Advertising & Sales Management

1. Advertising
&
Sales Management
Prepared By Prof. Pratiksha Patil
1

2. CONTENT
Sr no. Chapter Pg no
1. An Introduction to Advertising 4-12
2. Advertising as a Communication process 13-18
3. Advertising Campaign 19-30
4. Advertising Media 31-39
5. Creative Strategy 40-51
6. Evaluation of Advertisement 52-58
7. Advertising Agencies 59-66
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3. Sr no. Chapter
8. Introduction to Sales Management 67-78
9. Sales Organization Structure 79-89
10. Managing Distribution Channels 90-104
11. Managing Sales Personnel 105-145
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4. 4

5. Advertising
Meaning :
“ The non-personal communication of information usually paid for & usually
persuasive in nature, about products (goods & services) or ideas by
identified sponsor through various media.”
 The purpose of advertising may also be to reassure employees or
shareholders that a company is viable or successful.
 Advertising messages are usually paid for by sponsors and viewed via
various traditional media; including mass media such as
newspaper, magazines, television commercial, radio
advertisement, outdoor advertising or direct mail; or new media such as
websites and text messages.
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6. ‹#›

7. Functions of advertising
 Stimulates demand
 Strengthens other promotion mix elements
 Develops brand preference
 Cuts costs
 Lowers price
 Competitive weapon
7

8. Sales Promotion
Meaning:
 Sales promotion is one of the seven aspects of the promotional mix.
 Media and non-media marketing communication are employed for a
pre-determined, limited time to increase consumer demand, stimulate
market demand or improve product availability.
 Examples include contests, coupons, freebies, point of purchase
displays, premiums, prizes, product samples, and rebates.
 Sales promotions can be directed at either the customer, sales staff, or
distribution channel members (such as retailers).
 Sales promotions targeted at the consumer are called consumer sales
promotions.
 Sales promotions targeted at retailers and wholesale are called trade
sales promotions.
8

9.  Objectives of Sales Promotion:
To introduce new products
To attract new customers and retain the existing
ones
 To maintain sales of seasonal products
To meet the challenge of competition
9

10. Integrated marketing communication
 IMC is the coordination and integration of all marketing
communication tools, avenues, functions and sources
within a company into a seamless program that maximizes
the impact on consumers and other end users at a minimal
cost.
 This management concept is designed to make all aspects
of marketing communication such as advertising, sales
promotion, public relations, and direct marketing work
together as a unified force, rather than permitting each to
work in isolation.
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11. 11

12. ‹#›

13. Advertising as a communication
model
13

14. Advertising as a communication model
 AIDA model (Attention-Interest-Desire-Action)
 Lavidge-steiner model (Awareness-knowledge-liking-
preference-conviction-purchase)
 Roger’s innovation adoption model: (Awareness-
interest-evaluation-trial-adoption)
14

15. Role of advertising in Marketing Mix
Advertising and Product:
 A product is normally a set of physical elements, such as
quality, shape, size, colour and other features.
 The product may be of very high quality .
 At times, the product is so designed that it requires careful
handling and operations.
 Buyers must be informed and educated on the various
aspects of the product.
 This can be effectively done through advertising.
Thus, advertising plays the role of information and
education.
15

16. Advertising and Price:
 The price is the exchange value of the product.
 A marketer may bring out a very high quality product with additional
features as compared to competitors. In such a case, price would be
definitely high.
 But buyers may not be willing to pay a high price would be definitely
high. But buyers may not be willing to pay a high price. Here comes
advertising.
 Advertising can convince buyers regarding the superiority of the brand
and thus its value for money.
 This can be done by associating the product with prestigious
people, situations, or events.
 Alternatively when a firm offers a low price products the job of
advertising needs to stress the price advantage by using hard hitting
copy.
 It is not just enough to convince, but it is desirable to persuade the
buyer. Thus advertising plays the role of conviction and persuasion.
16

17. Advertising and Place:
 Place refers to physical distribution and the stores
where the goods are available Marketer should see to it
that the goods are available at the convenient place
and that too at the right time when the buyers need it.
 To facilitate effective distribution and expansion of
market, advertising is of great significance.
 Thus advertising do help in effective distribution
and market expansion.
17

18. Advertising and Promotion:
 Promotion consists of advertising, publicity, personal
selling and sales promotion technique.
 Businessmen today have to face a lot of competition
 Every seller needs effective promotion to survive and
succeed in this competitive business world.
 Advertising can play a significant role to put forward the
claim of seller, and to counter the claims of competitor.
 Through effective advertising, sellers can face competition
and also help to develop brand image and brand loyalty.
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19. Advertising Campaign
19

