net profit are estimated.
This gives a fair idea of the growth rate of the organization for the next year. Depending
upon the increase of decrease in net profits, the budgets would be increased or
controlled respectively in all departments. In this unit, we shall look at various financial
concepts of budgeting and the manner in which net profit is generated. All the
expenses within the sales department and other departments should be taken into
account to arrive at the net profit. We shall understand that expenses are of two types
direct and indirect expenses. We shall just look at the basic financial concepts and in-
depth understanding is outside the preview of this unit.
Sales budgeting have to deal with several issues like identifying the right budget
allocation according to region wise, dealing with NPA accounts, developing new
territories, identifying and analyzing the variances, creating new revised budgets etc.
Hence understanding these issues is an important task and the analysis should be done
at regular intervals.
In the next half of the unit we shall understand about controlling the budget by setting up
the control systems. These systems not only take care that the expenses doesn’t over
shoot the budget allocations but also help in analyzing the competitor’s activities and
budget allocation mechanisms. Control system should be able to monitor the customer
preferences and help in providing valuable information for the sales department.
Objectives
1) Explain various financial concepts in budgeting
2) Identify various issues in sales budgeting
3) Recognize the importance of a control system for the sales budgeting
4) Explain the need of various control in sales budgeting for the sales department
16.2 Sales budgeting concepts
Sales budgeting would be an important task after the sales forecast. Once the sales
figure for the next time period are known, the revenue for the organization would be
calculated.
16.2.1 Financial concepts in budgeting
Various expenses would be taken into account before arriving at the operating profit and
the net profit for the next time period. Expenses for an organization would be of two
types :-
Type of
Expenses
Direct Indirect
Expenses Expenses
Direct expenses would include those expenses which are directly involved in the
creation of the product or service. Some of the direct expenses would include the
material required for the product or resources used by the service, wages of the direct
labour i.e. labour involved in creating the product or service, travelling costs of the direct
labour etc. On the other hand, indirect expenses include those expenses which are not
directly related to the production of goods or services. For example, sales activities,
marketing activities, wages of sales representatives etc. fall under the indirect
expenses. The revenue can be identified by multiplying the number of units with its cost.
After identifying the expenses and revenue and removing the taxes we get the net profit
for the organization. One of the primary objectives of sales budgeting is to see that the
net profit doesn’t go below the organization objectives. For most of the organizations the
objective for net profit margin would be at least 10-20 percent.
16.2.2 Issues in sales budgeting
There are several issues in budgeting and allocation which needs to be analysed. Sales
budgeting are mainly done at the macro level but the actions takes place at the micro
level. The top management allocates the budgets and may take the feedback from the
local sales managers which again depend upon whether the organization follows a
centralized or decentralized decision making process. There can be many other issues
which the sales budgeting process has to look at. Some of them are:-
a) Establishing the need for budget
The budget would be established for different regions depending upon the need. Hence
the sales manager should be able to establish the need for budgets. The real activities
of the sales process happens at the micro level i.e. at the branch level and the
expenses in incurring the sales would be best known by the sales managers at a branch
level. The exact need of budget should be established by taking into account for all the
expenses such as travel expenses, office rents and bills for electricity, phone lines etc.
The budgets should be allocated at the local level by taking the feedback from the sales
managers.
b) Having multiple views of the sales budget
The sales budget created should clearly identify the sales from multiple views such as:-
 Sales by the region/ territory
 Sales by the product or service
 Sales by the sales representative
Having multiple views will help in answering some of the questions about why the sales
budgeting is not as per the expectations of the sales forecast.
c) Identifying NPA’s and planning the events
Having created the sales budgeting from multiples views enables the sales manager to
identify the NPAs in his region/ territory. In sales we refer Non-performing assets as
NPT which stand for Non-performing territories. For example, the overall sales figure for
the city is increasing but due to multiple views the sales manager can easily see that
one of the territories in his region is showing a down trend in sales figures. Hence
necessary action can be taken to improve the sales figure. It is understood in business
world that a market leader will work to develop new territories and may leave the
territories which are under performing whereas a market follower would safe guard
existing underperforming territories and strive for development. The NPA can be the
sales representative too if they are not able to attain their sales quotas. Hence sales
manager can identify such representative and give necessary training to improve their
productive levels.
d) Monitoring the forecasted figures to the actual sales
Most of the companies divide the yearly forecast figures into monthly sales which could
be attained by the sales representatives if they achieve their assigned quotas. But there
would be chances that the forecast may go wrong and the quotas set were not realistic.
In such cases it is always important to monitor the actual sales figures with the
forecasted sales figures at regular intervals. Sales manager may use the variance
analysis technique like ANOVA to check the variance.
e) Time interval for monitoring sales budgets

