Sales & Distribution Management Module 2.pdf

Copyright © 2023 Jayanti Rajdevendra Pande. All rights reserved.
RASHTRASANT TUKDOJI MAHARAJ NAGPUR UNIVERSITY
MBA
SEMESTER: 3
SPECIALIZATION
MARKETING
SUBJECT
SALES & DISTRIBUTION MANAGEMENT
MODULE NO : 2
SALES ORGANISATION & MANAGING THE SALES FORCE
- Jayanti R Pande
DGICM College, Nagpur

Q1. Define sales organisation & explain the purpose of sales organisation.
SALES ORGANIZATION refers to the structured framework within a company that manages and oversees the sales function. It
encompasses the arrangement of roles, responsibilities, and hierarchies within the sales department to ensure efficient and
effective sales operations.
PURPOSE OF SALES ORGANISATION
1. Establishing Clear Lines of Authority: One of the main objectives of a sales organization is to define and delineate the authority
and responsibilities of sales personnel. This helps in avoiding confusion and ensuring that decisions are made by the
appropriate individuals.
2. Optimizing Executive Efficiency: Sales organization aims to streamline executive time and resources by assigning tasks and
responsibilities efficiently. This enables sales leaders and teams to focus on core sales activities, ultimately enhancing
productivity.
3. Facilitating Coordination and Balance: Sales organizations promote coordination and balance among different sales functions
and teams. This ensures that efforts are synchronized, and resources are allocated effectively, leading to a more cohesive sales
strategy.
4. Ensuring Comprehensive Activity Execution: Another crucial purpose of a sales organization is to guarantee that all essential
sales activities are carried out systematically. This includes prospecting, lead generation, sales presentations, order processing,
and post-sales support.
5. Encouraging Specialization and Expertise: Sales organizations provide a framework for the development of specialized roles and
expertise within the sales department. This specialization allows sales professionals to focus on specific aspects of the sales
process, such as product knowledge or market analysis, leading to better customer service and sales outcomes.

Q2. Explain the process of setting up a sales organisation?
SETTING UP A SALES ORGANIZATION
1. Set Clear Objectives: Begin by defining the specific objectives and goals of your
sales organization. These objectives should align with your overall business
strategy and sales targets. Having a clear understanding of what you aim to
achieve is the foundation of building an effective sales organization.
2. Identify and Quantify Activities: Identify the key sales activities required to meet
your objectives. Quantify these activities by determining their volume,
frequency, and importance. This step involves analyzing the sales process,
customer interactions, and market demands to understand what needs to be
done.
3. Group Activities into Roles: Group related sales activities into distinct roles or
positions within the sales organization. These roles should be clearly defined
with specific responsibilities and tasks. For example, you may have roles for
sales representatives, sales managers, lead generators, and customer support
specialists.
4. Allocate Personnel to Positions: Once roles are established, assign qualified
personnel to fill these positions. Consider factors like skills, experience, and
expertise when making these assignments. Ensure that each role has the right
person to execute its tasks effectively.
5. Implement Coordination and Control: Create mechanisms for coordination and
control within the sales organization. This includes setting up communication
channels, reporting structures, and performance measurement systems.
Regularly monitor and evaluate the performance of the sales team to ensure
alignment with objectives and make necessary adjustments as needed.
Setting up a Sales Organization
1 Set Clear Objectives
2 Identify and Quantify Activities
3 Group Activities into Roles
4 Allocate Personnel to Positions
5 Implement Coordination and Control

Q3. Explain the different types of sales organisation. What factors influence the size of sales organisation?
TYPES OF SALES ORGANIZATIONS
1. Line Sales Organization: the sales department operates with a straightforward hierarchy where salespeople report to sales managers, who, in
turn, report to higher-level executives. It is a traditional and simple structure, suitable for smaller organizations or those with a single product
or service line.
2. Line & Staff Sales Organization: This structure combines the line organization with specialized staff positions that provide support and
expertise to the sales function. Sales managers and salespeople form the line, while staff positions like sales trainers, market analysts, and
product specialists assist in decision-making and training.
3. Functional Sales Organization: Functional sales organizations group salespeople based on their specialized functions or expertise. Sales teams
may be divided by product type, customer segment, or geographic location, allowing for greater specialization and focused sales efforts.
4. Horizontal Sales Organization: Teams are organized based on shared functions, promoting collaboration and adaptability across diverse
product lines and markets.
5. Committee Sales Organization: In this structure, sales strategy and major decisions involve collective input from a group of executives or
managers. Typically employed in large organizations to benefit from diverse perspectives.
FACTORS INFLUENCING THE SIZE OF A SALES ORGANIZATION
1. Firm Size: The larger the company, the more extensive the sales organization may need to be to cover various markets and customer segments
adequately.
2. Nature of Market: The complexity and size of the target market play a significant role. A broad and diverse market may require a larger sales
organization compared to a niche market.
3. Product Nature: Products with high complexity, customization, or technical requirements may necessitate a larger sales force for proper
customer support and education.
4. Product Price: High-value products often require a more extensive sales organization to justify the sales effort and provide personalized
service.
5. Finance and Company Sales Policies: company's financial resources and strategic focus impact the sales organization's size. Aggressive growth
may lead to expansion, while cost control encourages a leaner team.

