MKTG 360 Exam 2

___________ focuses on creating new products for entertaining new markets by introducing new product lines or purchasing new businesses.

Diversification

Sales & operational planning process

1. Define goals and objectives 2. Set policies 3. Establish procedures 4. Devise strategies 5. Direct tactics 6. Develop and enforce control

Devise strategies

A strategy is an overall program of action for using resources to achieve a goal or objective

North American Product Classification System (NAPCS)

A system for categorizing consumer products and service industries

Build-up-approach

A way of developing forecasts based on primary research, new data collected for the specific purpose at hand

Buying Power Index (BPI)

A weighted combination of population, income, and retail sales, expressed as a percentage of the national potential, to identify a given market's ability to buy

Account/territory management

Arrange route for best coverage. Maintain sales portfolios, samples. Maintain customer database.

Develop a preliminary allocation of sources

Assign resources to particular activities, customers, products, and territories

Account analysis: weak strength of position, high account opportunity

Attractiveness: Accounts are potentially attractive based on high opportunity, but sales organization has weak position. Sales call strategy? frequent sales calls to strengthen position

Account analysis: strong strength of position, low account opportunity

Attractiveness: Accounts are somewhat attractive since sales organization has strong position, but future opportunity is limited Sales call strategy? moderate frequency to maintain current position

Account analysis: strong strength of position, high account opportunity

Attractiveness: Accounts are very attractive, offer high opportunity, and sales organization has strong position. Sales call strategy? frequent sales calls

Account analysis: weak strength of position, low account opportunity

Attractiveness: Accounts are very unattractive since they offer low opportunity and sales organization has weak position. Sales call strategy? minimal sales calls and migrate personal sales calls to telephone or Internet

To maximize their productive time, salespeople can take these steps:

Avoid time traps. Allocate time. Set weekly and daily goals. Manage time during sales calls. Evaluate (monitor) time usage over time.

Here are some reasons for adopting a team selling approach:

Information needs of customers are large. Several people are involved in the decision to buy. The potential sale is large for the selling or buying company or both. Complexity of the products or services is high and therefore beyond a single individual's capabilities.

The Sales Force Selection Process

Initial screening -> Reference checking -> in-depth interviews -> Employment testing -> Follow up interviews -> Making the selection

Types of socialization

Initial socialization Extended socialization

Servicing function

Install the product or display. Report complaints. Handle adjustments, returns, and allowances.

Job rotation

Sales trainees learn how different departments work as well as making social contacts when they are exposed to the overall organization

Introductory training

Salespeople can be socialized by doing the following: reading literature on company's history, products, job description, and compensation and benefit packages attending introductory training programs before they are exposed to actual operations of the firm

Common Time Traps

Salesperson calls on unqualified or unprofitable prospects, Salesperson insufficiently plans each day's activities, Salesperson makes poor territorial routing and travel plan, Salesperson neglects customer service until a small problem becomes a large one that takes more time to resolve, Salesperson conducts unnecessary meetings, visits, and phone calls, Salesperson fails to insulate self from interruptions or sales calls or while doing paperwork.

Efficiency

Salesperson is cost oriented and focuses on making the best possible use of the salesperson's time and efforts.

Effectiveness

Salesperson is results oriented and focuses on achieving sales goals.

Recruiting

Send the sales candidate literature that details the company's philosophy. Internet site may discuss corporate culture and explains why a recruit would want to seek a job there.

Tactics

What actions need to be taken by whom, and when?; day-to-day actions that make up the strategic plan

Strategy

What is the best way to get there?; an overall program of action for using resources to achieve a goal or objective

Analyze the environment in which the salesperson is to work

What is the competition the salesperson faces? What kinds of customers will be contacted, and what problems do they have? What knowledge, skills, and potential are needed for this position?

Control

What measures must be monitored so we know how we're doing?

Some questions candidates typically ask interviewers:

What percentage of the job will require travel? What is the likelihood of relocation? What are the starting salaries for a particular position? What is the typical career path of each position? What is the compensation package? What are the benefits?

Direct tactics

Tactics are day-to-day actions that make up the strategic plan, for example, using special sales contests to spur sales of products

The most widely used approach to estimating industrial demand uses information provided by

The Standard Industrial Classification Manual

Costs/benefits

The benefits from forecasting must more than offset the costs of generating the sales forecast

Coordinating function

The control function of a sales budget is to evaluate actual results against sales budget expectations.