20. Advertising Campaign
An advertising campaign is a series of advertisement messages that share a
single idea and theme which make up an integrated marketing communication
(IMC). Advertising campaigns appear in different media across a specific time
frame.
In simple words advertising campaigns is a series of advertisements with an
identical or similar message, placed in one or more of advertising media over a
particular period of time.
The ad campaign must be co-ordinate with other marketing efforts and
activities which maybe a part of the marketing mix. Before going ahead with
the advertising campaign one must consider factors like the 5 M’s
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21.  The campaign theme is the central message that will be communicated
in the promotional activities.
The campaign themes are usually developed with the intention of
being used for a substantial period but many of them are short lived
due to factors such as being ineffective or market conditions and/or
competition in the marketplace and marketing mix.
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22. Planning & managing advertising
Appraisal of advertising opportunity
 Presence of positive primary demand
 Good chances of product differentiation
 Products have hidden or not readily noticeable
qualities
 Presence of powerful emotional buying motives
 Availability of sufficient funds
22

23. Market research/market analysis:
 Before you even start thinking about where you might
want to place an ad or even what it could look like, it’s
important to do at least some basic research.
 Even if you aren’t in a position to bring in an expensive
research firm, you can ask your current customers
questions about why they come back to you, as well as
taking a close look at your target needs and interests.
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24. Setting goals/advertising objectives:
 The aims you have in mind for a particular advertising
project need to be written down ahead of time.
 While it’s good to be ambitious, it’s also important to
decide what constitutes a successful advertising
campaign for your business.
 Sales can be the simplest metric: if you’re advertising a
particular product, how many units will you need to
sell to pay for that campaign?
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25. Budgeting:
 Your business probably has a set advertising budget for
the year — but how do you divvy it up between your
various advertising projects? For each project you’re
planning, you need to be clear on just how much
money you’re willing to spend.
 You’ll almost certainly change exactly how you divide it
between costs like copy writing and design, but you
can treat the overall amount as set in stone.
 Write it down and put it in your project folder
25

26. Approaches to budgeting:
 Affordable method
 Arbitrary allocation method
 Percentage of sales method
 Competitive parity method
 Objective & task method
 Payout planning
 Quantitative models
 Experimental approach
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27. Advertising venue/media:
 The website, TV, newspaper, radio station, magazine or
other advertising venue you place your ad with is a crucial
decision.
 You’ll need to look at not only the cost of your preferred
venues but also whether they reach your target
demographic.
 Ad buys can make up a significant portion of your budget.
 Deciding on where you will place your ads first tells you
how much money you’ll have left over for actually creating
your ad
27

28. Choosing creatives:
 Unless you’re planning to write, shoot and design every
part of your ad, you’ll probably need to bring in some help.
 Finding the right freelancers for each aspect requires
checking through portfolios and rates — if you can find a
business or freelancer who can handle all aspects of
creating your ad, even if that means subcontracting, it can
save you a lot of time.
 You’ll also want to make sure that you find any talent you’ll
need for your ad (voice actors for radio, models for
photography and so on).
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29. Design and wording:
 While you may not have a lot of actual writing and designing to do for
your ad, during the creation process you will need to review and sign
off on different stages of the project.
 When starting with a new designer or other creative, make sure that
you both know any expectations for timelines and progress checks
Placing the ad:
 Once you have a finished ad in hand, it’s time to actually place it with
your preferred advertising venue.
 You may have a few contracts to sign and a check to hand over. You’ll
also want to make sure you actually see your ad once it’s run — from a
newspaper.
29

30. Evaluation:
 Depending on your ad, how you evaluate it can vary.
 If it included a coupon, for instance, you can simply count how many
customers brought in the coupon.
 For other ads, you may be simply comparing sales before, during and
after your advertising campaign.
 Spend as much time on analyzing how your advertising campaign
worked as you can.
 That information can point you to more effective uses of advertising in
the future.
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31. Advertising Media
31

32. Types of media
 Print media
- Newspapers & magazines
 Direct media
- Direct mail & advertising specialties (free gifts like
diaries, key rings, purses, paperweights, pens, calender
etc..) directory advertising & sponsored magazines.
 Outdoor media: Pamphlets, posters, hoardings, neon signs
etc
 Electronic media
 Interactive media
 E-mail
32

33. The most innovative and highly creative advertising in the
world can fail if it’s presented to the wrong audience, or if
it’s presented at the wrong time, or if it’s presented in the
wrong place.
The media department is responsible for placing advertising
where it will reach the right people at the right time and in
the place...and do so in a cost-effective way.
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34. Commonly Available Media Vehicles
 Broadcast TV  Broadcast TV, Cable TV, Pay
 Cable TV (Limited) TV, VOD
 Movies/Cinema Adv.  Satellite TV and Radio
 AM/FM radio  Movies/Cinema Adv.
 Reel to Reel tape  AM/FM radio
 Telephone  Telephone and Mobile phone
 Postal Mail  Postal Mail
 Newspapers  Newspapers, Magazines
 Magazines  CD, cassette, MP3, VCR, DVD
 Books  Internet and web, including
email, web browsing, PC
gaming, Music downloading
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35. Media planning
 Target Market. Whom are you going to sell ?
 Where is product or service distributed?
 What is Budget?
 Media Mix?
 What is Competition Doing?
 Where should we advertise?
 Which media vehicles?
 When during the year?
 How often should it run?
35