Q4. What is personal selling? Explain the various types of personal selling.
PERSONAL SELLING is a marketing strategy where sales representatives or agents directly engage with potential customers to
promote and sell products or services. This approach involves building relationships, understanding customer needs, and
tailoring sales presentations to influence purchase decisions. There are three main types of personal selling:
TYPES OF PERSONAL SELLING
1 Industrial Selling Industrial selling primarily targets other businesses (B2B). Sales representatives focus on fulfilling the needs
of industrial or manufacturing firms, often dealing with complex, high-value products or services. Subtypes include:
a) Institutional Selling: Targeting educational institutions, government bodies, and non-profits, offering tailored solutions and
contracts.
b) Selling to Resellers: Providing products or services to businesses that intend to resell them, often collaborating with
wholesalers or distributors.
c) Selling to Governments: Involves selling to government agencies, necessitating adherence to specific procurement
regulations.
d) Selling to Business Users: Directly selling products or services to companies or professionals for their internal use, such as
office equipment or software.
2 Retail Selling: Occurs in retail stores where salespeople assist individual consumers in finding products, offering information,
and facilitating purchases.
3 Services Selling Involves selling intangible services like insurance, financial planning, healthcare, or consulting. Sales
professionals focus on explaining the service's benefits, addressing concerns, and building trust.

Q5. Explain the nature & function of personal selling.
NATURE OF PERSONAL SELLING
• Face-to-Face Interaction: Personal selling involves direct, in-person interactions between sales representatives and potential
customers. This allows for real-time communication and relationship-building.
• Oral Communication: Communication in personal selling primarily relies on spoken words and active listening. Salespeople use
persuasive language and negotiation skills to convey product benefits.
• Costly: Personal selling can be an expensive marketing method due to factors like travel, training, and commissions. It often requires a
significant investment in sales personnel.
• Slow Process: Compared to other marketing techniques, personal selling can be a time-consuming process. It involves building trust
and rapport with customers, which may take time.
• Quick Handling of Queries and Customer Knowledge: Personal sellers excel in addressing customer inquiries promptly and possess in-
depth knowledge about their needs, preferences, and pain points, leading to more effective sales strategies.
FUNCTION OF PERSONAL SELLING
• Making Sales: The primary function of personal selling is to persuade and close sales deals by matching products or services with
customer needs and desires.
• Building Relationships: Personal selling plays a crucial role in building and nurturing long-term relationships with customers. Trust and
rapport contribute to repeat business and referrals.
• Serving Customers: Salespeople assist customers throughout the buying process, providing information, addressing concerns, and
ensuring a smooth purchasing experience.
• Fulfilling Orders: Personal sellers often manage order fulfillment, ensuring that products or services are delivered as promised and
meeting customer expectations.
• Performing Executive Functions: Sales representatives may also perform executive functions like market research, product
development feedback, and gathering competitive intelligence, providing valuable insights for the company's overall strategy.

Q6. Describe the theories of personal selling.
THEORIES OF PERSONAL SELLING:
Seller-Oriented Theories:
1 AIDAS Theory
AIDAS stands for Attention, Interest, Desire, Action, and Satisfaction. This theory focuses on the steps a salesperson should take
to lead a potential customer through the buying process.
 Attention: The salesperson grabs the prospect's attention.
 Interest: The salesperson generates interest in the product or service.
 Desire: The salesperson cultivates a desire or need for the offering.
 Action: The salesperson encourages the prospect to take action, such as making a purchase.
 Satisfaction: After the sale, the salesperson ensures the customer is satisfied to build loyalty and potentially secure
repeat business.
2 Right Set of Circumstances Theory
• The right set of circumstances theory suggests that successful selling depends on creating the right conditions or
circumstances for a sale to occur.
• Salespeople must be adept at identifying situations where the customer's needs, desires, and timing align with the product or
service being offered. Recognizing these opportune moments can significantly enhance the likelihood of a successful sale.

Buyer-Oriented Theories:
3 Buying Formula Theory
• The buying formula theory shifts the focus to understanding the buyer's decision-making process. It underscores that
each customer may have a unique formula or set of steps they follow when making a buying decision.
• Salespeople must identify and align with these steps, which can include problem recognition, information search,
evaluation of alternatives, the actual purchase decision, and post-purchase evaluation.
• By aligning their sales approach with the buyer's formula, salespeople can facilitate the purchasing process and meet
the customer's needs more effectively.
4 Behavioural Equation Theory
• The behavioural equation theory underscores the importance of understanding and influencing the buyer's behaviour.
• Salespeople analyse customer behaviours, such as preferences, attitudes, and responses, to tailor their sales strategy
effectively.
• By predicting and responding to buyer behaviour, salespeople aim to guide customers toward a purchase decision.