As a company grows, it needs

a larger sales force

Correlation coefficient

a measure of how much two variables are related to one another

The forecasts developed mathematically based on sales in recent time periods refer to

a moving average

Test marketing

a popular counting forecasting method for consumer packaged goods products

Sales forecast

a prediction of the future market potential for a specific product; sets the sales expectations for a given time period and can indicate what types of products customers are likely to want

Market potential

a quantitative estimate, in either physical or monetary units, of the total sales for a product within a market; the maximum possible sales for an entire industry

The workload analysis can help develop the following:

a sales call pattern for each territory a sales call strategy—see account analysis

Simple regression analysis

a statistical approach to predicting a dependent variable such as sales, using one independent variable such as advertising expenditures.

Multiple regression analysis

a statistical approach to predicting a dependent variable, such as sales, using several independent variables, such as advertising expenditures and price simultaneously

Exponential smoothing

a type of moving average that represents the weighted sum of all past numbers in a time series, with the heaviest weight placed on the most recent data.

Standard industrial classification (SIC)

a uniform numbering system for categorizing nearly all industries according to their particular product or operation

Selection process

activities involved in choosing candidates that best meet the qualifications and have the greatest aptitude for the job

Selection

activities involved in choosing qualified candidates that have the greatest aptitude for the job

Developing a salesperson workload analysis requires an estimate of A. the number of accounts to be called on and the frequency of the calls B. the duration or length of a call C. the travel time D. all of the above

all of the above

The top-down steps in developing a sales forecast using the breakdown approach include all of the following except A. a forecast of general economic conditions B. an estimate of the industry's total market potential for product category C. a determination of the share of this market the company currently holds and is likely to retain in view of competitive efforts D. all of the above

all of the above

Consolidated metropolitan statistical area

an MSA that has a population of 1 million or more

The top down steps in developing a sales forecast using the breakdown approach include all the following except A. a forecast of sales of the product B. an estimate of the sales of all the competitors' product categories C. an estimate of the industry's total market potential for a product category D. use of the sales forecast for operational planning and budgeting

an estimate of the sales of all the competitors' product categories

Sales territories need revision when A. a firm is experiencing growth and additional salespeople are needed to be hired B. territories are too small C. there is considerable territory jumping by salespeople D. any of the above happen

any of the above happen

Initial screening interviews and tests

are conducted in person or over the telephone; the best candidates are invited for in-depth interviews

Periodic movements

consistent patterns of sales changes in a given period generally called seasonal variations

D&B-Dun's Market Identifiers (DMI)

directory file produced by D&B, Inc, that contains basic company data, executive names and titles, corporate linkages, DUNS Numbers, organization status, and other marketing information on over 17 million U.S. business establishment locations, including public, private, and government organizations

Strategic Business Unit (SBU)

divisions of major firms within multiple product companies, each has its own management, are evaluated on their profit and growth potential as standalone firms, characteristics: distinct mission separate management unique customer segments their own competitors planning independent of other company units

Sales volume quotas

dollar based sales quote, unit volume sales quota, point quotas

Sales managers who organize, train, motivate, or evaluate salespeople without a plan are likely to be frequently A. reorganizing B. retraining C. undergoing high sales force turnover D. enduring all the above

enduring all the above

Sales, cost, and profit data

financial data by product, market, territory, and time period

Recruitment

finding potential job applicants, telling them about the company, and getting them to apply

moving average

forecasts developed mathematically based on sales in recent time periods

Weighted application form

forms that score candidates on each job attribute by assigning different values to each attribute

Goals

general, long range destinations

Trading area

geographic region consisting of a city and the surrounding areas that serves as the dominant retail or wholesale center for the region

Scatter diagram

graph that plots one variable against another to see whether there is a relationship

These are benefits of socialization

greater job satisfaction increased employee commitment greater job involvement, better understanding role in the company

Team selling

grouping of several individuals in an organization to sell products and services to all relevant decision makers

Line and staff organization

have more functional areas and staff assistants to complete specialized support activities, such as marketing research or sales forecasting. Staff managers only make recommendations or assist line managers. VP Marketing -> Director of Marketing Research -> Device Manager -> Sales people

Correlation analysis

helps calculate the strength of the association between two variables. Correlations do not imply cause and effect

Long term training

helps with standardization of values, behavior norms, and philosophy and it helps produce consistent sales performance results as salespeople become highly motivated team players.