36. MP process
 Deciding about target market for advertising/situation analysis
 Marketing strategy
 Advertising strategy
 Media objectives
 Develop & implement media strategies
 Matching media with target group
 Selection of media
- Media habits of target group
- Nature & feature of product
- Cost of media
- Legal & ethical consideration
- Media vehicles used by competitors
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37.  Selection of specific media vehicles:
- Target audience media habits
- Product characteristics
- Message characteristics
- Media costs
 Selection of media schedule
 Allocating funds to media & vehicle
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38.  Multi media strategy
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39. Measuring Advertising effectiveness
 Reach: it is the number of different homes or persons
exposed at least once to an advertising over a specific
period of time.
 Frequency refers to the number of times an advertising
message is delivered to the audience, within given
period of time.
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40. Creative strategy
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41.  Creative process
- Orientation
- Preparation
- Analysis
- Ideation
- Incubation
- Synthesis
- Evaluation
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42.  Several techniques in generating new ideas
- Adapt
- Put to other users
- Modify
- Imagine
- Reverse
- Connect
- Eliminate
- Creative strategy development
- Copy platform
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43. Copywriting
 Copywriters (as writers of copy are called) are used to help create
taglines, jingle lyrics, web page content , online ads, e-mail and
other Internet content, television or radio commercial scripts,
press releases, white papers, catalogs, billboards, brochures,
postcards, sales letters, and other marketing communications
media.
 It includes
- Main headline
- Sub-headlines
- Body copy
- Slogan
- Logotype/signature
- Closing idea
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44.  Features
- Brief
- Clean
- Interesting
- Sincere
- Personal
- Convincing
44

45. Guidelines for copywriting
 Let your personality shine through
 Have sound structure( and a purpose)
 Know your audience
 Hit on emotions, needs & desire
 Be consistent
 Use calls to action
 Be persuasive
 Accent your strengths
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46. Copywriting for print
46

47. Newspapers
 Copy does not have to work as hard to catch audience’s
attention
 Straightforward and informative
 Writing is brief
Magazines
 Better quality ad production
 Ads can be more informative and carry longer
copy
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48. Posters and Outdoor
 Primarily visual
 Words try to catch the consumer’s attention and lock
in ideas
 An effective poster marries words with visuals
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49. How to Write Radio Copy
 Voice Radio Guidelines
 Music  Keep it personal
 Sound effects  Speak to listener’s
interests
 Wake up the inattentive
 Make it memorable
 Include call to action
 Create image transfer
13 - 49

50.  Copywriting for TV commercial
- Audio element
- Planning & production of TV commercial
Stage involved in production of TV commercial
- pre-production phase
- Production
- Post- production phase
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51.  Advertising layout
- Illustration
- Headline
- Copy
- Logo
- Direct the viewer’s eye
- Emphasis
- Proportional use of space
- White space
- Bleed & border
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52. Evaluation of advertisement
52

53. Evaluation of advertisement
 Pre-testing
- PACT (positioning advertising copy testing) principle
- Methods pf pre-testing advertising
Print advertising
- Direct questioning
- Focus group
- Portfolio test
- Paired comparison test
- Order-of-merit test
- Mock magazine test
- Direct mail test
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54.  TV & radio advertising
- Central location test
- Clutter test
- Trailer
- Theatre test
- Live telecast test
- Sales experiment
 Psychological testing
- Pupillometries device
- Eye-movement camera
- Galvanic skin response
- Voice-pitch analysis
- Brain-pattern analysis
- Hemispheric lateralisation
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55.  Post-testing methods
- Recall test
- Recognition test
- Inquiry test
55

56.  Essential of effective testing
- Establish communications objectives
- Use a consumer response model
- Use both pre-tests & post-tests
- Understand & implement proper research.
56

57.  Concurrent testing methods
It is a research that evaluates the promotion efforts while
it is running in a market place.
- Qualitative research
- Brand preference testing
- Split-run techniques-tests 2 forms of the ad in the
marketplace to determine which one is most effective
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58. Steps in consumer purchasing decisions
 Unaware of the existence of the product
 Aware of the product
 Aware of the product’s features
 Having a favorable attitude towards the product
 Having a preference for the product
 Desiring to buy the product
 Purchasing the product
 Making post-purchase evaluation
58

59. Advertising Agencies
59

60. Advertising agency is:
An independent business organisation.
Composed of creative and business people.
Who develop, prepare and place advertising on advertising media.
For sellers seeking to find customers for their goods and services.
Functions of an Advertising Agency:
1. Media Department:
- Develop a media plan to reach the target audience effectively in a cost
effective manner
- The staff analyses, selects and contracts for media time or space that
will be used to deliver the ad message.
This is one of the most important decisions since a significantly large
part of the client’s money is spent on the media time and/or space.
60