The time interval to check for variance and sales budgeting depends upon the sales
manager and may be done daily or weekly or monthly or quarterly or half yearly or
yearly. However one must understand that too frequent monitoring may result in
wastage of time and money on trivial or uncontrollable factors. On the other hand, too
loose monitoring process may result in lower performance levels as it’s the human
nature to adopt slackness when the control system is weak
Let us now discuss about the control system and its functionality for the sales budgeting
process.
SAQ 1
1) Explain the direct and indirect expenses for an organization
2) Explain the advantages of having multiple views of the sales budgets
3) Identify the importance of timely monitoring of a sales budget
16.3 Monitoring and controlling the sales budgeting
Monitoring and controlling the sales budget is an important task to maintain a healthy
balance sheets in an organization and meeting the organization objectives. Having an
appropriate timeframe for monitoring is very important for the organization. Too frequent
monitoring implies wasting time and money on trivial or uncontrollable factors. Whereas
too loose monitoring with large time gaps means not taking sufficient care in reviewing
the sales budget. This may also lead to poor performance by the sales representatives.
In fact, no one likes a job which is not monitored as everyone expects some sort of
appreciation after their job done. Recognizing the work of the sales representatives by
monitoring their performance will also help in framing the appraisal system. Let us now
understand the need of a control system for monitoring and controlling the sales budget.
16.3.1 The need for a sales budgeting control system
Sales budget control system is required by the organization for many reasons. Let us
now understand them in detail:-
a) To monitor the performance
Monitoring sales budgets implies monitoring the sales figures generated by the
employees and checking whether the sales quotas have been achieved. The control
system should be able to monitor in regular intervals as it is the natural tendency for
humans to adopt slackness. The biggest question is what to monitor? Is it the sales
figures or efforts or expenses or direction and so on? In many times the organization
would go by the sales figures and revenue generated. Efforts and direction would be left
out but to get a holistic picture of the performance of a sales representative every factor
must be taken into account. Hence, control system should be able to get a holistic
picture of the performance evaluation for the sales representatives.
b) Identifying areas of improvement for sales representatives
Control system should identifying the areas of improvement by monitoring the

