Sales Management and Business

Development Assignment

Workshop Report
Guest Faculty: Prashant Verma

Submitted to: Prof. Arpan Anand

Submitted By: Yash Singhal
Roll No: PGSF2136
OPTIMIZING THE SALES FORCE
Every drug and call have a relationship; if we know what that relationship is, we can utilize it
to get here quickly; however, we must first understand how to develop that relationship.
The concepts that we are using can be used in any industry, but he took an example of a
pharmaceutical company.
There are 2 variables:
Variable 1 >> X: Resources Level Allocated (Dependent Variable)
Variable 2 >> Y: Response (Independent Variable)
If we use a magazine as an example, the Y variable will represent new subscribers, and the X
variable will be the amount spent on advertising. In the example of a shop, the Y variable will
be profit generation through product lines, while the X variable will be shelf space allocated
to each product line.
If we see in our example then
X Variable: Ads (Dependent)
Y Variable: Sales (Independent)

How company actually works with retailers?

According to Mr. Verma, a salesperson visits the stores to collect orders and record them on a
notebook or mobile device. The top management may pay a visit to the shopkeepers to meet
with them and negotiate that if they keep this product, they will receive this, or if they buy
this, they will receive this. P&G, for example, has a fairly typical way of stating that if you
give me this much room and I ask you to put on the product, you will.
Curves in Sales
The curve that best depicts the effort-response connection can be determined by a marketing
analyst. In the case of sales, the optimum curve is a "S" shaped curve because sales increase
after reaching a given goa.
The general equation is,
Y = a+ bx
In this equation there are 4 components but which is the component that effects the formation
of the graph line?
The parameters are the ones that effects the formation of line and they are “a” (Intercept) and
“b” (Slope).

There are very two basics curves that are used:

1.) ABUDG Curve: This "S" shaped curve is commonly used in advertising and
budgeting. It begins flat, then grows steep, and then returns to flat. The equation for
the ABUDG curve is as follows:

Where a = Sales that will be done without putting efforts

b = Rate at which sales is increasing
c = Rate at which sales is increasing
d = Maintain balance with b & c

The red line shows how the curve would look if d wasn't included in the diagram.
As illustrated below, we can receive some estimations from a sales manager with prior
expertise.
And through experience suppose the manager gave us these values as below:

We can utilise Solver in Excel to find the estimations once we have these numbers.
And our main goal here is to reduce the gap between the manager's sales level and
the sales projections we generate utilising the ABDUG Model. Here's an example of
a problem we solved using Excel:
Here we got the values for Drug 1 and can calculate the values for rest of the drugs to and we
have put constraints on a, b, c and d like:

And these constraints are given by the manager who has prior experience.

2.) POWER Curve: This curve arises when you have a number in the power of x (such
as x2, x3, and so on). Because it's a generic equation, if it's X0, it means that
regardless of whether I put effort into marketing the goods or not, this many sales
will come whether I put effort into it or not. The formula for calculating the power
curve is:

Here b gives the slope to the curve so if “b” is positive then the graph will be upward
sloping. He asked a qustion that in the below diagrams which one will be
effective in case of sales?
Mr. Verma explained that in Figure A, there is no diminishing rate of return,
therefore if we put in one effort, we will get 1.5 results, however in Figure B, if we
put in one effort, we will get results that are little less than 1. As a result, Figure B is
the best alternative in terms of sales.And the here there is condition for “b” i.e., 0 < b
<1
- Thus the Power Curve shows us the diminishing Rate of Returns, that is
additional ad yield fewer extra sales.
 Difference between Power Curve and Polynomial Curve
A Polynomial Curve with the same independent variable demonstrates various sorts of
relationships with the dependent variable.
In our circumstance, the polynomial works well, but we can't use it because it doesn't happen
on a regular basis, and the power curve is more in line with our managerial thought process.

For Example, we are given this question:

And we are given that 4000 calls are made then we can calculate No. of units that be sold
through this (Calculation is done below)
(In terms of Dollars, $)
Drug 1 Sales = 50(4000) ^0.5 = 3162 Units = 3162*10 = 31,620
Drug 2 Sales = 10(4000) ^0.75 = 5030 Units = 5030*15 = 75,450
Drug 3 Sales = 15(4000) ^0.6 = 2174 Units = 2174*20 = 43,480
Drug 4 Sales = 20(4000) ^0.3 = 241 Units = 241*25 = 6,025
(Solved in Excel)

(But if the Total No. of Calls Changes to 20)

When we assigned different drugs to different calls, the loss skyrocketed. So, when we
operate large firms, we must consider the loss of labour and the way we do things, as well as
sales and whether we are making a profit or losing money by making more calls after putting
in so much work, so should we truly do more sales simply to keep the hired sales associates
busy? Figure 1 below shows how rounding off results in higher profitability than using
normal values. Figure-1

Figure-2

Through this we learned how solve that exactly how many calls can we do:
- First establish a relationship between your efforts and depend variable.
- Use this relationship in modelling and do the hit and trial method through excel
as solved above and maximize profit.
WORKLOAD
We need to know how much work there is so that we can determine how many staff to hire.
To put it another way, it aids us in estimating the size of our sales force. When I have a
transaction from a hospital and I know it's a significant customer, I have to look at the
broader market. For Calculating Workload, we should follow some steps:
Step - 1: Look at the customer classification and number of customers, which we can get
from the senior manager or historical data.
Step - 2: The manager who tells us that thus many sales calls must be made tells us that he is
a valuable customer who requires these many calls in order to covert.
Step – 3: Calculate estimate no. of hours to each customer and then calculate the total no. of
hours.
Here is an example done in Excel:

Now why a workforce gets wrong or faces a problem?