61.  Accounts department:
- It is the link between the ad agency and its clients.
- The account executive is mainly responsible to gain knowledge about
the client’s business, profit goals, marketing problems and advertising
objectives.
- Account executive is responsible for getting approved the media
schedules, budgets and rough ads or story boards from the client.
- The next task is to make sure that the agency personnel produce the
advertising to the client’s satisfaction.
- The biggest role of the account executive is keeping the agency ahead
of the client through follow-up and communications.
61

62.  Client Servicing:
- Client servicing is the process of creating and maintaining a
strong working rapport with each customer. Often referred to as
customer care, client servicing is about understanding the needs
and desires of the customer, and moving to meet those needs in
a proactive manner.
 Production Department:
- After the completion and approval of the copy and the
illustrations the ad is sent to the production department.
- Generally agencies do not actually produce the finished ads;
instead they hire printers, photographers, engravers,
typographers and others to complete the finished ad.
- For the production of the approved TV commercial, the
production department may supervise the casting of actors to
appear in the ad, the setting for scenes and selecting an
independent production studio.
- The production department sometimes hires an outside director
to transform the creative concept to a commercial.
62

63. Creative department:
 To a large extent, the success of an ad agency depends upon the creative
department responsible for the creation and execution of the
advertisements.
 The creative specialists are known as copywriters. They are the ones
who conceive ideas for the ads and write the headlines, subheads and
the body copy. They are also involved in deciding the basic theme of
the advertising campaign, and often they do prepare the rough layout
of the print ad or the commercial story board.
 Creation of an ad is the responsibility of the copywriters and the art
department decides how the ad should look.
63

64.  Types of agencies
- Media buying services
- Creative boutiques
 Agency compensation
- Commission
- Negotiated fees
- Percent charges
64

65.  Agency evaluation
- Reasons of losing clients
 Clients dissatisfaction
 Poor communication
 Personality clashes
 Unrealistic clients demands
65

66.  How agencies acquire new clients
- Referrals
- Solicitations
- Presentations
 Client-agency relationship
66

67. Sales Management
67

68. Objectives of sales management
 Sales volume
 Gain additional market share/revenue
 Expand target market
 Add extra value to the product
 Develop brand franchise
 Contribution to profit
 Continuous growth
68

69. Functions of SM
 Setting the sales objectives
 Deciding the sales policies
 Organizing the sales force
 Fixing the sales target / quota
- Advantages of SQ
1. Easier to locate untapped market
2. Serve as a control measure
3. Compensation plan could be made more effective
4. Useful in conducting sales contests
69

70.  Selection & recruitment
 Induction & training
 Development of sales force
 Sales communication & report
 Sales control & supervision
70

71.  3 major factor of salesman
- Personality
- Product knowledge
- Psychology of people
71

72. Personal selling
 Objective of PS : Consumers mind go through
following phases:
AIDAS (action-interest-demand-action-satisfaction)
model
 Building Product Awareness
 Creating Interest
 Providing Information
 Stimulating Demand
 Reinforcing the Brand
72

73.  Managing sales force
- Recruitment of sales staff
- Training the sales staff
- Directing the operation of the sales staff
- Motivating
- Evaluation
73

74.  Personal selling tasks
- Provider stage
- Persuader stage
- Prospector stage
- Problem solving stage
- Procreator stage
74

75. Selling process
 Prospecting & qualifying
 Pre approach
 Presentation and demonstration
 Overcoming objections
 Closing
 Follow-up & maintenance
75

76. Sales related marketing policies
 Type of promotion to use:
- Consumer promotion
- Trade promotion
- Sales force promotion
Approaches for consumer & trade promotions
1. Same for less
2. More for the same
- Immediate value offer Vs Delayed value offer
- Price-cut Vs extra value offer
76

77.  Which product to promote
- Customer demand for product is unpredictable
- Inventory holding cost are high
- Product is seasonal
- Product is likely to go out of fashion
77

78.  Choice of market areas
 Promotion timing, duration & frequency
 Rate of discount, terms & conditions
 Protection from competition
 Promotion evaluation
- Pre testing
- Concurrent testing
- Post-testing
78

79. Sales organization structure
79

80.  Principles of structuring a sales organisation
- Specialization
- Departmentalization
- Standardization
- Centralization
- Evaluation
- Structure
80

81.  Important factor in structuring sales
- Objectives & goals of firm
- Nature of product & line of activity
- Areas of operation
- Nature of industry
- Level of computerization & upgradation of
information system
- External environment & government interventions
81

82.  Departments of sales organization
1. Physical distribution department
2. Publicity & sales promotion
3. Public relation
4. Personnel department
5. Statistics & record department
6. Credit & collection department
82

83. Types of sales organization structure
 Organizing by functions
 Organizing by products
 Organizing by customer groups
 Organizing by regions
83