Key accounts

high-volume, important customers that require added attention from the sales organization

Positive job outcomes of POF include the following:

higher job satisfaction lower stress lower likelihood of turnover

Personnel Selection Inventory: Topical Areas Assessed by the Questionnaire

honesty drug abuse customer relations safety work values supervision (attitudes toward authority) employability index (composite score of everything but validity)

Product development

new product, current market; creates new or improved products for current markets by adding new sizes, models with new features, alternative quality versions, or creative new alternatives to satisfy the same basic needs.

The level of non-selling activities influences the time and effort needed to cover a geographic control unit. Non-selling activities of salespeople include all the following except A. preparing for sales calls B. processing orders C. servicing accounts after the sale D. none because all of the above are non-selling activities

none because all of the above are non-selling activities

Typical probing questions asked in unstructured interviews include all of the following except: A. questions that determine whether a candidate is self-motivated B. questions that identify candidates who will work on their own to improve themselves C. questions that determine the candidate's pattern for winning or recovering from loss D. none of the above are asking in unstructured interviews

none of the above are asked in unstructured interviews

A salesperson workload analysis is an estimate of the following:

number of accounts to be called on frequency of the calls length of each call travel time needed non-selling time required

Employment test

objective way to measure traits or characteristics of applicants for sales positions and to increase the chances of selecting good salespeople using intelligence tests or some other norming test

Erratic movements

one-time specific events—such as wars, strikes, snowstorms, hurricanes, fires, and floods—that are not predictable

Budgeting

operational planning process expressed in financial terms

Line organization

organizations have few managers who have authority over specific functional areas of the business, such as production, finance, or sales

Trend analysis

quantitative forecast whereby the dependent variable is sales, and the independent variable is time

A properly designed routing system has three primary advantages:

reduced travel time and selling costs improved territory coverage improved communication (since managers know where salespeople are)

Product diversification

refers to expansion into new product lines or by purchasing new businesses

In assigning sales personnel to territories, managers should rank them using these criteria

relative ability product and industry knowledge energy level persuasiveness verbal ability

Matrix organization

revolve around projects; encourage teamwork to maximize individual contributions. Team leaders are viewed as coordinators rather than as bosses. are most effective in these circumstances: projects or products are unique, team members are professionals in terms of expertise and skills, project is of a short duration, speed and creativity are as important as cost

summary points

salary level challenge/opportunity

Reasons why forecasting is imporant

sales and marketing planning production scheduling cash flow projections financial planning capital investment procurement inventory management human resource planning (hiring salespeople) budgeting

Reference checking

screening tool that enables a company to obtain information from former and current bosses. coworkers, clients; process of following up with references provided on an application to check the credibility of a job candidate

The purpose of organizing the sales force is to accomplish marketing and sales objectives by taking these steps:

shortening the time a sales manager needs to evaluate and respond to changing market needs arranging activities efficiently establishing and maintaining open channels of communication with customers, salespeople, support staff, and concerned stakeholders

Sales territory

specific geographic area that contains present and potential customer and is assigned to a particular salesperson

Automated screening

speeds the gathering and analysis of data from applicants

Questions typically asked by sales candidates during interviews are usually on all the following subjects except A. stability of the economy B. relocation C. career paths D. benefits

stability of the economy

Automated screening techniques such as computer interviews is being used increasingly by firms for all of the reasons except A. faster gathering and analysis of the data B. standardization of questions C. applicants tend to give more truthful answers to machines rather than people D. they reduce employee turnover

standardization of questions

Regression analysis

statistical approach to predicting a dependent variable such as sales, using one or more independent variables such as advertising expenditures

Non-quantitiative forecasting techniquies

subjective forecasts based on knowledgable people's opinions instead of being analytically derived

Counting methods

survey of customers' buying intentions test marketing

Surveys of buying intentions

surveys that ask customers about their intention to buy various products over a specified period

interviewing skills

temperament well-organized and prepared questions asked

Which is not true with regard to using employment test to screen sales applicants? A. test scores are sometimes used as sole criterion B. managers sometimes think that the highest score indicates the best prospect C. potentially successful salespeople may be screened out because they do not fit the stereotype the test is designed to measure D. test cannot identify any traits or qualification (intelligence, aptitude, personality, honesty) that other selection tools cannot identify better

test cannot identify any traits or qualification (intelligence, aptitude, personality, honesty) that other selection tools cannot identify better

The main objective of conducting an account analysis is to

identify customer and prospects and determine how much sales potential exists for each account

Conducting an account analysis helps ...

identify customers and prospects and determine the sales potential of each account.