Q7. What is management of sales? Explain the decision in managing the sales force.
Management of Sales involves the strategic planning, organization, and control of a company's sales activities to achieve its sales
objectives and maximize revenue. It encompasses a range of decisions and actions geared toward effectively managing the sales
force and optimizing their performance.
DECISIONS IN MANAGING THE SALES FORCE.
• Size of Sales Force: Determining the appropriate size of the sales force is crucial. This decision requires assessing market
potential, sales goals, and territory coverage. Depending on market conditions and growth targets, decisions may involve
expanding or reducing the sales team.
• Staffing of Sales Force: Selecting the right individuals to join the sales force is vital. This decision encompasses recruiting, hiring,
and on boarding sales professionals possessing the skills, knowledge, and attributes required to succeed. Clearly defining job
roles and responsibilities is essential.
• Training of Sales Force: Equipping salespeople with product knowledge, selling techniques, and customer relationship skills is
pivotal. Decisions involve designing training programs, choosing training methods, and evaluating training effectiveness.
• Compensation of Sales Force: Developing a fair and motivating compensation plan is critical for attracting and retaining top
sales talent. Decisions revolve around determining base salaries, commissions, bonuses, and incentives that align with
performance and company objectives.
• Motivation of Sales Force: Maintaining the sales team's motivation is essential for achieving targets. Decision-makers must
identify motivational factors like recognition, rewards, career advancement, and a positive work environment. Crafting
strategies that inspire and engage the sales force is key.
• Performance Evaluation: Implementing systems for evaluating sales force performance is vital. This encompasses setting clear
performance metrics, conducting regular performance reviews, and providing constructive feedback. Decisions about
performance measurement help identify areas for improvement and recognize top performers.

Q8. Write about the different steps involved in staffing the sales force.
STAFFING THE SALES FORCE is a critical process that involves selecting and hiring individuals who are well-suited to sell a company's
products or services effectively. This process consists of several key steps:
1. Planning: The first step in staffing the sales force is planning. This involves defining the staffing needs based on sales goals, market
analysis, and growth targets. Sales managers must identify the number of salespeople required, the territories they will cover, and
the skills and qualities needed to succeed in the role.
2. Recruiting: Once the staffing needs are identified, the company initiates the recruiting process. This involves actively searching for
potential candidates through various channels, such as job postings, recruitment agencies, social media, and employee referrals. The
goal is to attract a pool of qualified candidates.
3. Selecting: Selecting involves evaluating the pool of candidates to identify those who best match the desired qualifications and
criteria. This step often includes reviewing resumes, conducting initial interviews, and assessing candidates' skills, experience, and
compatibility with the company culture.
4. Hiring: After the selection process, the company extends job offers to the chosen candidates. The hiring step includes negotiating
compensation packages, discussing employment terms, and obtaining necessary legal and administrative documentation, such as
contracts and tax forms.
5. Socialization (On boarding): Socialization, also known as on boarding, is the process of integrating newly hired salespeople into the
organization. It involves providing them with the necessary training, resources, and information to perform their roles effectively.
Salespeople learn about the company's products, sales processes, policies, and culture during this phase. Effective on boarding helps
new hires become productive members of the sales team more quickly.

Q9. Explain the different types of training of sales force.
TRAINING OF SALES FORCE is a crucial component of ensuring that sales professionals are well-equipped to perform their roles effectively. It
encompasses various types of training designed to enhance different aspects of their capabilities and knowledge.
TYPES OF TRAINING OF SALES FORCE
1. Team Training: focuses on improving collaboration and synergy within the sales team. It involves activities and exercises that
help team members work cohesively, communicate effectively, and leverage each other's strengths. This type of training is
especially beneficial in sales environments that require teamwork, such as account management or complex sales situations.
2. Diversity Training: aims to promote inclusivity and sensitivity to diversity issues within the sales force. It helps sales
professionals understand and appreciate differences in cultures, backgrounds, and perspectives. This type of training is
valuable in diverse sales teams and ensures that salespeople interact respectfully with a wide range of customers.
3. Skills Training: is one of the most common types of training for sales professionals. It focuses on enhancing specific sales skills,
such as negotiation, communication, objection handling, and closing techniques. Skills training helps salespeople become more
effective in their sales interactions and boosts their overall performance.
4. Literacy Training: is essential for salespeople dealing with technical or complex products or services. It ensures that sales
professionals have a comprehensive understanding of industry-specific jargon, terminology, and technical details. This type of
training is critical in industries like healthcare, technology, and finance.
5. Cross-Functional Training: involves providing sales professionals with knowledge and skills beyond their immediate sales roles. It
may include training on marketing strategies, customer relationship management (CRM) systems, or understanding the
broader business operations. Cross-functional training equips salespeople to contribute to the company's overall success and
align their efforts with other departments.
6. Refresher Training: is conducted periodically to reinforce existing knowledge and skills. It helps salespeople stay up-to-date with
industry trends, product updates, and changes in sales processes. This type of training is especially valuable for long-serving
sales teams to ensure they remain competitive and adaptable.