84. Functional Sales Organization
National Sales Manager
Field Sales Manager Telemarketing Sales Manager
Regional Sales Managers District Sales Managers
District Sales Managers Salespeople
Salespeople

85. Product Sales Organization
Sales Manager
Assistant sales manager Assistant sales manager
Product A Product B
Salespeople (100) Salespeople (100)

86. Customer group
Sales Head
Sales mgr Sales mgr Sales mgr Sales mgr
industry I industry II industry III industry IV

87. Geographic Sales Organization
National Sales Manager
Eastern Region Sales Manager Western Region Sales Manager
Zone Sales Managers Zone Sales Managers
District Sales Managers (20) District Sales Managers (20)
Salespeople (100) Salespeople (100)

88. Comparison of
Sales Organization Structures
Organizational
Structure Advantages Disadvantages
• No geographic duplication
• Lack of management
Geographic • No customer duplication
control over product or
• Fewer management levels
customer emphasis
• Salespeople become experts
• High cost
in product attr. & applications
Product • Geographic duplication
• Management control over
• Customer duplication
selling effort
88

89. Comparison of
Sales Organization Structures
Organizational
Structure Advantages Disadvantages
• Efficiency in performing • Geographic duplication
Functional • Customer duplication
selling activities
• Need for coordination
89

90. Managing distribution channel
90

91. Nature & Importance of Distribution Channels
 Marketing channel
 Set of interdependent organizations involved in the process of
making a product or service available for use or consumption
by the consumer or business user.
 Channel choices affect other decisions in the marketing
mix
 Pricing, marketing communications
 A strong distribution system can be a competitive
advantage
 Channel decisions involve long-term commitments to
other firms
91

92.  How Channel Members Add Value
 Fewer contacts.
 Match product assortment demand with supply.
 Bridge, time, place, and possession gaps that separate
products from users.
 Number of Channel Levels
 The number of intermediary levels indicates the length of a
marketing channel.
 Direct Channels
 Indirect Channels
 Producers lose more control and face greater channel
complexity as additional channel levels are added.
92

93.  It is the delivery of goods at the right time & at the
right place to the consumers
 The means by which products and services get from
producer to consumer and where they can be accessed
by the consumer
 The more places to buy the product and the easier it is
made to buy it, the better for the business (and the
consumer?)
 Channel selected should be convenient, economical &
suitable for the distribution of specific product.
93

94. TYPES OF MARKETING CHANNELS
94

95. Functions of channel intermediaries
 Reconciling the needs of producers & consumers
 Improve efficiency by reducing the number of
transactions & creating bulk for transportation.
 Improved accessibility
 Providing specialist services
95

96. Channel design
1. Channel selection:
- Marketing factors
- Manufacturer factors
- Product factors
- Competitive factors
2. Distribution intensity
- Intensive distribution
- Selective distribution
- Exclusive distribution
96

97.  Channel integration
- Conventional marketing channel
- Franchising
- Channel ownership
97

98. Channel Behaviour and Organization
 Conventional Distribution Channels
 Consist of one or more independent channel members
 Each seeking to maximize its own profits
 Often result in poor performance
 Vertical Marketing Systems
 planned channel system designed to improve
distribution efficiency and cost effectiveness by
integrating
 Producers, wholesalers, and retailers act as a unified
system
 One channel member owns, has contracts with, or has
so much power that they all cooperate
 Benefits should include greater control, less conflict,
and economies of scale due to the size of the system
98

99. Channel Behaviour and Organization
 Vertical Market System  Integrates successive stages
(VMS) of production and
 Corporate VMS distribution under single
 Contractual VMS ownership – channel
 Administered VMS ownership is established
through common
ownership
 Coordination and conflict
through regular
organizational channels
12-99

100. Channel Behaviour and Organization
 Vertical Market System  Individual firms who join
(VMS) through contracts
 Corporate VMS  Franchise organizations
 Contractual VMS  Manufacturer-sponsored
 Administered VMS retailer franchise system
 Manufacturer-sponsored
wholesaler franchise system
 Service-firm-sponsored
retailer franchise system
12-100

101. Channel Behaviour and Organization
 Vertical Market System  Leadership through the
(VMS) size and power of
 Corporate VMS dominant channel
 Contractual VMS members
 Administered VMS  Leadership could be
manufacturer or retailer
12-101

102. Selecting channel members
 Which characteristics are important?
 Years in business
 Lines carried
 Growth and profit record
 Cooperativeness and reputation
 Type of customer
 Location
102

103. Channel management
 Selection
- Identifying sources
 Developing selection criteria
- Motivation(understanding the needs)
- Training(knowledge about product)
- Evaluation
- Managing conflict
Sources of channel conflict
- Differences in goals
- Role & rights ambiguity
- Differing perceptions
- Differences in desired product lines
- Multiple distribution channels
- Inadequacies in performances of channel members & manufacturer
103