Sales goals

implement a sales management training program for new sales managers within two years reduce sales force turnover to below the industry average over the next five years

The sixth step in preparing the annual sales budget is to

implement the budget and provide periodic feedback

Time and territory management strategies help ...

improve productivity

Market share/Market growth matrix

matrix displaying alternative methods of growing sales

"Shows poise, self-confidence, and maturity in dress; general demeanor; and degree of relaxation." These critical characteristics and behaviors of sales recruits refer to

maturity

personality traits

maturity planning skills sociability ambition enthusiasm persuasiveness

Sales aptitude tests

measure a person's innate or acquired social skills and selling know-how as well as tact and diplomacy

Intelligence tests

measure a salesperson's general cognitive ability or intelligence as an indicator of future job performance

Computer screening tests

measure honesty and personality

Personality tests

measure the behavioral traits the interviewer believes are necessary for success in selling, such as assertiveness, initiative, and extroversion

Knowledge tests

measure what the applicant knows about a certain product, service, market and the like

Jury of Executive Opinion

method asks key managers within the company for their best estimate of sales in a given planning horizon and combines the results to develop the forecast

Sales force composite

method is similar, but it asks the sales force for their best estimates of sales in the planning horizon.

Business Portfolio matrix

method of segmenting the company's activities into groups of well-defined businesses for which distinct strategies are developed

If territorial sales potential is inaccurate, sales performance may be

misleading

Manufacturing, marketing, procurement, customer service, and sales all improve with an effective sales and operational planning process. All the following are characteristics of successful sales and operational planning programs except A. people B. process C. mission D. technology

mission

Econometric Models

models developed to trace economic conditions in the U.S. by industry with the objective of capturing, in the form of equations, complex interrelationships among the factors affecting either the total economy or the industry's or company's sales

Time Series Method

moving averages exponential smoothing Box-Jenkins trend analysis using ARIMA

Factors to Consider in Evaluating Sources

nature of the product nature of the market promoting from within sales training provided by the company personnel needs of the company sources of successful recruits in the past recruiting budget legal considerations

Causal or association methods

1. Correlation-regression analysis 2. Econometric models 3. Input-output models

Factors that predict performance

1. Current employment 2. Prior sales experience 3. Knowledge of job requirements 4. Recruitment source 5. Residential moves 6. Education

External measures

1. Customer satisfaction 2. Societal satisfaction

Correlation-regression analysis TYPES

1. Correlation analysis 2. Simple regression analysis 3. Multiple regression analysis

Control units should be as small as possible, for two reasons:

(1) pinpoint the geographic location of sales potential (2) make adjusting territories much easier

Using historical data to predict sales, forecasters look for the following:

-Trends -Periodic movements -Cyclical movements -Erratic movements

Salesperson jumping necessities territory revisions:

-often leads to higher costs -selling inefficiencies -low morale in the sales force

Steps in conducting a job analysis

1. Analyze the environment in which the salesperson is to work. 2. Determine duties and responsibilities expected from the salesperson 3. Observe and record sales tasks being performed

Signs Indicating the Need for Territorial Revisions

1. As a company grows, it needs a larger sales force. 2. If territorial sales potential is inaccurate, sales performance may be misleading. 3. Morale problems will emerge if there are wide variations in territory potential. 4. Salesperson jumping necessitates territory revisions: -often leads to higher costs -selling inefficiencies -low morale in the sales force

Forecasting Approaches and Techniques

1. Breakdown Approach 2. Build up Approach

Factors that predict low turnover

1. Career aspirations 2. Employment 3. Prior sales experience 4. Employment length

Criteria for Evaluating Forecasting Methods

1. Comprehensibility 2. Accuracy 3. Timeliness 4. Quality and quantity of information 5. Qualified personnel 6. Flexibility 7. Costs/benefits

Personality tests measure

1. Emotional intensity 2. Intuition 3. Recognition motivation 4. Sensitivity 5. Assertiveness 6. Trust

Reasons for sales territories

1. Enhance market coverage 2. Minimize selling costs 3. Strengthen customer relations 4. Build a more effective sales force 5. Better evaluate sales 6. Coordinate selling with other marketing functions

Size of the salesforce

1. Equalized workload 2. Incremental productivity 3. Sales potential

Steps in Forecasting Sales Using the Breakdown Approach

1. Forecast general economic conditions. 2. Estimate the industry's total market potential for a product category. 3. Determine the share of this market the company currently holds and is likely to retain in view of competitive efforts. 4. Forecast sales potential of the product. 5. Use the sales forecast for operational planning and budgeting.