Q10. How to develop & conduct a sales training program?
DEVELOPING AND CONDUCTING A SALES TRAINING PROGRAM
1. Aim of Training:
Identifying the Initial Training Needs: Determine the specific knowledge and skills that salespeople need to succeed. Assess current
capabilities and identify gaps.
Job Specifications: Tailor training to match job requirements, considering factors like the target market, product complexity, and sales
strategies.
Trainees' Background and Experience: Adapt training content and pace based on the trainees' prior experience and knowledge.
Sales-Related Marketing Policies: Ensure that the training aligns with the company's marketing policies and strategies.
Identifying Continuing Training Needs: Recognize that sales skills and market conditions evolve; establish a process for ongoing training
needs assessment.
2. Contents of Sales Force Training:
Training on Company: Cover the company's history, culture, mission, and values to instill a sense of belonging and commitment among
trainees.
Training About the Product: Provide in-depth knowledge of the products or services, including features, benefits, use cases, and
competitive advantages.
Training on Sales Organization: Explain the sales team's structure, roles, and reporting lines to help trainees understand their positions in
the organization.
Training on Sales Policies: Ensure trainees are familiar with sales policies, pricing, discounts, and terms and conditions.
Training in Selling Skills: Focus on developing essential sales skills like prospecting, pitching, objection handling, negotiation, and closing
deals.
Training on After-Sales Service: Teach trainees about post-sale support, customer service, and how to build long-term customer
relationships.
Training in Reporting Systems: Train on sales reporting tools and procedures, emphasizing the importance of accurate data.

3. Methods of Training:
Group Training Method: Conduct workshops, seminars, or group sessions where trainees can learn from each other and
practice skills together.
Individual Training Method: Provide one-on-one coaching and mentoring for personalized guidance and skill development.
4. Execution of Training:
Develop a detailed training schedule and curriculum, assign trainers or instructors, and ensure access to necessary resources.
Use a variety of training materials, such as presentations, case studies, role-playing, and real-life scenarios.
Encourage active participation and engagement among trainees through discussions, quizzes, and practical exercises.
5. Evaluation and Reinforcement of Sales Training Program:
• Continuously assess trainee progress through tests, evaluations, and feedback.
• Collect trainee feedback to identify areas for improvement in the training program.
• Provide ongoing support and reinforcement through follow-up sessions, coaching, and access to additional resources.
• Adjust the training program as needed to address changing market dynamics and sales strategies.

Q11. Give the principles of sales force motivation.
PRINCIPLE OF SALES FORCE MOTIVATION
1. Principle of Feeling of Security: Salespeople need job security and a stable work environment to stay motivated. When they
feel secure in their positions, they are more likely to focus on their tasks and perform well.
2. Principle of Promotion: Offering opportunities for career advancement and growth within the organization motivates
salespeople to excel in their current roles. The prospect of moving up the career ladder can be a powerful motivator.
3. Principle of Human Behaviour: Understanding the psychological and behavioral aspects of salespeople can help in designing
effective motivation strategies. Recognizing individual needs and preferences is key to motivating a diverse sales team.
4. Principle of Praise: Recognizing and appreciating the achievements and efforts of salespeople through praise and positive
feedback can boost morale and motivation.
5. Principle of Leadership: Effective leadership sets the tone for the sales team. Inspirational and supportive leaders can
motivate salespeople to perform at their best.
6. Principle of Participation: Involving salespeople in decision-making processes and goal setting gives them a sense of
ownership and responsibility, enhancing their motivation.
7. Principle of Simplicity: Keeping motivation strategies straightforward and easy to understand is crucial. Overly complex
systems can demotivate salespeople.
8. Principle of Reward and Punishment: Implementing a system of rewards for exceptional performance and consequences for
underperformance can motivate salespeople to strive for excellence.
9. Principle of Regularity and Continuity: Consistent motivation efforts, rather than sporadic ones, help maintain high levels of
motivation over time.
10. Principle of Flexibility: Recognizing that different salespeople may be motivated by different factors and adjusting motivation
strategies accordingly enhances their effectiveness.

