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Sales Management

Workers Compensation Law Discussion

Sales Management

Postby Stacy » Sun Nov 13, 2016 6:13 am

Q. 1- Briefly describe the various tasks and responsibilities of a sales manager

Q. 2- What is the purpose of sales display? Why is it increasingly vital for the marketer to effectively manage the displays of their offerings?

Q. 3- What kind of criteria would you propose to use, in selecting sales people for promotion to sales manager? Substantiate.

Q.4- What factors should the sales manager consider while deciding which recruitment sources to use? Explain with suitable examples.

Q-5- What are the components that go into the preparation of a sales budget? Briefly describe the steps involved in the preparation of the same.  
Stacy
 
Posts: 37
Joined: Tue Feb 18, 2014 3:28 am

Sales Management

Postby Elder » Mon Nov 14, 2016 3:18 pm

Q. 1- Briefly describe the various tasks and responsibilities of a sales manager

Q. 2- What is the purpose of sales display? Why is it increasingly vital for the marketer to effectively manage the displays of their offerings?

Q. 3- What kind of criteria would you propose to use, in selecting sales people for promotion to sales manager? Substantiate.

Q.4- What factors should the sales manager consider while deciding which recruitment sources to use? Explain with suitable examples.

Q-5- What are the components that go into the preparation of a sales budget? Briefly describe the steps involved in the preparation of the same.  
Elder
 
Posts: 47
Joined: Mon Jan 13, 2014 10:44 am

Sales Management

Postby kenway7 » Mon Nov 14, 2016 6:28 pm

JATENDER,

HERE IS SOME  USEFUL  MATERIAL.

REGARDS

LEO LINGHAM

=========================================

1) Briefly describe the various tasks and responsibilities of a sales manager in the organization you are associated or familiar with.

SALES  MANAGEMENT

IT  IS  THE  MANAGEMENT  PROCESS  OF ESTABLISHING , DIRECTING , AND COORDINATING   THE SALES               DEVELOPMENT  ACTIVITIES   FOR  THE  COMPANY PRODUCTS.               STRATEGICALLY  PLAN FOR, DEVELOP               AND PROFITABLY PENETRATE THE MARKET  TO WHICH               THE PRODUCTS, SERVICES AND CAPABILITIES OF THE                 COMPANY CAN BE DIRECTED.               ENSURING   THE  SALES  TO   CUSTOMERS ,               DISTRIBUTORs  and  RESELLERs achieve  the budgeted target.

=========================================================

THE  SCOPE  OF  THE  SALES  MANAGEMENT  VARIES  WITH  THE -NATURE  OF  THE  INDUSTRY

-PRODUCTLINES

-GEOGRAPHICAL  SPREAD

-NATURE OF  SELLING

ETC ETC.

=====================================================

The  scope  of  the  sales  management, in broad terms  includes,

the  following

Establish Salesforce objectives

Organizing the Salesforce

Recruiting and Selecting Salespeople

Training Sales Personnel

Compensating Sales People Motivating Sales People

Developing  sales  plans

Developing  sales  development  programs

etc etc

===================================================

SALES  MANAGEMENT

Specific accountabilities

*Direct all sales activities for the achievement of short and long term business objectives, increased profit, and market control.

*Establish and co?ordinate the sales objectives, policies and programme within the context of the overall corporate plan and, where appropriate, recommend standards and set targets and quotas.

*Prepare or arrange for preparation of the budgets, reports and forecasts and ensure they are presented in a timely manner to the Chief Executive.

*Appraise the activities of the sales staff according to overall sales strategies. Monitor and evaluate the performance, and the efficiency of staff and procedures.

*Co?ordinate subordinate staff to optimise the use of human and material resources to achieve goals. Consult with subordinate staff and review recommendations and reports.

*Direct the preparation of operational matters including volume and profit objectives, promotion distribution, pricing and selling.

*Direct sales activities by setting product mix, geographical sales areas and customer service standards.

*Control and monitor sales methods, key customer strategies and arrangements by recommending prices, discount policies, credit arrangements, and conditions of sale.

*Monitor customer service, invoicing, expenditure, payments and administration costs.

*Direct the development of initiatives such as new products, incentive bonus schemes and the dropping of unprofitable products.