Types of sales department organizations

1. Geographic 2. Product 3. Function 4. Market 5. Combination of the preceding four

Internal measures

1. Industry average 2. Past performance 3. Managerial expectations

Employment Testing

1. Intelligence test 2. Knowledge test 3. Sales aptitude test 4. Vocational interest test 5. Attitude and lifestyle test 6. Personality test

Non-quantitative forecasting methods

1. Judging methods 2. Counting methods

Types of organizations

1. Line 2. Line and Staff 3. Functional 4. Matrix Organization

Extended socialization

1. Long term training 2. Job rotation 3. Corporate social activity

Analyze the situation

1. Market characteristics 2. Competition 3. Sales, cost, and profit data 4. Benefits offered 5. Promotional mix 6. Distribution systems

Salesforecsting Techniques

1. Non-quantitative methods 2. Quantitative methods

Developing a set of job qualifications

1. Personality Traits 2. Qualifications

Sources of salespeople

1. Persons within the company 2. Competitors 3. Non-competing companies 4. Education institutions 5. Advertisements 6. Professional recruiters

Standard company reviews

1. Physical examinations 2. Drug tests 3. Background checks

Sales budget uses

1. Planning function 2. Coordinating function 3. Controlling function

Budget Preparation Steps

1. Review and analyze the situation 2. Communicate sales goals and objectives 3. Identify specific market opportunities and problems 4. Develop a preliminary allocation of sources 5. Prepare a budget presentation 6. Implement the budget and provide periodic feedback

How Salespeople Spend Their Time

1. Sales 2. Communication 3. Developing customer relationships 4. Team support 5. CRM/ database

Preparing a job description

1. Sales activities 2. Servicing functions 3. Account/ territory management 4. Sales promotion 5. Executive activities 6. Goodwill

Procedure for setting up sales territories

1. Select a geographic control unit 2. Conduct an account analysis 3. Develop a salesperson workload analysis 4. Combine geographic control units into territories 5. Assign salespeople to territories

Estimating Industrial Demand Approaches

1. Standardize Classification System 2. Buyer Intentions

Selecting a geographic control unit

1. States 2. Countries and zip codes 3. Cities and metropolitan areas 4. Trading areas

Types of in-depth interviews

1. Structured interview 2. Unstructered interview

Quantitative Forecasting Methods

1. Time series methods 2. Casual or association methods

Sales organizations development guidelines

1. market oriented approach 2. approach designed around sales activities 3. defined areas of authority and responsibility 4. reasonable span of control 5. flexibility 6. coordination and balance

Time-series methods

1. moving averages 2. exponential smoothing 3. ARIMA

Judging methods

1. naive forecast 2. Jury of Executive Opinion 3. Sales force composite

% Salespeople spend prospecting

14%

% Salespeople spend with their customers

15%

% Salespeople spend waiting/traveling

32%

% Salespeople spend doing administrative tasks

34%

% Salespeople spend making service calls

5%

_______ measures how much two variables are related to one another.

A correlation coefficient

Accuracy

A forecasting method must provide results that are sufficiently accurate for the purpose desired

Types of sales quotas

Activity quotas Financial quotas Combination quotas Sales volume quotas

Sales and Operational Planning Process (S&OP)

Analyze sales record -> Develop a preliminary forecast -> Have managers adjust and review forecasts -> Build a sales plan around the forecast -> Make adjustments to operating plans

Stages in the Sales Management Planning Process

Analyze the situation -> Set goals and objectives -> Determine market potential and forecast sales -> Develop strategies -> Allocate sources and develop budgets -> Evaluate and control

Communicate sales goals and objectives

All management levels must be fully informed about sales goals and objectives.

People S&OP Program

All managerial levels must support the S&OP process and the plans that result

In discussing time and territory management, which of the following statements is erroneous? A. An activity analysis for several representative days (usually five to ten) reveals how much time the salesperson is currently spending on each task. B. Salespeople should work with their sales managers to develop a weekly plan of action. C. About a third or a quarter of a salesperson's time is spent on face-to-face selling. D. Although computer-based interactive models have been used in academic settings, they have yet to be applied successfully to sales force territory management because there are too many diverse variables in selling.