Q12. What is motivation of sales force? Explain the methods of sales force management.
MOTIVATION OF SALES FORCE refers to the strategies and efforts aimed at inspiring and energizing the sales team to achieve their sales
targets and perform at their best. Motivated salespeople are more likely to be productive, customer-focused, and committed to meeting
the company's sales objectives. Here are some methods commonly used for motivating the sales force:
1. Bonus: Bonuses are financial incentives provided to salespeople for achieving specific sales targets or exceeding performance
expectations. They serve as direct rewards for exceptional performance and can vary in size depending on the level of achievement.
2. Promotions: Promotions involve offering career advancement opportunities to salespeople who consistently perform well. The prospect
of moving up the organizational hierarchy can be a strong motivator for ambitious sales professionals.
3. Incentives: Incentives are rewards or perks provided to salespeople as additional motivation. These can include gift cards, vacations,
merchandise, or other non-monetary rewards for reaching or exceeding sales goals.
4. Compensation: Competitive compensation packages, including base salaries, commissions, and bonuses, are fundamental to sales force
motivation. A well-structured compensation plan ensures that salespeople are rewarded for their efforts and results.
5. Recognition & Honour: Recognizing and honoring the achievements of salespeople is a powerful motivator. This can take the form of
public acknowledgment, awards, certificates, or special recognition events. Feeling valued and appreciated enhances motivation.
6. Personal Meetings: Personal meetings with sales managers or executives provide opportunities for feedback, coaching, and goal setting.
These one-on-one interactions can help align individual aspirations with company objectives, motivating salespeople to excel.
7. Personal Communication: Regular, open, and transparent communication from leadership fosters trust and a sense of belonging.
Salespeople who feel informed about company goals, strategies, and their role in achieving them are more likely to stay motivated.

Q13. What is compensating sales force? Explain the factors affecting sales force compensation.
SALES FORCE COMPENSATION is the remuneration and reward system used to pay salespeople for their efforts, performance,
and contributions to achieving sales targets and organizational goals. It is a critical aspect of motivating and retaining a high-
performing sales team.
FACTORS AFFECTING SALES FORCE COMPENSATION
1. Salesperson's Role: The role of the salesperson within the organization has a significant impact on compensation. Different
roles, such as inside sales, outside sales, account management, and sales leadership, have varying compensation structures.
2. Sales Cycle: The length and complexity of the sales cycle influence compensation. Longer sales cycles may require base
salaries or other forms of stability to sustain salespeople during extended periods without closed deals.
3. Product Market: The nature of the product or service and the market it serves can affect compensation. High-value, complex
products or services may command higher compensation to attract and retain sales talent.
4. Productivity of Salesperson: Salespeople are often compensated based on their performance, such as achieving sales quotas
or targets. High-performing salespeople who consistently exceed their targets may receive higher commissions or bonuses.
5. Comparative Wages: Market conditions and industry standards play a crucial role in determining sales force compensation.
Employers need to offer competitive compensation packages to attract and retain top sales talent.
6. Sales Team Structure: The structure of the sales team, including the hierarchy and size, can impact compensation. For
example, sales managers or team leaders may receive additional compensation for their leadership roles.
7. Company Goals and Budget: The financial health of the company and its overall sales and revenue goals also affect
compensation decisions. Companies may adjust compensation plans based on their budget constraints and strategic
objectives.

Q14. State the different types of sales compensation.
VARIOUS TYPES OF SALES COMPENSATION
A. Monetary Compensation:
1. Straight Salary Method: In the straight salary method, salespeople receive a fixed base salary as their primary source of compensation.
This approach provides financial stability regardless of sales performance. It is suitable for roles where sales are challenging to
measure directly, such as account management.
2. Straight Commission Method: The straight commission method compensates salespeople based solely on a percentage of their sales.
Salespeople earn commissions for each sale they make, and their income directly correlates with their sales performance. This
method is often used for roles with clear and measurable sales outcomes.
3. Salary-Commission Combination: The salary-commission combination approach combines a fixed base salary with commissions based
on sales performance. This provides a balance between financial stability and incentives for achieving sales targets. It is a common
compensation structure in sales roles.
4. Drawing Account & Commission Plan: In this method, salespeople receive a drawing account, which is an advance against future
commissions. They earn commissions on sales, and the amount earned is reconciled against the drawing account. Once commissions
exceed the advance, salespeople receive the excess.
Non Monetary Compensation
1 Promotions
2 Recognition Programs
3 Fringe Benefits
4 Traveling Expense Account
5 Perks
6 Sales Contests
Monetary Compensation
1 Straight Salary Method
2 Straight Commission Method
3 Salary-Commission Combination
4 Drawing Account & Commission Plan

B. Non-Monetary Compensation:
1. Promotions: Promotions involve recognizing and rewarding salespeople by offering them opportunities for career advancement and
increased responsibilities. It can serve as a motivational tool for ambitious sales professionals.
2. Recognition Programs: Recognition programs acknowledge and honour the achievements and contributions of salespeople. These
programs can include awards, certificates, public recognition, and special events to boost morale and motivation.
3. Fringe Benefits: Fringe benefits are non-cash rewards provided to salespeople as part of their compensation package. These benefits
may include health insurance, retirement plans, stock options, and other perks that enhance overall job satisfaction.
4. Traveling Expense Account: Salespeople who frequently travel for business may receive a traveling expense account. This account
covers expenses related to travel, accommodation, meals, and transportation, making business travel more convenient.
5. Perks: Perks are additional non-monetary benefits that can motivate salespeople. They may include company cars, expense
accounts for entertainment, access to exclusive events, or memberships to clubs or gyms.
6. Sales Contests: Sales contests introduce a competitive element into the compensation structure. Salespeople compete against each
other to win prizes or rewards for achieving specific sales targets. These contests can provide short-term motivation and
excitement.

