1. The Strategic Role of Information in Sales Management
Sales & Distribution
Management
Marketing 3345

2. Information Drives Management Decision Making and Planning
Sales forecasts
Territory estimates
Quotas
Sales force size
Sales territory design

3. Market Opportunity Analysis
Market potential –estimate of possible sales of a commodity, a group of commodities, or a service for an entire industry in a market during a stated period under ideal conditions
Sales potential – the portion of the market potential that the firm can expect to reasonably achieve
Sales forecast – an estimate of the dollar or unit sales for a specified future period
Sales quotas – sales goals assigned to a marketing unit for use in managing sales efforts

5. Impact of Sales Forecasts on Budgeting
Sales budget
Production budget
Direct labor materials
and overhead budgets
Cost of goods sold budget
Budgeted profit and loss
statement
Sales and
administrative
expense budget
Revenue budget
Impact of Sales Forecasts on Budgeting

6. Utilization of Sales Forecasting Methods of 134 Firms
Percentage
Percentage of of Firms Percentage of
Firms that That Use Firms No
Methods Use Regularly Occasionally Longer Used
Subjective
Sales force composite % % %
Jury of executive opinion
Intention to buy survey
Extrapolation
Naïve
Moving Average
Percent rate of change
Leading indicators
Unit rate of change
Exponential smoothing
Line extension
Quantitative
Multiple regressing
Econometric
Simple regression
Box-Jenkins
S&MM, February 2008

7. Subjective Methods of Sales Forecasting
User expectations – buyer indicates intention to purchase
Sales force composite – sales force opinions
Jury of executive opinion - key experts’ or management opinions
Delphi technique – each participant prepares an estimate, and these are compared anonymously and iteratively

8. Objective Methods of Sales Forecasting
Market test – place product in select areas
Time series analysis – relies on historical data to develop predictions for the future
Statistical demand analysis – attempts to make a comparison to determine the relationship between sales and factors that influence sales

9. Forms of Time Series Analysis
Moving average – averaging sales results over previous time periods to forecast into the future
Exponential smoothing – a type of moving average where most recent years are given more weight
Decomposition – applied to monthly or quarterly data where seasonal pattern is evident
A critical adjustment is that of seasonality and cyclical factors

10. Choosing a Forecasting Method
Which forecasting method should be used and how accurate is the forecast likely to be?
In general, the various forecast comparisons suggest that no method remains superior under all conditions.
Good forecasters apply multiple forecasting methods to the problem
Scenario planning prepares a series of “what-if” questions and produces possible outcomes

11. Developing Territory Estimates
Territory estimates effect:
The design of sales territories
Procedures for identifying potential customers
The establishment of sales quotas
Compensation and its subcomponents
The evaluation of salesperson performance

12. Planning Tools North American Industry Classification System (NAICS)
Developed by the US Bureau of the Census, organizes the reporting of business information
Each industry in the US is assigned a two-digit number
Buying Power Index (BPI)
Generated and published by Sales Marketing Management Magazine, considers income, population and retail sales
Most useful with low-priced convenience goods

13. Sales Quotas Goals assigned to salespeople
Apply to specific periods and may be expressed in dollars or physical units
Tool for sales managers’ planning and controlling field selling activities and results
Benchmark for evaluating sales effectiveness
Motivate sales people

14. Purpose of Quotas
Quotas facilitate planning and control of the field selling effort
Provide incentives for sales representatives
Provide measures to evaluate salespeople’s performance.

15. Characteristics of a Good Quota
Attainable
Easy to understand
Complete
Timely

16. Types of Quotas Sales based quotas Sales activities quotas
Financially based quotas

17. Sales Volume Quotas Often based on past sales.
Related directly to market potential, thus credible and easily understood.
May be expresses in dollars, physical units, or points.

18. Activity Quotas Reflect territorial conditions
Require a detailed analysis of the work required for effective territorial coverage
Customers influence activity quotas through:
Account and order size
Purchasing patterns
Support required for satisfaction

19. Financial Quotas Reflect the financial goals of the firm Sales volume
Gross margin
Intended profit margin
Additional sales potential
Cost of support and service

20. Determining Sales Force Size
Salespeople are among the most productive assets of a company, and they are also among the most expensive!
How can an optimal sales force be established?
Breakdown method:
Sales Volume
Number of sales
personnel needed =
Productivity

21. Determining Sales Force Size
Workload method uses the buildup method to estimate the work required to serve the entire market
Incremental method suggests that sales representatives should be added as long as the incremental profit produce by their addition exceeds the incremental cost

23. Territory design – “The Build Up Approach”

25. Sales Analysis
Simple sales analysis - facts are listed and not measured against any standard
Bases for sales comparison
Quotas
Comparative sales forecast
Forecast vs. actual
Reports can focus on exceptions or significant deviations from the financial norms or budget.

26. Key Terms market potential sales potential sales forecast sales quotas
subjective forecasting methods
user expectations method
sales force composite
jury of executive opinion
Delphi technique
objective forecasting methods
market test
time-series analysis
moving average
exponential smoothing
decomposition
seasonality
statistical demand analysis
scenario planning
North American Industry Classification System (NAICS)
sales volume quotas
activity quotas
financial quotas
sales force deployment
breakdown method
workload method
incremental method
account analysis
sales analysis
80:20 principle
enterprise resource planning (ERP)
Buying Power Index (BPI)
iceberg principle
isolate and explode