Although computer-based interactive models have been used in academic settings, they have yet to be applied successfully to sales force territory management because there are too many diverse variables in selling.

Sales and Operational Planning Process (S&OP)

An organized process that uses sales inputs to forecast business for upcoming periods of varying length

Guidelines for Developing a High-Quality Sales Organization

Be willing to delegate. Be sure authority equals responsibility. Put salespeople where they fit best. Be more than just an efficiency expert. Hold sales personnel accountable for what they do. Be flexible. Know what needs to be done. Organize the sales force to avoid unequal workloads.

Planning function

Budgeting is an operational planning process expressed in financial terms, which provides a guide for action toward achieving the organization's objectives

Strategic planning (participants and focus)

CEO, boards, president, senior vp; company mission, goals, primary strategies, overall budgeting

Review and analyze the situation

Common line items in sales budgets include these: salaries direct selling expenses commissions and bonuses promotional materials advertising

Recruitment process

Conduct a job analysis Prepare a job description Identify sales job qualifications Attract a pool of sales recruits Select best recruits

With regard to correlation and regression analysis, which of the following statements is erroneous? A. Correlation analysis identifies variables that move together without implying cause-and-effect relationships B. Linear regression defines the relationship between a single independent variable and a dependent variable C. Multiple regression seeks to determine the effect of several independent variables on a single dependent variable D. In liner regression, the formula for a straight line is y = a + bx, where b is the intercept and a is the slope of a line or trend of the line

Correlation analysis identifies variables that move together without implying cause-and-effect relationships

Goodwill

Counsel customers on their problems. Build relationships with channel partners. Maintain loyalty for the company.

Planning Components for Managers

Diagnosis; Prognosis; Objectives; Strategies; Tactics; Control

management must make assumptions about the future by using these two tools

Dialectic planning Contingency planning

Procedures

Detailed descriptions of specific steps for carrying out actions

Establish procedures

Detailed descriptions of specific steps for carrying out actions are called procedures.

Executive activities

Develop monthly and weekly work plan. Make a daily work plan for the next day. Organize field activity for sales calls.

Sales promotion

Develop new accounts. Promote products. Make calls with buyer's salespeople.

Develop and enforce controls

Develop performance standard controls so they can compare actual performance to predetermined standards.

Some key points to cover upon making a formal offer:

Duties of the salesperson Compensation -salary -draw -bonus -commission -expenses Territory coverage Length of employment relationship Termination of employment

Structured interview

Each candidate receives the same set of standardized questions designed to determine the applicant's fitness for a sales position.

____ traces economic conditions in the U.S. by industry, with the objective of capturing, in the form of equations, complex interrelationships among the factors affecting either the total economy or the industry's or company's sales.

Econometric models

Strategy S&OP Program

Effective strategy should align supply and inventories with demand.

Contingency

Events that are conceivable, but less likely than those based directly on the forecast

Financial quotas

Expense quotas, profit quotas: Gross margin quotas, contribution margin quota, net profit quota

Qualified personnel

Experts can give opinions on qualitative techniques like the jury of executives' opinions or the Delphi method.

T/F: "Discusses persons and events critically; doesn't allow emotions to cloud perceptions." These critical characteristics and behaviors of sales recruits refer to results orientation.

False

T/F: "Is sincere, friendly, tactful, responsive, not aloof." These critical characteristics and behaviors of sales recruits refer to assertiveness.

False

T/F: A prediction of the future market potential for a specific product is known as market potential.

False

T/F: A specific geographic area that contains present and potential customers and is assigned to a particular salesperson is known as a metropolitan statistical area.

False

T/F: A trading area is a metropolitan statistical area that has a population of 1 million or more.

False

T/F: Although there are different levels of organizational planning, the focus of strategic planning is on departmental, yearly, and quarterly plans, policies, procedures, and budgets.

False

T/F: An approach to planning that calls for making a new set of assumptions-sometimes directly opposite- and reevaluating all previous planning decision is known as contingency planning.

False

T/F: Complex systems showing the amount of input required from each industry for a specified output of another industry are known as econometric models.

False

T/F: For firms that sell through channel partners, it is inappropriate to use trading areas as a control unit.

False

T/F: General, long-range destinations are known as objectives.

False

T/F: Geographic structured sales organizations are useful when product lines are complex or distinct and require increased individualized attention.