performance of the sales representatives. Once the performance is monitored the
control system should be able to find out the necessary skills to be improved and then
proper training should be provided to improve those skills set.
c) Identifying areas of weakness
Control system should be aiming at identifying goals of the organization and improving
the organization performance to achieve them. In doing so, many functions within an
organization have to be integrated. Control system should be able to identify the cost in
generating the required sales figures. If the cost of operations is high then the net profit
would be low even if the sales figures are decent. Control system should identify
weaknesses in the organization and develop the system where the resources are put to
maximum use. For example, if the control system finds out the reason for increased
costs for generating a lead is due to the improper communication channels between the
marketing and sales department, then making use of CRM in the organization would be
the solution to the problem.
d) Identifying trends and monitoring competitor activities
Control system is required by the organization to identify the market trends. In this
competitive world, the preference of the customer changes too frequently and the
competitors would be ready to grab the opportunities. Hence it is necessary to have a
system to monitor the competitor movements closely and then identify the necessary
changes that needs to be done in the strategies of various departments to sustain the
competition and achieve required sales.
e) Analyzing deviations
Many times there would be deviations from the sales objectives. Monitoring and
analyzing the deviations would be an important task. For example, the organization may
put the sales objective for the branch office 10000 units/ month. The branch office may
start with nice figures over 10000 for the first two months but later on from the third
month the sales figures take a dip and fall below 10000. The reasons for such deviation
should be analysed. There can be many reasons such as:-
 the increased market competition,
 decreased sales especially if the sales are seasonal, for example the sales for air
conditioners and refrigerators are high in summer when compared to winter
season
 Changing customer preferences or consumption pattern
 High attrition rate i.e. due to the high attrition rate the required number of sales
representatives are not available to generate the expected sales figures.
Such reasons have to be identified. Therefore, a control system may be required by the
organization.
f) Input for organization strategies
Control system helps in provide valuable information in setting the strategies in the right
direction to achieve the organization objectives. By identifying the right strengths and
weaknesses of the organization, its strategies can be set. For example, if the control
system identifies that the organization has good products, but low sales due to high
costs over the competitors then necessary marketing activities have to be planned to
justify the price and the benefits or else the prices have to be reduced to boost the
sales.
g) Identifying the losing market share
The forecast would be done at the start of the year or required time interval and targets
or quotas would be set. Achieving the required quotas may not necessarily mean
achieving the organization objectives at all the times. Control system is necessary to
monitor the situations not only where the organization has improved its sales but also
lost market share too. The objective of the organization may be to serve the maximum
number of customers at all times and be the industry leader. Whenever the market is
growing too fast, the sales figures should also be increasing. Just performing by the
sales quotas would be helpful in being the leader in the market place. Hence, control
system is necessary to identify the growth in the industry and adjust the sales quotas
accordingly so that the organization can maintain its position in the market place.
16.3.2 The need of variance analysis and control in sales budgets
The sales variance according to Ghosh (2005) is the operating profit variance due to
sales. It is the difference between the budgeted operating profit and the margin between
the actual sales and the standard cost of those sales. Variance analysis acts as a cost
controlling mechanism for the organizations. The deviations or irregularities in the
operating profits can be analysed by the variance analysis and control systems. The
sales variance is of two types namely:-
 Operating profit due to sales volume: This deals with the variance in the
operating profit which may be more or less than the forecasted operating profit.
The reason may be due to the changes in the volume of sales generated by the
sales department. The operating profit would be less when the sales figures are
less than the forecasted figures and vice-versa. Here, the price of the unit is kept
constant for the forecasted sales and the actual sales.
 Operating profit variance due to selling price: This deals with the variance in
operating profit due to the decrease or increase in selling price. Even though the
sales quotas are achieved, the sales department may not be able to generate
the required operating profit due to the changes done in the selling price when
the actual sales have taken place.
Usually in many situations the variance would be due to both the reasons mentioned
above. This type of variance is known as mixed variance.
The sales budgets have to be controlled in such a manner that the organization
objective is achieved with the right variances in place. It is not always practical for the
organization to stick to a constant selling price. The price keeps on changing due to the
changing environment at the market place. The selling price would be lowered
whenever the demand is less or the competitors lower their prices. The variance
analysis and control would involve the following points:-
 Improving the sales figures to decrease the variance : Whenever the sales
variance is increasing due to the low sales, then organization have to revise their
strategies to make sure that the sales figures are improved and thereby creating
a lesser variance
 Identifying the right selling price: In an attempt to grab the sales opportunity
the organizations or the sales departments tend to decrease their selling price.
Before any such attempt, the variance should be analysed and the affect on the
overall balance sheets and profit figures should be estimated. It should be noted
that for each penny decrease in selling price the operating profits would be
decreased. Hence identifying the right selling price is a challenging task for the
organizations. The decrease in selling price should justify the increase in sales
figures so that the overall operating profit doesn’t decrease for the organization.
 Variance control with proper strategies: As discussed earlier in this unit, right
strategies help the organization to achieve more sales and lesser variances.
 Variance control by improving the organization efficiency: By improving the