*Maintain necessary contact and negotiations with major suppliers, key customers, industry associations and government representatives to achieve the objectives of the division.

*May assist in the direction of merchandising methods and distribution policy.

*Select, or approve the selection and training of staff. Establish lines of control and delegate responsibilities to subordinate staff.

*Ensure all the activities of sales comply with relevant Acts, legal demands and ethical standards.

======================================================

======================================================

Management of Salesforce

Sales force is directly responsible for generating sales revenue.

Eight general management areas: Establish Salesforce objectives

Similar to other promotional objectives

Demand oriented or image oriented.

Major objective is persuasion, converting consumer interest into sales.

Sales objectives; expected to accomplish within a certain period of time.

Give direction and purpose and act as a standard for evaluation.

Set for total salesforce and each individual salesperson.

Can be $s, units sold, market share to achieve, for individual salespersons, also include ave. order size, ave. # of sales/time period, and ratio orders/calls.

Organizing the Salesforce

In-house vs. independent agents(manufacturer's sales agents). Organize by: Geography(simplest, but not suitable if product(s) are complex or customers require specialized knowledge) Customer: Different buyers have different needs Product: Specific knowledge re: products is needed Size. Marginal analysis, or determine how many sales calls/year are needed for an organization to effectively serve its customers and divide this total by the average # of sales calls that a person makes annually. Also use subjective judgement.

MBNA estimates how many calls to expect, one year in advance, and then determines the size of the salesforce at any given time. Recruiting and Selecting Salespeople

Need to establish a set of required qualifications before beginning to recruit. Prepare a job description that lists specific tasks the salesperson should perform and analyze traits of the successful salespeople within the organization.

May use assessment centers--intense training environment that places candidates in realistic problem settings in which they give priorities to their activities, make and act on decisions.

Recruitment should be a continual activity aimed at reaching the best applicants.

Applicants that most match the demographics of the target market. Changing demographics, may be wise to hire hispanic sales people if your territory is in Florida!!

Training Sales Personnel

Use formal programs, or Informal on-the-job training. Can be complex or simple.

Training should focus on: the company products selling techniques. Aimed at new hires and experienced personnel.

Can be held in the field, educational institutions or company facilities.

Oldsmobile spent $25 million last year to teach its dealers how to better treat its customers.

Compensating Sales People

To attract, motivate and retain sales people, that facilitate and encourage good treatment of the customers. Need to understand personalities of sales people. Strive for proper balance of freedom, income and incentives.

Need to determine the best level of compensation required, and the best method of calculating it. Straight salary straight commission(selling insurance)--single percentage of sales or sliding rate Combination plan Motivating Sales People

Need a systematic approach, must also satisfy non-financial needs: Job security Working Conditions Opportunities to succeed Sales contests increase sales.

Symbolic awards--plaques, rings etc.

Can also use negative motivational methods for under performers.

Due to burn out--even the best need motivating!!

Ongoing process...keep reps. hungry

Need a motivational program.

Spend time with reps, personal attention!!

Take interest in them and the sales goals

Compensation packet that rewards quality salesmanship and extra effort Recognition of extra effort of sales force Make sure SR feel important Keep SR informed of company activities Make certain reps. believe in the company Goals must be realistic and achievable and changeable Determine what they want and give it to them Controlling and Evaluating Salesforce performance Rely on information from call reports, customer feedback and invoices. Performance is determined by objectives. May compare with predetermined performance standards or with other sales people working under similar conditions. ###########################################################

2) What is the purpose of sales display? Why is it becoming increasingly vital for the

marketer to effectively manage the displays of their offerings?

SALES  /  MERCHANDISE DISPLAYS

Merchandise displays offer retailers nonpersonal ways of presenting products or

information to consumers inside stores. Retailers use displays to stimulate sales of

products at points of purchase(POP). POP displays capitalize on existing traffic

that has already come into the store with or without the intent to buy products on display.

Innovative, colorful, helpful displays often heighten the interest of shoppers in specific

merchandise and in shopping in general.

Most retailers can expect to incur little or no risks or work with many displays. It is

common practice for wholesalers and sales representatives to set up and maintain

displays of their products. This is one way that these suppliers can insure shelf space

for their products, thus, they claim, benefitting both themselves and retailers.

