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 Introduction to sales management:

 Sales Management has to be understood as a sub – system of Marketing


Management.

 It is the Sales Management that translates the Marketing Plan into Marketing
Performance that is why; it is sometimes described as the muscle behind the
marketing management.

 Sales Management performs a number of Strategic Tasks as well as a number of


administrative and operational tasks.

 Sales Management is mainly concerned with the management of selling function.

 Sales Management originally referred exclusively to the direction of sales force


personnel.

 The functional concept of sales management was originally used by the


businessmen in the context of directing the sales force but the meaning of the term
has changed gradually over the years.

 In twentieth century, the term attained wider dimension since it included


management of all marketing activities such as advertising, sales promotion,
marketing research, physical distribution, pricing and product merchandising etc.
in addition to the management of personal selling.

 However, in due course of time, the term ‘marketing management’ was used
widely by academicians and managers to include all the functional aspects of
marketing rather than ‘sales management’.
 During the course of time, it was felt that a clear distinction should be made in
these two terms.

 The definition committee of the American Marketing Association defined the


term sales management as follows: “ Sales Management means, “ 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.”

 The American Markting Association’s definition made sales management


synonymous with management of sales force. The above definition suggests that,
the sales management is nothing more than the management of sales force.

 Evolution of sales Management:

 Prior to the industrial revolution, small scale enterprise dominated the economic
scene and selling was no problem.

 The Chief problem was to produce enough goods for nearby consumers.

 Orders were obtained with minimum effort and they were on hands before goods
were produced.

 Manufacturing problems received the most attention.

 Selling and other marketing problem were handled on part – time basis.

 With the Industrial Revolution, which began about 1760 and shortly after the
American Revolution in the United States it became increasingly necessary to
find and sell in new markets.
 Newly built factories were turning out huge quantities of goods of every
description.

 Their continued operation demanded great expansions in the area of sales


coverage, as adjacent markets could not absorb the increased quantities being
manufactured.

 As a result the markets in the west switched over from the seller’s market to
buyer’s market, because the supply of goods exceeded the demand, leading to an
excessive competition and an influence of consumerism in the market.

 As a result separate sales department were set up to handle this situation.

 Thus, sales management started contributing a lot towards achievements of the


corporate objectives.

 Sales management was assigned the responsibility to estimate market potential,


capacities of its sales force and middlemen and consumer behaviour.

 Sales management philosophy started guiding and leading the personnel


responsible for carrying out the plan of action to achieve the established goals.

 Sales management started to charter the future course of action and started
providing detailed information to higher executives so that they can take
marketing decisions.

 Thus, sales management played a very important role in decision – making


process and in setting realistic sales and profit goals.
 In fact, the whole planning of the top management started depending upon the
performance of sales department because sales assumed the position of one of the
most important variable in company’s operating statement.

 All the persons concerned i.e., Shareholders, directors, executives etc started
depending upon this variable (Sales) while appraising the company’s
performance.

 Distinciton between marketing and selling:

 Very often marketing and Selling are used interchangeably, but actually these two
terms differ in their meaning.

 Marketing is a wider term and selling is part and parcel of it.

 Marketing starts with having a understanding of unmet need and ends with
customer satisfaction. It includes all activities starting with having understood
some unmet needs, conceiving product idea and ends with satisfaction of
customer even if it is sold.

 Thus, marketing includes all pre – selling activities (finding unmet needs,
conceiving an idea of producing something, planning for its production, actual
production, test marketing etc), all selling activities and post – selling activities
such as after sales service.

 Selling on the other hand, involves only the transfer of goods and services to the
customers for money. Thus, it is one of the functions of marketing.
 Objective of Sales Management:

 As we have discussed that the sales management plays a very important role in
the success of the enterprise because sale is the single most important variable in
appraising the performance of the company, its executives and its personnels.

 From the company point of view, there are three general and underlying
objectives of Sales Management:
(I) Achieving sufficient Sales Volume
(II) Providing ample contribution to profits, and
(III) Experiencing continuing growth.

 Sales Executives carry out the plans as chalked out by the top management which
is finally responsible for the success and failure of the business. The top
management coordinates the operation of all departments including the sales
department. Top management delegates to marketing management and marketing
management to sales management, sufficient authority to achieve these three
objectives.
(I) Achieving Sufficient Sales volume: In the process of delegation, the top
management fixes the sales volume more specific on the basis of market, territory,
customer or any other basis which it wants to achieve in a specific period. The
sales executives, during the planning phase, which proceeds goal setting, provide
sufficient information regarding market and sales potentials, capabilities of sales
force and the middlemen, and the like. Once these goals are finalized, it is up to
sales executives to guide and lead the sales personnel and middlemen to
implement the selling plans and achieve the goals so finalized.

(II) Providing Ample Contribution to profits: The Second major objective of


Sales Management is providing ample contribution to profits. Mainly Sales
Volume, Gross margin and Net Profit in units of product and amount with bench
marks of growth projected for sales and profits are fixed on the basis of sales
management’s appraisal of market opportunities. Now, these goals are attained or
not, depend upon the performance of sales and other marketing personnel.

The top management generally keeps in mind, in planning and operating


purposes, two basic accounting formulas:

Sale – Cost of Sales = Gross Margin.


Gross Margin – Sales Expenses = Net Profit.

Sales, gross margin and sales expenses mainly depend upon the caliber and
performance of sales management, which are the major determinants of net profit.
However, cost of sales factor cannot be directly influenced by sales management,
but indirectly large volume of sales affects the unit cost of production and thereby
affects gross margin.

It is the responsibility of sales management to provide a higher gross margin and


net profit to the enterprise. This depends very much on the larger volume of sales.
The higher the sales volume, the lower the cost of sales and higher the gross
margin and net profit.

(III) Experincing Continuing Growth: The third and the most important
objective of the sales management is to project continuous long term growth of
the enterprise to attain an optimum marketing performance in terms of sales
volume and net profit. This requires and effective overall coordination. The sales
management can play very significant role in diverse coordinating activities
involving the organisation. The planning, the other elements in the marketing
programme, the distributive net work, and the implementation of overall
marketing strategy.

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