104.  Types of conflict
- Vertical channel conflict
- Horizontal channel conflict
- Multichannel conflict
 Avoiding & resolving conflict
- Developing a partnership approach
- Regular communication
- Forming dealer council
- Co-option
- Training in conflict handling
- Improved performance
- Channel ownership
104

105. Managing sales personnel
105

106. Recruitment & selection of SP
 Managing sales force
- Recruitment of sales staff
- Training the sales staff
- Compensating SP
- Motivating (sales budget, sales territories, sales quota,
sales contest)
- Controlling sales force
106

107.  Designing sales force
- Setting sales goals
- Sales strategy
- Sales force composition
- Sales force size
- Compensation / rewards
107

108. Compensation and
Motivation of Sales Force
108

109. Compensation Plans
Compensation plans for the sales force are designed to achieve several objectives.
Some of these are:
i. To assist the company in meeting its sales projections,
ii. To bring the earnings of the sales force to desired levels,
iii. To reward individual salespersons in direct proportion to their efforts and
performance.
109

110. Formal Compensation Process
Determine
Determine
Establish Sales Compensation
Compensation
Force Objectives Objectives, Strategies
Factors
and Tactics
Implement Long and
Appraisal and
Short-term Range
Recycling
Programmes
Measure Individual,
Group Relate Rewards
Communicate
and Organisational to Performance
Compensation Policy
Performance
110

111. Various Modes of Compensating the Sales Force
Salary
A straight salary payroll is by far the easiest for employers to handle.
Deductions for provident fund, income taxes and other fringe benefits are fixed
In many industries, this method of compensation is generally used.
Cont….
111

112. Strengths of the Salary Compensation Plan
1. For the sales force
 Simple to calculate
 Fixed income
 Job security
2. For the company
 Reduces turnover in sales force
 Increases authority of sales manager in controlling sales force
 An effective tool in case
• Group efforts are required
• Hiring new staff
Cont….
112

113. The following are the weaknesses of the Salary Compensation Plan
1. For the sales force
 Lack of incentive to excel
 Old sales force/under achievers tend to be overpaid
2. For the company
 Fixed expenses, difficult to cut down expenses
 Frequent adjustments in salary necessary, yet too many changes are as
bad as too few
 Requires excellent supervision which is not always available.
Cont….
113

114. Straight Commission
Paying a commission is a variable expense rather than a fixed one.
If sales are made, a commission is paid — no sales, no commission.
This keeps sales expenses strictly in line.
A straight commission pay plan has many advantages.
It is desirable for a company suffering from a severe cash shortage since the
commission need not be paid until proceeds are received from a sale.
Flexible commission rates can be a strong incentive and many organizations are
successful because the sales force enjoys a liberal commission schedule.
Cont….
114

115. Target Commission
A straight commission is paid on sales volume.
On a fixed commission base, a fixed percentage of sales volume is paid to the sales
force.
A fixed rate commission is easy to figure and administer.
If the rate is 2 per cent, it stays at that percentage whether the salesperson sells
goods worth Rs 40,000 or Rs 4,00,000. A progressive commission rate accomplishes
a major objective of most companies: it provides a constant incentive to the sales
force to do better. The following example explains this:
Sales (Rs) Commission Rate
Up to 40,000 2%
From 40,000 to 1,00,000 3%
Above 1,00,000 4%
If a salesperson’s quota is Rs 80,000, he would earn Rs 2,000 if he achieved that
target exactly — a composite rate of 2.5 per cent. For example: Smith Kline Beecham
is using this method in their worldwide selling.
Cont….
115

116. Bonus, Profit Sharing, Fringe Benefits
Paying bonus is a method that a company adopts to reward special contribution and
as an incentive to superior performance.
Profit Sharing
Fringe Benefits
Fringe benefits have become a fascinating subject and an item of considerable
expense to organizations. The costs of fringes can be as high as 30 per cent of direct
compensation expense depending on what benefits are offered and whether a
portion of the expense is shared with the employee.
Cont….
116

117. Reimbursement of Expenses
 Travel — usually by car or scooter
 Meals
 Lodging
 Entertainment
 Miscellaneous
Proper Sales Compensation Plan
 Provide a living wage
 Have performance Based pay levels
 Be adjustable to meet companys’ goals and individual aspirations.
Such a plan not only helps in normal times but also takes care of special
needs of a company.
117

118. Motivating sales personnel
118

119. ‹#›

120. Motivation to the Sales Force
 Motivation is the force within us that directs our behaviour.
 A sales manager can use the question guidelines suggested by Ginger Trumfio
for motivating his salespersons.
Are you an Effective Motivator?
Keeping your sales force motivated is vital to execute ongoing sales. How effectively do you
motivate your salespeople? Answer the following questions and you be the judge.
1. What are the three most effective techniques you use for motivating your entire sales force?
2. Do you know what motivates each person who reports to you?
3. Do you know what role compensation plays in the motivation of each salesperson?
4. Do you know what role recognition plays in the motivation of each salesperson?
5. Do you know what role “opportunity for growth” plays in the motivation of each salesperson?
6. Have you customised a motivational programme for each person who reports to you?
Cont….
120