False

T/F: In general, the breakdown approach is more expensive because aggregate, publicly distributed forecasts from secondary sources provide the basis for decision making.

False

T/F: Procedures refer to an overall program of action for using resources to achieve a goal or objective.

False

T/F: Product-oriented organizations are appropriate when product lines are simple and require less individualized attention.

False

T/F: Revision of sales territories is a time-consuming but important task that should be done at least yearly.

False

T/F: Specific results desired within a designated time frame-usually the period covered by the annual sales plan-refer to goals.

False

T/F: Territory jumping is associated with an increase in morale among salespeople.

False

T/F: Territory jumping is known to occur when one salesperson jumps into another salesperson's territory in search of lowering sales expenses.

False

T/F: The North American Industrial Classification System is a system for categorizing consumer products and service industries.

False

T/F: The process by which undesirable job candidates are eliminated as soon as possible refers to the selection process.

False

T/F: The recruiter asks each candidate the same set of standardized questions designed to determine the applicant's fitness for a sales position during an in-depth interview.

False

T/F: The sales goals for different sales territories and individual salespeople are known as sales potential.

False

Performance S&OP Program

Firms don't know how well they're doing unless they measure outcomes.

Breakdown Approach

Forecast economic conditions, such as these: GNP consumer price index wholesale price index interest rates unemployment levels

Tactical planning (participants and focus)

General sales manager, director of marketing; departmental, yearly, and quarterly plans, policies, procedures, budgets

Allocate Resources and Develop Budgets

Given detailed sub-plans and tactics, managers must allocate resources—money, people, materials, equipment, and time—to carry out the plans. The sales budget is the expected expenditures required to achieve projected sales revenues.

Stakeholders

Government: federal, state, local Company employees Stock holders Financial community Suppliers Investigative reporters

Quality and quantity of information

In forecasting as in other areas, "garbage" input leads to "garbage" output (GIGO).

Unstructured interview

In informal interviews, probing questions are used to learn the following: a) whether candidate is self-motivated b) whether candidates will work on their own c) whether the candidate has a pattern for winning or recovering from loss

Selection in initial socialization

In interview process candidate can be exposed to company values and philosophy

Customer/Market Sales organization

Sales manager -> Consumer market sales people, Industrial (B to B) market sales people

_______ measure what the applicant knows about a certain product, service, market, and the like.

Knowledge tests

Product Sales organization

Sales manager -> computer sales people, office equipment salespeople

Strategic Business Units

Logical divisions of major businesses within multiple product companies

Sales activities

Make regular calls. Sell the product or product line. Check stock; identify possible product uses.

Before a sales manager can search for a particular type of salesperson, he or she must know something about the sales job to be filled. A job analysis identifies the duties, requirements, responsibilities, and conditions involved in the sales job. What is the third step in conducting a job analysis?

Make sales calls with several salespeople to observe and record the various tasks of the job.

Flexiblity

Managers continually monitor actual sales for any deviations from forecast that may indicate the need for revised sales forecasting tools.

Which of the following statements about recruiting in inaccurate? A. Many sales managers start recruiting only after someone leaves, but this limits the pool of candidates you can screen and interview. B. Many sales managers are well trained in recruitment, so they readily know the best sources to find qualified candidates. C. Managers who constantly recruit have a useful backlog of pre-screened candidates to choose from. D. A problem with waiting to recruit until you have an opening is that you can fall prey to a sense of desperation and hire to quickly without proper screening.

Many sales managers are well trained in recruitment, so they readily know the best sources to find qualified candidates.

Technology S&OP Program

Market intelligence and decision support system are in place for reports that assist in planning

Identify specific market opportunities and problems

Sales managers and salespeople should use budget resources to pursue specific market opportunities and deal with problems on a timely basis.

Geographic sales organization

National Sales Manager -> Western Region Sales Manager, Eastern Region Sales Manager

A system for categorizing firms, formally adopted beginning with the 2002 Economic Census and publication of the 2002 U.S. NAICS Manual,refers to the

North American Industrial Classification System

Standardize classification system

North American Industrial Classification System (NAICS) has replaced the original SIC.

What is a disadvantage in using countries as control units?

Not all countries are similar in size, sales potential, or ease of market coverage.

Define goals and objective

Objectives are specific results desired within a designated time frame, for example, become best service-oriented sales force.

