2. A sales budget is management's estimate of sales for a
future financial period. A business uses sales budgets to
set department goals, estimate earnings and forecast
production requirements.
It specifies:
a) How much quantity to be sold
b) In which territories goods are to be sold
c) To what type of customers goods are to be sold
d) What will be the estimated amount of sales/selling
expenses
e) How projected sales/selling expenses will affect our
profits
3.
4. 1) Estimates sales in units and in rupees.
2) It is made by sales department.
3) It is prepared for a definite future period.
4) Anticipates level of sales and selling expenses.
5) Affects budget of other departments. Helps to
coordinate activities of other functional departments.
6) Helps in exercising control over sales force.
7) Used as a planning instrument for various
departments
8) It is a continuous activity.
5. Factors Affecting Sales Budget
Internal Factors
1)Last year sales
2) Growth rate in sales
3) Market area
4) Modifications in products
5)Changes in price policy
6)Brand and company
image
7)Stage of product life cycle
External Factors
1) Level of competition
2) Competitor’s Strategy
3) Phase of business cycle
4)Changes in government
policies
5)Changes in technology
6)Economic conditions of
the country
7)Purchasing capacity of
customers
6. 1) Sales Budget
a) Estimates the sales in terms of units and value in rupees.
b) Based on past sales and trends in sales and can be
adjusted for expected changes.
c) Gives estimates of sales- product wise, area wise, month
wise.
7. 2) Selling Expense Budget
a) It is about approved selling expenses which can be
incurred to achieve estimated sales in the budget
period.
b) All expenses relating to selling and distribution of
the products are included.
c) Gives detailed information about various selling
expenses which salesman can incur to achieve sales
targets.
8. d) Expenses can be
-fixed, variable or semi variable
-administrative, personal selling expenses, distribution
and promotion expenses
9.
10. I.Top-Down Approach
The top management decides goals and budgets
which are communicated to different sales
departments along with disbursal of funds.
II. Bottom-Up Approach
The sales departments are asked to set their
budget levels according to their goals and
communicate it to the to management level
where, finally these are aggregated.
11. Top Management
decides the budget
levels
Distribution of funds to
departmental units
along with the
instruction to stay
within the budget limits
BOTTOM-UP APPROACH
Objectives are set at
departmental units
Activities to be performed are
decided
Costs of performing these
activities are set
Budgets are determined at an
individual level and fed back to
the top management
12. Preliminary
Analysis
Development of
Sales Forecast
Determination of
Sales Activities
Determination of
Selling Expense
Budget
Finalization of
Projections at
Departmental
Level
Presentation
beforeTop
Management
Review and
Approval
Allocation and
Assignment
Follow-Up
13. 1. Helps in Planning
2. Control over Sales Force
3. Control over Selling Expenses
4. Identifying Weak Points
5. Helps to Increase Sales and Profits
6. Motivates the Sales Force
7. Helps to Operate Effective Compensation
Plans
8. Launch Special Sales Promotion
9. Improve Overall Efficiency
10.Coordinate the Activities
11.Allocate and Assign Sales Operations
14.
15. 1) Percentage of Sales Method
Selling Expenses Amount= Past Year’s Sales or
Anticipated Sales * Pre-determined Percentage
For example: if anticipated sales are Rs.300 Lakh and
percentage of selling expenses is 3%, then the
company can spend Rs. 9 lakh as selling expenses.
2) Competitive Parity Method
Collection of data regarding competitors’ selling
expenses based on the assumption that competitor
has framed their selling expense budget correctly.
16. 3) Objective and Task Method
It is goal oriented method and determines selling
expenses by:
a) Identify selling tasks to achieve target sales
b) Identify cost of these tasks
c) Aggregate all such costs and provide some amount of
contingencies
4) Affordable Method
This considers funds available with the company for
determining selling expenses. It depends upon ‘what the
company can afford’ and ignores the actual
requirements for selling expenses to achieve sales targets.
17. Sales Management- Pearson
Sales Management – C.N. Sontakki
Sales Management – Cundiff and Still
Advertising and Sales Management – VK Publications
Sales Management- Pardeep Kumar