121. 7. What have you done in the past week with the deliberate intention of motivating a
salesperson?
8. Did you praise someone today?
9. Do you show your commitment to developing each salesperson by actively (at least once a
month) coaching him on skills and techniques?
10. When a salesperson seems to be feeling stressed, do you ask questions and spend time
listening to his concerns?
11. Do you ask your representatives, “What can I do personally to help your sales efforts?”
12. Do you review their monthly performance with them in a timely manner?
13. Have you done anything recently to “demotivate” your salespeople?
For example: failed to give recognition; embraced a salesperson in front of peers or clients;
taken over a sales call?
14. Do you treat your salespeople with respect?
15. Do you show your salespeople trust?
Cont….
121

122. Low-Cost Ways to Motivate
 A pat on the back.
 A smile.
 A simple, sincere, thank you.
 A personal letter to the employee, with copies sent to your immediate supervisor and to the
employee’s supervisor.
 Public recognition in front of peers.
 Public recognition in front of one’s boss.
 A letter of praise from a customer or vendor praising an employee, posted on the company’s
bulletin board.
 Listening to an employee who has an idea for improving efficiency and then acting
affirmatively on that suggestion.
 Arranging employee discounts from your vendors or customers.
 Allowing the employee to work on an especially exciting project that he or she would not
usually work on.
 Asking employees what non-monetary rewards they would like to have and, if possible,
providing them.
 Issuing a “You Were Mentioned” certificate to employees whenever you hear something nice
about them, whether from a customer, co-worker, or superior.
Cont….
122

123.  Electing a high-achieving employee to a quality circle or to a company wide task force.
 Providing free lunch for employees caught in the act of victory by an appointed group of
company wide “catchers”
 Rotating the “company flag” or other symbols of excellence from one deserving unit to
another on a quarterly basis.
123

124. Sales Career Stages and Motivation
 Are salespersons motivated by different rewards at different stages of their
career? Do salespeople have different career and personal concerns based
on career stages? The basic answer to both these questions is ‘Yes’.
Cont….
124

125. Dimensions of Motivation INTENSITY
Motivation has mainly three dimensions
PERSISTENCE
DIRECTION
1. Intensity: It is the magnitude of mental and physical effort put in by a
salesperson for his or her activity or goal.
2. Persistence: It is the extension of effort over time.
3. Direction: It implies that the individual can choose how his or her efforts will
be spent.
Cont….
125

126. Motivation Can Also be Intrinsic or Extrinsic
 Intrinsic motivation means that individuals are motivated internally by a
desire to please themselves or merely by the satisfaction of performing a job.
 Extrinsic motivation means that someone else provides the motivation
through methods such as pay, promotion or recognition.
126

127. Model of the Motivation Process
The motivation process consists of six steps :
1. Recognise need deficiency
2. Search for ways to satisfy needs
3. Establish goal-directed behaviour
4. Performance
5. Provide rewards or punishment
Cont….
127

128. The Six Step Motivation Process
Recognise need
Process begins
deficiency
Search for ways to
Needs reassessment satisfy needs
SALESPERSON
Provide punishment Establish goal
or rewards directed behaviour
Performance
128

129. Other Factors of Motivation
Job Related Factors
 The Job Itself
 Skill variety
 Task identity
 Job feedback
 Leadership
 Job Organisational and Involvement Commitment
 Job involvement
 Organisational commitment
 Institutional stars
 Corporate citizens
Cont….
129

130. Individual Related Factors
 Career Plateauing
 Performing deficiencies
 Selection and training
 Redesigning job to increase intrinsic motivation
 Reducing stress and burnout
 Increasing growth opportunities
 Acceptance of growth opportunities
130

131. Non-financial Factors and their Impact on Sales Force
Motivation
 Meetings between Manager and Sales Force
 Clarity of Job
 Sales Contests
 Sales Conferences and Conventions
 Positive Feedback
 Reward and Recognition
 Observations and Future Directions
131

132. Sales Contests
 Sales contests are short-term incentive programs implemented to
motivate salespersons to achieve specific goals or activities.
 For sales contests to be successful:
 Objectives must be specific and clearly defined
 Contest theme must be exciting and clearly communicated
 Each salespersons must believe they can win
 Awards must be attractive to participants
 Contest must be promoted and managed properly
132

133. Sales Contest Elements
 Contest Objectives
 To increase total and product sales most common
 Sales force must be given sufficient time
 All contest information and rules must be clear
 Theme
 Contests receive a theme to create excitement
 Chance of winning
 Compete against self, others, or as a team?
133