Q15. How to design & administrate sales force compensation plans?
DESIGNING AND ADMINISTERING SALES FORCE COMPENSATION PLANS
1. Define Sales Job: Begin by clearly defining the sales job and its responsibilities. Understand the specific roles and expectations of
salespeople, including the nature of their sales, target market, and sales cycle.
2. Evaluate Company's General Compensation Structure: Examine the company's overall compensation structure and philosophy. Ensure
that the sales force compensation plan aligns with the company's financial capabilities and strategic objectives.
3. Consider Compensation Patterns in Community & Industry: Research and benchmark compensation patterns in the local community
and the industry. Understand what competitors and similar businesses are offering to attract and retain sales talent.
4. Determine Compensation Level: Decide on the overall compensation level for the sales force. This includes establishing a base salary,
commission rates, and bonus structures. Consider the desired total compensation package.
5. Provide for the Various Compensation Elements: Outline the different components of the compensation plan, including base salary,
commissions, bonuses, and any additional incentives or benefits. Clearly define how each element is calculated and earned.
6. Special Company Needs & Problems: Address any unique company needs or challenges in the compensation plan. For example, if the
company is introducing a new product line, consider how salespeople will be compensated for selling these new offerings.
7. Consult the Present Sales Force: Seek input and feedback from the current sales force. They can provide valuable insights into what
motivates them and what aspects of the compensation plan may need improvement.
8. Reduce Tentative Plan into Writing and Pre-Setting: Document the finalized compensation plan in writing. Ensure that all components,
calculations, and eligibility criteria are clearly explained. Pre-set targets and goals for salespeople to strive towards.
9. Revise the Plan: Continuously review and revise the compensation plan as needed. Market conditions, company goals, and sales force
feedback may necessitate adjustments to keep the plan competitive and motivating.
10. Implement the Plan & Provide for Follow-Up: Roll out the compensation plan to the sales force, providing training and explanations as
necessary. Establish a system for tracking and monitoring sales performance against compensation targets. Regularly review and
communicate progress to ensure alignment with goals.

Q16. Write about the sales force performance appraisal.
SALES FORCE PERFORMANCE APPRAISAL is a systematic process for evaluating and assessing the performance of salespeople
within an organization. It helps in measuring their effectiveness, identifying areas for improvement, and aligning their efforts with
the company's goals. Here are the key steps involved in sales force performance appraisal:
1. Set Performance Standards: The appraisal process begins with setting clear and well-defined performance standards and
expectations. These standards should be specific, measurable, achievable, relevant, and time-bound (SMART). Performance
standards may include sales quotas, revenue targets, customer satisfaction scores, and other relevant metrics.
2. Keep Records of Performance: Maintain comprehensive records of each salesperson's performance throughout the appraisal
period. These records should include sales data, customer feedback, performance reviews, and any relevant documentation.
3. Comparison of Actual with Standards: Compare each salesperson's actual performance with the established performance
standards. This involves assessing whether they have met, exceeded, or fallen short of their targets and expectations.
4. Taking Remedial Actions:
Based on the performance appraisal results, take appropriate remedial actions as needed. These actions can include:
• Providing constructive feedback: Discuss areas where the salesperson excelled and areas that require improvement. Offer
specific feedback and actionable recommendations for development.
• Training and development: Identify training needs and provide resources or training programs to help salespeople enhance
their skills and knowledge.
• Recognition and rewards: Acknowledge and reward top-performing salespeople for their achievements. This can serve as
motivation for the entire sales team.
• Compensation adjustments: Consider performance-related adjustments to compensation, such as commission rates or bonuses
for high performers.