Displays offer effective means of increasing exposure for specific products at little or no

extra cost. They are especially effective ways of introducing new products or some at

minimal discount.

Many products sell better if they can be shown in operation. Displays can offer striking

evidence about products such as dishwashers, vacuum cleaners, computers, toys etc.

Consumers can get positive results immediately by trying products prior to actually

buying them.

The following are considered characteristics of good displays:

* are simple;

* have a central theme that ties in with other promotions;

* are distinctive and dramatic;

* are pleasing and appropriate for the product and store;

* show merchandise in use, where possible;

* are clean and neat;

* provide information;

* are consistent with image of store.

========================================================

SALES/ MERCHANDISE   DISPLAYS

are  planned  with  a  purpose.

*To  attract  the  passing  people  traffic.

*To  bring in  the  window  shoppers.

*To  attract  more  window  shoppers.

*To  turn  the  incoming  people  traffic into  customers.

*To  position   the  product  in front  of  potential  buyers.

*To  lift  the  profile  of  the  brand.

*To  create  an  awareness  of  the  product existence  in the  shop.

*To  attract the  customer  towards  the  product.

*To  influence  the  customer  to touch/feel   the  product.

*To motivate  the  customer  to  buy  the  product.

*To increase  the  impact of  the  product at  the  moment  of  purchase.

*To  stir  up  the  impulse  purchase.

*To  increase  the rate  of  sales  of  a product.

*To  present  the  product and  make the  customer  feel special.

*To  stock the  product  in  an  orderly  manner.

*To  help  the  merchandise  planning  better /  effective.

*To  help  the  customer to  locate  the  product  easily.

*To  help the  retailer  to  manage  the  stock/  inventory.

*To  help  to lift  the  brand  image.

*To  make  the  retail  selling  more  productive.

*To  increase   multiple  sales.

*To  bring  back  the  customer  for  repeat  purchase.

*To  act  as  a  suggestion  selling  agent.

*To  increase  product  stock  turnover.

*To  increase  sales  per  square  foot.

*To  help   to  decrease  the  mark  downs rates.

ETC   ETC

ALL  THESE  FOR  IMPROVING

-TOTAL  SALES

-TOTAL  SALES  PRODUCTIVITY

-TOTAL  PROFIT

-TOTAL  PROFITABILITY

==================================================

What are the various types of display arrangements that can be used to build traffic at retail outlets?

THERE  ARE  VARIETIES   OF  DISPLAY  ARRANGEMENT.

THE  SELECTION  OF  A  DISPLAY  ARRANGEMENT   DEPENDS  ON

-the  nature  of  the  product

-the  purpose  for  the  display  arrangement.

-the  occassion

-the  budget  allocation

etc etc.

-----------------------------------------

*ACRYLIC   DISPENSERS.

*COOL  ALUMINIUM   DISPLAY  COUNTERS  FOR  COLD  FOODS [ MEAT  ETC]

*HOT  ALUMINIUM  DISPLAY  COUNTERS  FOR  HOT  FOODS [ HOT  COOKED  TRAYS]

*DISPLAY  SHOWCASES.

*DRESS FORMS  -- RACKS  FOR  CLOTHES

*MANNEQUINS.

*BOUTIQUE  RACKS

*FRONT-END  DISPLAYS

*COUNTER  DISPLAYS.

*HIGH  WALL  DISPLAYS. [ FULL  DRESSES]

*DISPALY  CUBES  [ SHIRTS]  

*PEDESTALS [ IMPULSE  SALE]

*HIGH  STANDABOVE  [ LIKE  SHAMPOOS]

*HIGH  ROUND  STAND  [ SALON  PRODUCTS]

*CONTOUR  WAVE DISPLAYS.

*TALL  TOWER   DISPLAYS.

*SORTING  AND  DISPLAY  TABLE  [ SHIRTS  ETC]

*KIOSKS  DISPLAYS.

=====================================

=================================

3) What kind of criteria would you propose to use, in selecting sales people for promotion to sales manager? Substantiate.

THE  CANDIDATE  SHOULD  HAVE  A  GOOD  UNDERSTANDING

OF   SELLING  SKILLS  ELEMENTS.