organization efficiency by making use of CRM products and the right organization
structure, the operating costs can be reduced thereby decreasing the variance in
the operating profits. This is very important at present times where the prices are
kept low due to the competition and the operating profits are to be maintained
unaffected. The only way this can be achieved is by decreasing the cost of
operations in various departments like marketing, IT, sales etc.
SAQ 2
1) Explain the need for sales budget and control system
2) Explain the two types of sales variance
3) Identify the measure for controlling variance for an organization
16.4 Summary
In this unit we understood about the sales budgeting concepts. We have understood the
differences between the direct and indirect expenses for an organization. We also saw
the issue in sales budgeting. We examined the need for the sales budget for an
organization and identified the importance of having multiple views of the sales budget
by region/ territory, product/ service and by the sales representative. We learned the
importance of timely monitoring of the forecasted and the actual sales and identifying
the NPA and plan for their improvement. We saw that sales budget control system is
required by the organization for many reasons such as to monitor the performance of
the sales staff, identifying areas of improvement, identifying areas of weakness,
identifying trends and competitor activities, analyzing deviations and the reasons for
losing the market share. We have analyzed the importance of budget control system as
an input for organization strategy planning. We finally examined the need of variance
analysis and control for the sales budgets. We understood the reason for variance in
sales budgets due to the volume of sales of the selling price. We also understood how
to control the variance by improving the sales and identifying the right selling price
which can improve the sales figures and decrease the variance. Finally, we looked at
the variance control by proper strategies and improving the organization efficiency.
16.5 Keywords
1) Operating profit Profit figure attained after subtracting the direct

and indirect costs from the revenue generated.
2) Net profit Profit figure attained after subtracting the

organization total expenses including the tax
from the total revenue generated.
3) NPT Non-performing territories are those territories

which are not able to achieve their sales
quotas assigned by the organization.
16.6 References
1. N Ghosh (2005), “Management control systems”, Prentice-Hall, New Delhi, India
1. Robert N Anthony, Vijay Govindarajan (2008), “Management control system”,

Tata McGraw-Hill, New Delhi, India.

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SALES MANAGEMENT

Every module consists of three to five units.

1) Introduction & objectives

Module I- Sales Process and its Management

1) Introduction to sales management 1 - 17

4) Computer applications in sales management 48 - 63

Module II- Selling Skills

6) Sales Presentation 81 - 109

7) Negotiation Skills 110 - 123

8) Retail communication 124 - 140

Module III-People Issues in Sales management

9) Job analysis, recruitment & selection 141 - 159

10) Training the sales force 160 - 174

11) Compensation and motivation of sales force 175 - 187

12) Monitoring and performance evaluation 188 - 204

13) Sales Planning 205 - 218

14) Sales Organization 219 - 235

15) Sales forecasting and sales quotas 236 - 249

16) Sales Budgeting and control 250 - 261

1.2 Marketing Approaches

1.2.1 Production Concept

1.2.2 Product concept

1.2.3 Selling Concept

1.2.4 Marketing Concept

1.3 Marketing and Sales

1.3.1 Good Selling Process

1.3.2 Sales approaches

1.3.2.1 Direct Sales

1.3.2.2 In-direct sales

1.3.3 Types of personal sales

1.4 Evolution of sales department

1.5 Components of the Marketing Mix

1.5.1 Personal Selling and Other Promotional Tools

1.6 Functions of the sales manager

1.7 Sales Management Model

1.9 Glossary/ Keywords

1.11 Suggested Readings

“Sales management” as the term implies means management of sales. Often it is

The Definitions Committee of the American marketing association defined sales

After studying this chapter you will be able to:-

2) Describe various marketing and sales approaches

3) Describe the marketing mix and the sales management model

1.2 Marketing Approaches

Production Product Selling Marketing

1.2.1 Production concept

Important questions the firm has to address in this process are:-

1) Can the product be produced?

1.2.2 Product concept

Hence the “Selling Concept” was adopted by some companies.

1.2.3 Selling Concept

Important questions the firm has to address in this process are:-

1) Can the product be sold?

1.2.4 Marketing concept

The marketing concept underlines the following principles:-

1) Identify the needs and wants of the customer

2) Design the products and services to fulfill the same

3) Use various promotion techniques to communicate the benefits of the product

4) Realizing the profit by satisfying customer needs over a long term