134. Types of Rewards
 Sales contests can offer many types of reward in the form
of:
 Cash, prizes, or travel
 Promotion of contest important
 Launched as a special event with handouts
 Large scorecards to communicate progress
 Newsletter articles or interim prizes can keep motivation up
134

135. Controlling sales force
 Essential
- To ensure the achieved of selling objectives
- To ensure co-ordination in efforts
- To have sound public relations
Control methods are
- Sales targets
- Sales reports
- Sales expenditure reports
- Travel plans & reports
- Information gathered through meeting & contacts
- Number of sales meeting attended/number of calls
- Analysis of complaints
- Average cost per call
- Non-selling activities
135

136.  Non-quantitative standards
- Product & customer knowledge
- Customer & trade relations
- Quality of sales presentation
- Communication skills
- Punctuality
- Market intelligence
- Job attitude
- Cooperation
136

137. Evaluating & Controlling Performance of Salespeople
 Purposes / objectives / importance of performance
evaluation of salespeople are:
 Mainly to find how salespeople have performed
 This information is used for other purposes, such as:
• Improving salespersons’ performance, by identifying
causes of unsatisfactory performance
• Deciding salary increments and incentive payments
• Identifying salespeople for promotion
• Determining training needs
• Motivating salespeople through recognition and reward
• Understanding strengths and weaknesses of salespeople
137

138. Procedure for Evaluating and Controlling
Salesforce Performance
The steps involved in the procedure are:
 Set policies on performance evaluation and control
 Decide bases of salespersons’ performance evaluation
 Establish performance standards
 Compare actual performance with the standards
 Review performance evaluation with salespeople
 Decide sales management actions and control
138

139. Set Policies on Performance Evaluation & Control
Most companies establish basic policies. Examples are:
• Frequency of evaluation. Mostly once a year.
• Who conducts evaluation? Mainly immediate supervisor
• Assessment techniques, 360-degree feedback
• Sources of information. Sales analysis, new business
reports, lost business reports, call plans, etc
• Bases of salesforce evaluation.
• Conducting performance review sessions with
salespeople
139

140. Decide Bases for Salespersons’ Performance Evaluation
 A firm should decide which of the following bases / criteria it would use: (1)
result / outcome based, (2) efforts / behavioural based, or (3) both results &
efforts based
 A company selects performance bases or criteria from a list of alternatives, some
of them shown below:
Quantitative results / Quantitative efforts / Qualitative efforts /
outcome bases / criteria behavioural bases / criteria behavioural bases / criteria
• Sales volume • Customer calls • Personal skills
• Accounts / customers  No. of calls per day  Selling skills
 New accounts nos.  No. of calls per  Planning ability
 Lost accounts nos. customer  Team player
• Non-selling activities • Personality & Attitudes
 No. of reports sent  Cooperation
 Enthusiasm

141. Establish Performance Standards
 Performance standards are also called sales goals, targets,
sales quotas, sales objectives
 Performance standards for quantitative results are related
to the company’s sales volume or market share goals
 Performance standards for efforts / behavioural criteria are
difficult to set
• For this, companies do “time and duty analysis” or use
executive judgement
 Performance standards should not be too high or too low
 After establishing standards, salespeople must be informed
141

142. Compare Actual Performance with Standards
 Salesperson’s actual performance is measured and
compared with the performance standards
 For this, sales managers use different methods or forms:
• Graphic rating scales
• Ranking
• Behaviourally anchored rating scale (BARS)
• Management by Objectives (MBO)
• Descriptive statements
 Companies combine some of the above methods for an
effective evaluation system
142

143. Review Performance Evaluation with Salespeople
 Performance review / appraisal session is conducted, after
evaluation of the salesperson’s performance
 Sales manager should first review high / good ratings, and then
review other ratings
 Both should decide objectives / goals and action plan for future
period
 After the review, sales manager should write about performance
evaluation & objectives for the future
 Guidelines for reviewing performance of salespersons
• First discuss performance standards / criteria / bases
• Ask the salesperson to review his performance
• Sales manager presents his views
• Establish mutual agreement on the performance
143

144. Decide Sales Management Actions and Control
 Many companies combine this step with the previous step –
i.e. performance review
 During performance review meeting with salesperson, sales
manager does the following:
• Identifies the problem areas. E.G. Sales quotas not
achieved
• Finds causes. E.G. less sales calls, poor market
coverage, or superior performance of competitors
• Decides sales management actions E.G. train
salesperson, redesign territories, or review company’s
sales / marketing strategies
 If a salesperson’s performance is good, he / she should be
rewarded and recognised
144

145. Business Ethics and Sales Management
 Sales managers and salespeople have ethical
responsibilities
 Some of the ethical situations are:
• Relations with the company. EGs. Expense
statements, credit for damaged merchandise
• Relations with customers. EGs. Gifts, false information
to get business, customer entertainment
 Ethical guidelines
• A code of ethics developed by the company would be
effective if it is enforced by top management
145

146. 146