When we talk about an efficient manager, we're referring to someone who seeks to reduce
non-selling responsibilities and travel time so that salespeople may focus on selling.
Alternatively, organisations can divide their sales staff into efficient and non-efficient
employees, with the former assigned to selling activities and the latter to non-selling chores
and customer meetings.
And what firms actually do is eliminate all travel and devote those hours solely to sales
activity.
IN CLASS EXERCISE
Here is the working in the excel sheet:

Executive Training Module Forecasting

Measuring Marketing Opportunities – Forecasting:
There is a need for forecasting it may be for a new product or existing products we need to
work on three aspects while we are surveying:
- Total Market Demand: Market Potential
- Current Penetrated Market: How much portion is currently served
- Target Market: Market that is currently unserved
Three Step Approach of Forecasting:
In this approach we use the secondary data and primary data to construct a forecasting
model.
Step -1: Secondary Data review for prevalence
Step - 2: Primary Research
Step - 3: Analysis and Statistical Modelling
Here is an example for a Pharmaceutical Drug:

FORECASTING METHODS
I.) Chain Ratio Method: Under this method we multiply a base figure by altering
many elements that will have an impact on future market sales.
And an example was used to demonstrate this:
Market Potential x Trend Analysis x Market Research x Judgment = Baseline Forecast
He used a coffee shop as an illustration of how a shopkeeper guesses how much business will
be done.

Laplacian Rule: This rule states that everything has an equal chance of succeeding. There
were a total of 148 drinkers in our example above, and it was difficult to determine how
many were coffee drinkers, so we used the rule that everything has an equal probability, so
148 x 12 = 74, which tells us that there is a chance that there will be 74 coffee drinkers.
II) Bottoms Up Forecast:

FORECASTING – DECIDING WHAT’S RIGHT FOR YOU?

There are basically 4 steps
I.) Time: We consider three factors: Span (whether the prediction is short- or long-
term), Urgency (does the forecasting need to be done right away? ), and
Frequency (does the forecasting need to be done frequently?)
II.) Resource
III.) Input: In this we look on five aspects, Antecedent (are past data available?),
Variability (doesprimary series fluctuates?) , Internal Consistency(Any changes in
management decisions), External Consistency ( Any environmental changes?),
and External Stability (Any shift among variables?)
 IV.) Output: In this we look on five aspects Detail (Components are required?),
Accuracy (what should be the level of the accuracy?), Capability For reflecting
direction changes ( what should we do about the turning points), Capability for
V.) detecting direction relations changes (Should the turning points be identified?) and
the form ( Is the forecasting based on interval or probability based and weather it
is critical?)
OTHER FORECASTING METHODS
I.) Judgment Methods:

- Naïve Extrapolation: : It is determined by economic variables. For example, if

the economy grows by 1.2 percent, I will expand as well since the services I
provide have a direct impact on the economy, hence my company will grow by
1.2 percent
- Sales-Force Composite: In this strategy, each territory is assigned to a sales
manager, and we ask them to produce bottom-up estimates for each region,
compile them, and then set the projections.
- Jury of Executive Opinion: (This is used to in case of new products)
- Scenario Method: In this method the forecasting is done on based on different
time intervals.
- Delphi Technique: (This is commonly used when introducing new products.) We
don't have any past data in this process, so we ask other experts for their opinions
and have them work on different components. Then we gather all of the data and
analyse the statistics, giving you confidence in the figures (average figures from
all specialists) that they can be attained in the long term..
- Historical Analogy: We can observe the change in consumer behavior of a
developed country in an area that was previously a developing country, and then
make data accordingly. And, as seen below, this has a number of drawbacks.
 -
It is possible that when we say something, the customer interprets it differently and has other
expectations, and when the product or service is delivered, it is completely different from
what the customer expected.
Difference between Forecasting and Prediction
- We employ the Regression model for prediction, where the dependent variable is
known and may be modified by other known factors. Advertisements, sales calls,
pricing, and other factors can influence sales. The dependent and independent
variables have a relationship, and we may forecast using that relationship..
- We only have one variable and other data for forecasting. The number of
weddings (variable) is linked to the passage of time (Other Info.). Forecasting is
done using only one variable.

II) Counting Methods

III) Time Series Methods:
Time Series Example
If we use a scatter plot to represent a time series, it is difficult to predict the future, but if we
use a line chart, we can comprehend and predict the future by looking at the trend line. We
can forecast by observing the seasonal or cyclical movement. In today's world of product
sales, business cycles are no longer significant.

Mr. Prashant also explained that weather we need to do use which approach:
(i) Multiplicative Approach: Here we will do T x S (Where T = Trend & S =
Season)
(ii) Additive Approach: Here it will be T + S
But how can we predict which strategy would be used when? We can use
the multiplicative approach since it is more appropriate when looking at
the line if the gap from the previous time is wider this time and it persists.
There is a need to remove an average line since it simplifies and smooths
things out, helps us understand individual behaviour changes, and helps us
grasp the graph better so that our focus isn't on the ups and downs but on
 the averages. He explained the same in excel

II.) . Association/ Casual Methods:

- Correlation Methods: The forecast values are based on previous data and the
variables' covariance.
- Regression Models: We minimize the variance of the independent variables
using this method.
- Leading Indicators: It creates a forecast based on one or more structurally
related variables.
- Economic metric Models: We do this by integrating historic and economic data
to create equations that depict relationships between the economic aspects of the
national economy.
- Input – Output Models: It means that if demand for one industry changes, it will
have a direct impact on the other industries. For example, if the price of oil rises,
it will influence the automobile sector, manufacturing industries, and many others.