Product Knowledge      

Company Knowledge [ YOUR COMPANY/ THEIR SERVICES]      

Human Relations in Selling

Planning of Sales      

Time Management

Prospecting New Clients      

opening the Sales      

customer Relations

Sales Presentation      

Customer  Servicing

Sales Negotiation       

Persuasive Selling

Sales Communication      

Psychology in Selling

sales Counselling      

Probing Techniques

Consultative Selling      

Handling  of  various Types of customers

Handling Objections      

Building Goodwill Organisation  of  your daily work      

Listening Skills

Setting Goals      

Telephone Techniques

Selling Benefits      

Competitor's Knowledge      

Pre?call Planning

------------------------------------------

WHAT   TALENTS   YOU  NEED  AS  A  SALES  MANAGER.

HERE  ARE SOME

Things  you  must   OBSERVE / WORK  ON/ PUT  INTO  USE  TO  IMPROVE

YOUR   EFFECTIVE  ROLE:

• Accurate Self?Insight?Demonstrating an awareness of own strengths and development needs as well as the impact of own behavior on others,

• Adaptability?Effectively managing changing environments, including business challenges, technologies, etc.

• Building Organizational Talent?Attracting, developing, and  allowing the organization as a whole to meet future challenges.

• Business Acumen?Understanding and utilizing economic, financial, and industry data to accurately diagnose business strengths and weaknesses; identifying key issues and developing strategies and plans.

• Change Leadership?Continuously seeking(or encouraging others to seek) opportunities for different and innovative approaches to addressing organizational problems and opportunities.

• Coaching/Teaching?Providing timely coaching, guidance, and feedback to help others excel on the job and meet key accountabilities.     *Communicating with Impact?Expressing thoughts, feelings, and ideas in a clear, succinct, and compelling manner in both individual and group situations; adjusting language to capture the attention of the audience. *Cultural Interpersonal Effectiveness?Demonstrating an understanding and effective adaptation to varying interpersonal styles and norms across cultures; taking actions to minimize the stresses of cross?cultural experiences and using them as opportunities for growth.

*Customer Orientation?Cultivating strategic customer relationships and ensuring that the customer perspective is the driving force behind all value?added business activities.

*Developing Strategic Relationships?Using appropriate interpersonal styles and communication methods to influence and build effective relationships with business partners(e.g., peers, functional partners, external vendors, and alliance partners).

Driving for Results?Setting high goals for personal and group accomplishment; using measurement methods to monitor progress toward goal attainment; tenaciously working to meet or exceed those goals while deriving satisfaction from the process of goal achievement and continuous improvement.

*Empowerment/ Delegation?Using appropriate delegation to create a sense of ownership of higher?level organizational issues and encouraging individuals to stretch beyond their current capabilities.

*Energy?Demonstrating the physical and mental stamina necessary to meet the challenges of organizational demands.

*Entrepreneurship?Advancing own understanding and sharing insight regarding key market drivers; actively using that knowledge to create/seize business and customer focus opportunities and/or expand into new markets, products, or services.

*Establishing Strategic Direction?Establishing and committing to a long?range course of action to accomplish a long?range goal or vision after analyzing factual information and assumptions; taking into consideration resources, constraints, and organizational values.

*Executive Disposition?Conveying an image that is consistent with the organization's values; demonstrating the qualities, traits, and demeanor(excluding intelligence, competence, or special talents) that command leadership respect.

*Global Acumen?Developing and incorporating an understanding of the competitive global business environment as well as an awareness of economic, social, and political trends that impact the organizatior.

*Influencing Others?Using appropriate interpersonal styles and techniques to gain acceptance of ideas or plans; modifying one's own behavior to accommodate tasks, situations, and individuals involved.

*Learning Orientation?Demonstrating and encouraging in others a zeal for new knowledge, experiences, and challenges; regularly creating and capitalizing on learning opportunities.

*Managing the job?Effectively controlling one's job by planning time on priority goals, requirements, and areas of opportunities.

*Mobilizing Resources?Managing staff and resources consistent with organizational goals; proactively negotiating and accessing resources outside of one's immediate domain when necessary.