Q17. Define sales territory, Also give the approaches to establish the sales territory.
A SALES TERRITORY is a geographical area or group of customers assigned to a salesperson or a team of salespeople. Sales territories are
defined to facilitate efficient and effective sales operations by organizing and managing customer relationships, sales activities, and
revenue generation within a specific geographic region or market segment.
APPROACHES TO ESTABLISH SALES TERRITORIES:
1 Market Build-Up Approach: It involves dividing a larger market into smaller territories based on various factors, such as geographical location,
population density, demographics, and customer buying behavior. Here's how it works:
• Data Analysis: Gather data on the market, including customer locations, potential sales volume, and market demographics.
• Segmentation: Segment the market into smaller, manageable units based on the data analysis. For example, divide a city into neighbourhoods or
districts.
• Assignment: Assign salespeople or teams to each territory based on factors like their proximity to the territory, familiarity with the market, or
expertise in serving specific customer segments.
• Adjustment: Periodically review and adjust territories to account for changes in market dynamics, such as shifts in customer demand or
population growth.
2 Workload Approach: It focuses on distributing sales territories based on the estimated workload or sales potential within each territory. This
approach ensures that salespeople have a balanced workload and that territories are equitably distributed. Here's how it is implemented:
• Sales Potential Assessment: Estimate the sales potential of different areas or customer segments within the market. Consider factors like market
size, customer density, revenue potential, and growth prospects.
• Territory Allocation: Allocate territories to salespeople or teams based on their capacity to handle the expected workload. Salespeople may have
different capabilities and experience levels, so assignments should match their skills and resources.
• Balancing: Adjust and balance territories to ensure that each salesperson has a fair opportunity to meet their sales targets. This may involve
redistributing accounts or adjusting territory boundaries as needed.
• Performance Monitoring: Continuously monitor sales performance in each territory to identify any imbalances or opportunities for improvement.
Adjustments can be made based on performance data.

Q18. How to do routing & scheduling of sales person in territories?
ROUTING AND SCHEDULING SALESPEOPLE in territories is a crucial task to ensure efficient sales operations. Here are three
common approaches:
1.Straight Line: The straight line approach involves creating a linear route for salespeople to follow. They start from one end of the
territory and proceed to the other end, visiting customers along the way. This approach is straightforward and suitable for
territories with customers evenly spread along a linear path. It minimizes backtracking and duplication of routes.
2.Clover Leaf Pattern: The clover leaf pattern organizes sales visits in a circular or looped route. Salespeople start from a central
location and visit customer clusters in different directions. It is effective for territories with multiple customer clusters, reducing
travel distances compared to a straight line approach.
3.Hopscotch: The hopscotch approach involves visiting customers in a zigzag or hopscotch fashion. Salespeople cover specific
areas before moving to adjacent ones. This approach is suitable for territories with scattered customers or varying customer
density. It allows for efficient coverage of different areas.
When choosing a routing and scheduling approach, consider the geographic layout of the territory, customer distribution, visit
frequency, and specific goals. Utilizing route optimization software and geographic information systems (GIS) can further enhance
the efficiency of sales routes.
Effective routing and scheduling is crucial in sales territory management as it directly impacts salesperson productivity and
customer satisfaction. Beyond route planning, ongoing control is essential. This involves real-time monitoring of salesperson
movements, timely adjustments to accommodate new leads or urgent customer requests, and ensuring adherence to schedules.
Implementing control measures, such as GPS tracking and route optimization software, helps maintain efficiency, reduce travel
time, and enhance customer service, ultimately leading to improved sales performance.

Q19. What is sales budget? Also give different types of sales budget.
A SALES BUDGET is a financial plan or forecast that outlines an organization's expected sales revenue for a specific period,
typically on a monthly, quarterly, or annual basis. It is a fundamental component of the overall budgeting process and serves as
a foundation for planning and managing various aspects of a business, including production, marketing, and resource allocation.
TYPES OF SALES BUDGETS
1 Core Sales Budget: The core sales budget is the primary and most fundamental type of sales budget. It outlines the expected
sales revenue for the organization based on historical data, market analysis, and sales forecasts. This budget typically considers
factors such as sales volume, pricing strategies, and market trends. The core sales budget is the starting point for developing
other budgets within the organization.
2 Selling Expense Budget: The selling expense budget complements the core sales budget by detailing the anticipated costs
associated with the sales and marketing efforts required to achieve the projected sales revenue. It includes expenses related to
advertising, sales promotions, sales team salaries and commissions, travel costs, and other selling-related expenditures. This
budget helps management allocate resources effectively to support sales activities.
3 Administrative Budget: The administrative budget focuses on the non-selling and non-production aspects of the business.
While not directly tied to sales revenue, it is essential for overall financial planning. This budget includes expenses related to
general administration, such as salaries of non-sales staff, office rent, utilities, office supplies, and administrative overhead. The
administrative budget ensures that essential support functions are adequately funded and managed.

