This document discusses the importance of setting SMART sales objectives and the process for doing so. It outlines quantitative factors to consider like sales trends, market size, and budget/profit. Qualitative factors include economic conditions, competition, and organizational personality. The process involves setting individual objectives using macro, micro, and expense-plus approaches, reconciling them, and adjusting based on qualitative factors. The objectives should be specific, measurable, achievable, realistic, and time-bound to help achieve overall corporate and divisional goals.
2. IMPORTANCE OF SALES OBJECTIVES
Sales objectives are self-defining in that they
represent projected levels of goods or services to
be sold.
Every thing in the plan is to achieve sales
objectives
3. SMART OBJECTIVES
S – Objectives must be specific
M – Objectives must be measurable
A – Objectives must be challenging & achievable
R – Objectives must be realistic
T – Objectives must be time specific
4. FACTORS TO CONSIDER IN SETTING
SALES OBJECTIVES
Qualitative factors
Quantitative factors
5. QUANTITATIVE FACTORS
Sales Trends – trending of market in past and
company sales when projecting sales.
Market sales
Company versus market sales
Market share trends
Size and purchase rate of your target market
Budget, profit and pricing considerations
Sales expenses
Cost of doing business / operational cost
Expected profitability
6. QUALITATIVE FACTORS
Economic considerations
Recession, Inflation or stable conditions
Competition
Expand its sales force, add distribution channels, add
retail outlets etc.
Fad Volume – Sports tournament, Health related
Negative / Positive & how long ?
Your PLC
The mission and personality of your organization
Conservative , Charging ? What is the expectation?
7. PROCESS OF SETTING SALES
OBJECTIVES
1. Set individual sales objectives using three
different quantitative methods.
2. Reconcile these different quantitative goals into
composite sales objectives.
3. Adjust the quantitatively based composite sales
objectives through the interpolation of the
relevant subjective, qualitative factors, such as
the economy, competition, and the personality of
your organization
8. THE PROCESS OF SETTING SALES
OBJECTIVES
Task 1 Task 2 Task 3
Set quantitative Reconcile into one Qualitative adjustment of
Objectives composite sales composite objective into
objective marketing plan sales
objective
Market +
Macro Share
Composite sales Marketing plan
Micro Top + Bottom
objectives Sales Objectives
Expens Profit +
e plus Expense
9. SETTING QUANTITATIVE SALES OBJECTIVES
Outside macro approach
Inside micro approach
Expenses plus approach
Alternative new product / category approach
10. OUTSIDE MACRO APPROACH
Look outside your company env and estimate total
market or category sales for each of next 3 yrs
Then estimate your company market share for the
next 3 yrs.
Sales objective = total market sales x market share
Should end up with a 3 yrs projection for both unit &
dollar sales.
11. INSIDE MICRO APPROACH
Start at the top or with a review of the companies
total sales.
Using the straight percentage or trend line
approach project sales for next 3 yrs
Calculate the above for each department / product
line and add all together to arrive at a company
sales projection for next 3 yrs
Reconcile this total with your initial sales estimate
for the entire organization to determine an ultimate
top projection.
12. INSIDE MICRO APPROACH CONTD
Estimate sales from where they are generated to
arrive at the bottom up figure
Sales by each channel
Store unit
Service office center
Add them together to reach each years projection
To reach the final micro sales figure reconcile the
top sales estimates with the bottom sales estimates
13. EXPENSE PLUS APPROACH
Budget based method / ideal for short term
Estimate the cost and the required profit for the next year
Exp Op.expense% = Gross Margin% - Exp PBIT%
Sales Objective = Bud. Exp / Exp Op.expence%
14. ALTERNATIVE NEW PRODUCT / CATEGORY
APPROACH
Review the potential target market and work
back word to a sales objective number
Used when you don’t have historical data
When introducing a product for the first time
Numbers can be highly speculative and in accurate
15. RECONCILING SALES OBJECTIVES
Analyze the Macro, Micro & Cost plus approach
and reconcile the differences
Use three of them and get a weighted average
At least use two methods
16. QUALITATIVE ADJUSTMENT OF QUANTITATIVE
SALES
Review the qualitative factors that has an impact on
the sales objectives
Increase or decrease based on the qualitative
factors that you are considering
E.g.:-
A. Recession – negative impact (reduce)
17. OTHER CONSIDERATIONS
Include rationale with sales objectives
Process used, assumptions, factors considered
Involve upper management in setting sales
objectives
Plant to revise the sales objectives
18. EXPECTATIONS OF CHAPTER
Acknowledge the importance of setting sales
objectives
Appreciate both quantitative and qualitative factors
of effecting sales
Set sales objectives in achieving the corporate and
divisional objectives