*Operational Decision Making?Relating and comparing; securing relevant information and identifying key issues; committing to an action after developing alternative courses of action that take into consideration resources, constraints, and organizational values.

*Persuasiveness?Persuading or influencing others to accept a point of view, adopt a specific agenda, or take a course of action.

*Positive Disposition?Demonstrating a positive attitude in the face of difficult or challenging situations; providing an uplifting(albeit realistic) outlook on what the future holds and the opportunities it may present.

*Reading the Environment?Demonstrating broad organizational awareness by accurately perceiving organizational, political, and social dynamics and trends.

*Selling the Vision?Passionately selling an organizational strategy; creating a clear view of the future state by helping others understand and feel how things will be different when the future vision is achieved.

*Valuing Diversity?Creates and maintains an environment that naturally enables all participants to contribute to their full potential in pursuit of organizational objectives.

===================================================================

---------------------------------------------------------------------------------------------------------------------------------------------------

SALES MANAGEMENT  POTENTIAL  SHOULD HAVE  AN   UNDERSTANDING  OF

1.MANAGING  ONE'S   CAPABILITIES

2. SALES MANAGEMENT STRATEGY

3.MANAGING  THE  MARKET 4. MANAGING  SALES  PROBLEM SOLVING

5. MANAGING   THE  SALES FORCE 6. MANAGING  THE  SALES RECRUITMENT/SELECTION

7. MANAGING   SALES   OBJECTIVES

8.  MANAGING  SALES  SITUATIONS 9.MANAGING  SALES PLANNING

10 MANAGING / SETTING TERRITORY SALES OBJECTIVES

11. MANAGING  ACCOUNTS DEVELOPMENT   

12. MANAGING  SALES  CONTROL

13. MANAGING  FIELD VISITS

14. MANAGING  SALES FORCE COMMUNICATIONS

15. MANAGING  SALES  PERFORMANCE  MANAGEMENT  SYSTEM

=======================================

4) What factors should the sales manager consider while deciding which recruitment sources to use? Explain with suitable examples.

WHAT  ARE  THE VARIOUS  METHODS  OF   RECRUITMENT

A manager can recruit in two different ways:

1.Internal recruitment is when the business looks to fill the vacancy from within its existing workforce. ADVANTAGES

-Cheaper and quicker to recruit -People already familiar with the business and how it operates -Provides opportunities for promotion with in the business – can be motivating -Business already knows the strengths and weaknesses of candidates ----------------------------------------------------------------------

DISADVANTAGES

-Limits the number of potential applicants -No new ideas can be introduced from outside the business

-May cause resentment amongst candidates not appointed -Creates another vacancy which needs to be filled ================================================

The four most popular ways of recruiting  internally  are: 1.WORD  OF  MOUTH.

2.INTERNAL   REFERRALS.

3.INTERNAL   CIRCULARS/ NEWLETTERS.

4.INTRANET.

==================================================

2.External recruitment is when the business looks to fill the vacancy from any suitable applicant outside the business.

ADVANTAGES

-Outside people bring in new ideas -Larger pool of workers from which to find the best candidate -People have a wider range of experience -----------------------------------------------------------------------

DISADVANTAGES

-Longer process -More expensive process due to advertisements and interviews required -Selection process may not be effective enough to reveal the best candidate ===================================================

The four most popular ways of recruiting externally are: Job centres - These are paid for by the government and are responsible for helping the unemployed find jobs or get training. They also provide a service for businesses needing to advertise a vacancy and are generally free to use.

Job advertisements - Advertisements are the most common form of external recruitment. They can be found in many places(local and national newspapers, notice boards, recruitment fairs) and should include some important information relating to the job(job title, pay package, location, job description, how to apply-either by CV or application form). Where a business chooses to advertise will depend on the cost of advertising and the coverage needed(i.e. how far away people will consider applying for the job

Recruitment agency - Provides employers with details of suitable candidates for a vacancy and can sometimes be referred to as ‘head-hunters’. They work for a fee and often specialise in particular employment areas e.g. nursing, financial services, teacher recruitment

Personal recommendation - Often referred to as ‘word of mouth’ and can be a recommendation from a colleague at work. A full assessment of the candidate is still needed however but potentially it saves on advertising cost.