Q20. Explain the purpose & procedure of sales quotas.
Sales quotas are specific, measurable sales targets set for individuals or teams to drive performance, financial control, and motivation
within a sales organization.
PURPOSE OF SALES QUOTAS
• Financial Control: Sales quotas are instrumental in maintaining precise control over sales operations and associated expenditures. They
provide a structured framework for managing financial resources efficiently.
• Sales Force Motivation: Sales quotas serve as powerful motivators for the sales team. When salespeople have well-defined, attainable
targets, their motivation to meet or surpass them is naturally enhanced, resulting in improved sales performance.
• Quantitative Performance Benchmarks: Sales quotas establish quantitative performance standards, offering a numerical basis for
evaluating sales team success. They enable the measurement of actual sales against predetermined targets, facilitating performance
assessment and enhancement.
• Identification of Strengths and Weaknesses: By analysing whether sales quotas are consistently met or unmet, organizations can
pinpoint individual and team strengths and weaknesses. This insight aids in strategic resource allocation and improvement efforts.
PROCEDURE FOR ESTABLISHING SALES QUOTAS
1. Planning the Schedule: Initiating the process involves planning the schedule for setting and reviewing sales quotas. This schedule can
vary based on business needs, with options ranging from annual to quarterly or more frequent assessments.
2. Individual Conferencing: Organizations engage in one-on-one or group discussions with each salesperson to establish their respective
quotas. These discussions consider various factors, including past performance, market conditions, territory potential, and individual
capabilities.
3. Summarized Written Quota Statements: Following the discussions, organizations create summarized written quota statements for each
salesperson. These statements outline explicit sales targets, performance expectations, and any associated incentives or consequences
for meeting or missing the established quotas.

Q21. Which factor should be considered while setting sales quotas?
FACTORS CONSIDERED WHILE SETTING SALES QUOTAS
When setting sales quotas, several factors should be considered to ensure they are realistic, achievable, and aligned with the
organization's goals. These factors include:
 Past Sales Record: Analysing past sales performance provides valuable insights into historical trends, seasonal variations, and
the capabilities of salespeople. It serves as a baseline for setting future quotas.
 Customer Buying Power: Understanding the purchasing power and behaviour of customers is crucial. Different customer
segments may have varying buying patterns, and quotas should reflect these differences.
 Company Policy: Quotas should be consistent with the company's overall strategic objectives, policies, and financial targets.
They should support the broader business strategy.
 Production Capacity: Sales quotas need to consider the organization's production or service capacity. Setting quotas beyond
the organization's ability to fulfill orders can lead to operational challenges.
 Competition: Awareness of competitive dynamics, market share goals, and industry benchmarks is essential. Quotas should
be competitive yet attainable within the context of the market landscape.
 Market Conditions: Factors like economic conditions, market growth rates, and emerging trends can influence sales quotas.
Sales forecasts should account for these external factors.

Q22. What is sales quota? Describe different methods of setting the sales quotas.
A sales quota is a specific, quantifiable target or goal set for sales representatives, teams, or the entire sales organization to
achieve within a defined period. Sales quotas are a fundamental tool for motivating salespeople, measuring performance, and
aligning sales efforts with company objectives.
METHODS OF SETTING SALES QUOTAS
o Individual Unit Sales: This method sets quotas based on the expected sales volume for each individual salesperson. It often
considers historical performance, individual capabilities, and territory potential. Quotas are personalized to encourage
salespeople to achieve their specific targets.
o Total Market Sales Potential: Quotas are determined by assessing the total sales potential of the market or territory served by
the sales team. It considers factors like market size, customer demand, and growth potential. Quotas are then allocated to
salespeople based on their territories.
o Previous Year Sales: This approach relies on the sales figures from the previous year as a basis for setting quotas. Quotas may
be adjusted based on growth objectives or market changes. It provides a historical reference point for performance
improvement.
o Judgment of Higher Officials: Quotas may be established based on the judgment and experience of senior management or
sales leadership. This method involves the subjective assessment of market conditions, competitive dynamics, and
organizational goals.
o Sales Force's Own Estimates: Salespeople themselves provide input on their sales projections and quotas. They use their
knowledge of customers, market trends, and sales potential to set their targets. This method encourages salespeople to take
ownership of their goals.

IMPORTANT DEFINITIONS IN THIS MODULE
1 Sales Organisations
• Sales organizations are structured entities within a company responsible for planning, managing, and executing sales activities.
• Still & Cundiff – A sales organisation, like any organisation, is a group of individuals striving jointly to reach certain goals & bearing
formal as well as informal relations with each other.
2 Personal Selling
• Personal selling involves one-on-one communication between a salesperson and a potential customer to promote products or
services.
• Richard Bushirk – Personal Selling consists of contacting prospective buyers personally.
3 Territory Management
• Territory management is the strategic division and organization of geographic or customer areas to optimize sales efforts.
• Maynard & Davis – Sales Territory is a basic unit of sales planning & sales control.
4 Sales Budgets
• Sales budgets are financial plans outlining projected sales revenue for a specific period, aiding in financial forecasting and resource
allocation.
5 Sales Quotas
• Sales quotas are specific, measurable sales targets set for individuals or teams to motivate and evaluate sales performance.
• American Marketing Association – Sales Quota is a sales goal assigned to a marketing unit to be used for managing the sales effort.

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Sales & Distribution Management Module 2.pdf

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