The Strategic Role of Information in Sales Management
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Transcript The Strategic Role of Information in Sales Management
The Strategic Role of
Information in Sales
Management
Sales & Distribution
Management
Marketing 3345
Information Drives Management
Decision Making and Planning
Sales
forecasts
Territory estimates
Quotas
Sales force size
Sales territory design
Market Opportunity Analysis
Market potential –estimate of possible sales of
a commodity, a group of commodities, or a
service for an entire industry in a market during
a stated period under ideal conditions
Sales potential – the portion of the market
potential that the firm can expect to reasonably
achieve
Sales forecast – an estimate of the dollar or unit
sales for a specified future period
Sales quotas – sales goals assigned to a
marketing unit for use in managing sales efforts
Sales forecasts
Sales budget
Production budget
Revenue budget
Direct labor materials
and overhead budgets
Sales and
administrative
expense budget
Cost of goods sold budget
Budgeted profit and loss
statement
Impact of Sales Forecasts on Budgeting
Utilization of Sales Forecasting Methods of 134 Firms
Methods
Subjective
Sales force composite
Jury of executive opinion
Intention to buy survey
Extrapolation
Naïve
Moving Average
Percent rate of change
Leading indicators
Unit rate of change
Exponential smoothing
Line extension
Quantitative
Multiple regressing
Econometric
Simple regression
Box-Jenkins
Percentage of
Firms that
Use Regularly
Percentage
of Firms
That Use
Occasionally
Percentage of
Firms No
Longer Used
44.8%
37.3
16.4
17.2%
22.4
10.4
13.4%
8.2
18.7
30.6
20.9
19.4
18.7
15.7
11.2
6.0
20.1
10.4
13.4
17.2
9.7
11.9
13.4
9.0
15.7
14.2
11.2
18.7
19.4
20.9
12.7
11.9
6.0
3.7
9.0
9.0
13.4
5.2
20.9
19.4
20.1
26.9
S&MM, February 2008
Choosing a Forecasting Method
Which forecasting method should be used and
how accurate is the forecast likely to be?
In general, the various forecast comparisons
suggest that no method remains superior under
all conditions.
Good forecasters apply multiple forecasting
methods to the problem
Scenario planning prepares a series of “what-if”
questions and produces possible outcomes
Developing Territory Estimates
Territory
estimates effect:
The design of sales territories
Procedures for identifying potential customers
The establishment of sales quotas
Compensation and its subcomponents
The evaluation of salesperson performance
Planning Tools
North American Industry Classification System
(NAICS)
Developed by the US Bureau of the Census,
organizes the reporting of business information
Each industry in the US is assigned a two-digit
number
Buying Power Index (BPI)
Generated and published by Sales Marketing
Management Magazine, considers income,
population and retail sales
Most useful with low-priced convenience goods
Sales Quotas
Goals assigned to salespeople
Apply to specific periods and may be expressed
in dollars or physical units
Tool for sales managers’ planning and
controlling field selling activities and results
Benchmark for evaluating sales effectiveness
Motivate sales people
Characteristics of a Good Quota
Attainable
Easy
to understand
Complete
Timely
Types of Quotas
Sales
based quotas
Sales
activities quotas
Financially
based quotas
Determining Sales Force Size
Salespeople
are among the most
productive assets of a company, and they
are also among the most expensive!
How can an optimal sales force be
established?
Breakdown method:
Number of sales
personnel needed
Sales Volume
=
Productivity
Determining Sales Force Size
Workload
method uses the buildup
method to estimate the work required to
serve the entire market
Incremental
method suggests that sales
representatives should be added as long
as the incremental profit produce by their
addition exceeds the incremental cost
Territory design – “The Build Up Approach”