======================================================

5) What are the components that go into the preparation of a sales budget? Briefly describe the steps involved in the preparation of the same.

FOR   PREPARING     THE  SALES   BUDGET,

FIRST,    REVIEW

1.CORPORATE    VISION.

2. Corporate  Mission

3. Corporate  Objective

4. Corporate  Strategy

5.Corporate  Organization  Policy/ Budget  Guidelines.

6. Corporate  Sales  forecasts  [  3 or 5 or 10  years ]

-----------------------------------------------------------------------------

SECOND,  DEVELOP   THE   SALES  FORECAST

THERE  ARE   TWO  FORECASTING  SYSTEM  IN   ANY  ORGANIZATION.

1.MARKET  DEMAND   FORECASTING.

2.SALES  FORECASTING.

==========================================

1.MARKET  DEMAND  FORECASTING.

-this  forecasting  is  done  with  the  help of  experts.

-this forecasting  takes  external  factors  like

*political  situation.

*economic   factors

*social orders

*technology  impact

*legal

*environment  factors

-this  forecasting  also  considers  the  competitive  activities.

-this  forecasting  looks  at  the  total  market --all  consumers/customers.

etc etc.

IN  THIS FORECASTING,  THE  LINE  MANAGERS MAKE  VERY  LITTLE

CONTRIBUTIONS,  BECAUSE  THEY  LACK  THE  SENSITIVITY

OF  VARIOUS  FACTORS   AND  THEIR  IMPACT  ON THE  TOTAL  DEMAND.

==================================================

2. COMPANY   SALES   FORECASTING.

THE  SALES  MANAGEMENT  

FIRST  STEP,

-define  the    products  - WHAT  IT  IS.

-define   HOW  IT IS  USED BY  CUSTOMERS. -define  your  market  ---its  characteristics

-define  your  universe  where  the  business is  located --state or region  etc

-define  the   population  size  in the   area

-define  the    market size  in the  area.,  HOW  MANY  POTENTIAL  USERS

WILL  BUY  SUCH PRODUCTS  AS   YOURS.

=================================================

================================================

-reviews  the  previous  12  months  sales.

CHECKLIST SALES PLANNING AND FORECASTING

checks  the  company key objectives      

sets  the  sales   forecast

Decide on forecast period:

• short?term [ 12 months]

• medium?term  [  3  years

Check sources of data relevant to forecasting and planning exercise:

• internal: [ if  any ]

historical sales ?volumes -   values

-    ? month by month -   ? by product -   ? by territory -   ? by customer -   ? by geographical -   or functional level or job

• external: ? individual performance of competitors -   total market for the products by volume orvalue -   ? published  economic data on expenditure on the -   product or related product groups or categories

Develop sales forecasts at macro and

micro levels by: productvolumes product sales values month?by?month customer or user territory geographical management control area and functional position(e.g. key accounts) market sector

Consider:

Market knowledge -   economic factors(interest rates, employment levels, disposable incomes, market price  movements, inflation, production, distribution, exchange rates)

-    ? demographic factors(including population shifts and

changes in age/sex profiles and ratios) -   legislative'and regulatory changes -   ? political environment -   ? distribution channel developments -   ? import/export markets -   ? market trends and changes in product preference patterns -   ? seasonal or cyclical  market trends

Checklist Sales planning and forecasting ? user attitudes Perceptions and

Expectations   Notes    Action      

- competitive prices and pricing parameters            

- competitive current and potential new            

Products, and competitive market            

positioning and strategies            

company resources            

- plant and production and any other            

Capacity limitations            

- availability of raw materials and other            

Inputs            

- factory labour markets and labour            

Resources            

- personnel recruitment and training            

lead times            

- financial resources and limitations            

- research developments(new            

innovations and technology, in-house            

company research programmes,            

I ready made'new products, longer-term            

new products and developments)            

- sales force resources            

- marketing support(advertising and            

promotions)            

Budget sales force operating costs and            

expenses, including:            

Wages and salaries            

Expenses            

department operating costs            

Vehicles            

sales aids and promotional materials            

promotional activity and any pricing            

rebates or discounts within sales force            

Control            

Plan sales force forward staffing levels,            

taking account of:            

• sources and recruitment lead times            

• training needs and lead times            

management needs            

Changes in the needs and mix of skills,            

experience, characteristics, etc.            

Develop profit contribution forecasts by:            

• customer            

• territory            

• geographical or functional management            

control area or level            

Set specific objectives for each            

geographical or functional level of the sales            

organisation, and for each customer          

THIS  IS HOW  THE  SALES  FORECAST  IS

CARRIED  OUT.

DEMAND   MARKET  FORECAST  SALES  FORECAST

SALES  PLANNING

SALES  BUDGETING

always  go   together.

Develop sales forecasts at macro and

micro levels by: productvolumes product sales values month?by?month customer or user territory geographical management control area and functional position(e.g. key accounts) market sector

DEVELOP   THE SALES  BUDGET

Budget sales force operating costs and            

expenses, including:            

Wages and salaries            

Expenses            

department operating costs            

Vehicles            

sales aids and promotional materials            

promotional activity and any pricing            

rebates or discounts within sales force            

Control            

Plan sales force forward staffing levels,            

taking account of:            

• sources and recruitment lead times            

• training needs and lead times            

management needs            

Changes in the needs and mix of skills,            

experience, characteristics, etc.            

Develop profit contribution forecasts by:            

• customer            

• territory            

• geographical or functional management            

control area or level            

Set specific objectives for each            

geographical or functional level of the sales            

organisation, and for each customer          

SOME   RESOURCES

Sales budget

The sales budget is the most important element in the master budget as all other budget assumptions flow from the sales forecasts in the budget. While it can readily be seen that the cost of raw materials and direct labour are directly related to the level of sales, it might not be so obvious how other budget elements relate. Here are some relationships: ·   The level of capital expenditure will depend on the level of sales. If a company is showing rapid sales and therefore production growth, there may not be sufficient manufacturing capacity and the company will need to buy more capacity. This will require capital expenditure. ·   The level of sales which are on credit will influence the Balance Sheet because it drives the level of Accounts Receivable ·   The level of sales will drive selling and marketing expenses because extra sales means extra distribution costs and may relate to bonuses paid to the sales force ·   The mix of sales can relate to the level of selling and marketing expenses. If a company is introducing a new product there may be a high level of sales expenses as new advertising campaigns are ramped up ·   The sales made by a company generates a positive cash flow and so the level of sales are important in determining the cash flow of the company and, in turn, the cost of debt finance for the business

The sales budget will depend on the successful forecasting of a number of factors including: ·   The state of the overall economy ·   The competitive position ·   The plans to introduce new products ·   The success of advertising and marketing campaigns

The factors in which management might be interested are: ·   Product: Here the management will wish to know sales revenue by product line. Budgets may differ from company to company. For some companies, it will be possible to budget down to the individual product line and show budgeted product sales by product code in terms of units of production and revenue per item. An example of a company which will wish to budget in this manner is a motor vehicle manufacturer which will budget not only for the general model but also variations within a model. There will be different revenues per unit for a top of the range model than for the entry level model within that range. It is also very likely that there will be different gross margins for the different models within a range not only in terms of the ·   Period: The periods into which the budget may be divided might be by quarter, by month or even in some companies, by week. As discussed above, the overall budget will typically be for a financial year. ·   Sales territory: As well as breakdowns by product, it will often be necessary to analyse budgeted sales by sales territory. This might be based upon a geographic territory within a country, a breakdown by countries or regions and in some cases by class of customer. An example, for a software company, might be sales through sales channels such as local agents, direct phone sales and licensing arrangements with major customers such as government departments or large companies. Selling Expenses budget

The selling expenses budget will normally be made up of a variety of costs that are fixed and variable and what might be called "discretionary".

Some of these costs are: ·   Variable o   Sales commissions o   Distribution costs o   Some travel costs o   Warranty costs o   Sales discounts

·   Fixed o   Salaries o   Some travel costs o   Rates, light, heat and power etc ·   "Discretionary" o   Marketing costs o   Advertising campaign costs

So we can see that there is a direct link between the level of sales in dollar terms and the budgeted sales commissions to the sales force and the physical level of sales and distribution costs. Similarly, the more a company sells the greater will be the cost of meeting warranty claims on items sold.

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kenway7
 
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