Determine duties and responsibilities expected from the salesperson

Obtain information from these sources: salespeople channel partners customers distribution manager

Concentration Principle

Often called the "80-20 rule," it states that most of a salesperson's sales, costs, and profits come from a relatively small proportion of customers and products.

Implement the budget and provide periodical feedback

Sales managers must provide early warning of budget overruns and ensure that sales revenue and cost ratios remain within reasonable budget limits.

Top-performing salespeople always set priorities in their work, based on the following:

Parkinson's Law Concentration Principle

Strategic planning participants and focus

Participants: CEO, boards, president, senior VPs Focus: company mission, vision, goals, primary strategies, overall budgeting

Tactical planning participants and focus

Participants: general sales manager, director of marketing Focus: departmental, yearly, and quarterly plans, policies, procedures, budgets

Monthly and weekly planning participants and focus

Participants: regional sales managers Focus: branch plans and budgets

Daily planning participants and focus

Participants: sales supervisors and sales reps Focus: unit plans and budget

Successful S&OP programs

People Process Technology Strategy Performance

Employment tests are an objective way to measure traits or characteristics of applicants for sales positions and to increase the chances of selecting good salespeople. _______ measure the behavioral traits the interviewer believes are necessary for success in selling, such as assertiveness, initiative, and extroversion.

Personality tests

_______ measure the behavioral traits the interviewer believes are necessary for success in selling, such as assertiveness, initiative, and extroversion.

Personality tests

Comprehensibliity

Sales managers must understand the basic methods of developing forecasts.

Daily planning (participants and focus)

Sales supervisors and sales reps; unit plans and budget

Set policies

Predetermined approaches for handling routine matters or reoccurring situations are called policies.

______ focuses on the creation of new or improved products for current markets by adding new sizes, models with new features, alternative quality version, or creative new alternatives to satisfy the same basic needs.

Product development

___________ refers to the sales goals for different sales territories and individual salespeople.

Quota

Initial socialization steps

Recruiting, Selection, Introductory training

Sales Force Socialization

Refers to introducing the recruit to the following: company practices, procedures, and philosophy social aspects of the job

Monthly and weekly planning (participants and focus)

Regional sales managers; branch plans and budgets

Process S&OP Program

Regular meetings are held. Metrics monitor progress and provide benchmarks

Together, the two equal selling success:

S1 (Selling Success) = E1 (Effectiveness) + E2 (Efficiency)

A division, product line, or single product may be classed as an

SBU

Controlling function

Sales budgets must be closely integrated with budgets for other marketing functions

quotas

Sales goals for different sales territories and individuals salespeople

Functional sales organization

Sales manager -> Account development salespeople, Account maintenance salespeople

Corporate social activity

Socializing new salespeople at company picnics, sports teams, and sales meetings allows interaction with experienced salespersons, sales managers, and company executives.

Functional organization

Staff specialists have line authority, for example, a sales manager directs salespeople, but the sales training director also has authority over the sales force for training. VP Marketing -> Sales Manager -> Director of Sales Training, District managers, Technical service managers -> Salespeople

Boston Consulting Group's Market Share/Market Growth Matrix

Stars: high market share, high market growth; generate considerable income Cash cow: high market share, low market growth; generate strong cash flow Problem child (aka question marks): low market share, high market growth; have potential to become stars or cash cows Dogs: low market share, low market growth; generate little profits or make losses

Prepare a budget presentation

Succinct, well-reasoned written and oral budget presentations can be used to ask for increased allocation of funds.

Buyer intentions

Survey potential industrial customers to measure their purchase intentions—the likelihood they will actually purchase a given product.

NAICS (North American Industrial Classification System)

System for categorizing firms, formally adopted beginning with the 2002 Economic Census and the publication of the 2002 U.S. NAICS Manual

Timeliness

The forecasting method must generate forecasts in time for managers to use them.

Impact of Erroneous Sales Forecasts Distribution

Too high: costly, insufficient to sell excess products Too low: inadequate to reach market

Impact of Erroneous Sales Forecasts Production

Too high: excess output, unsold products Too low: inadequate output to meet customer demand

Impact of Erroneous Sales Forecasts Finance

Too high: idle cash Too low: cash shortage

Impact of Erroneous Sales Forecasts Profits

Too high: lower unit profits since expenses are high Too low: lower total profits because market not covered

Impact of Erroneous Sales Forecasts Customer relations

Too high: money wasted on unneeded activities, resulting in lower profits Too low: unsatisfactory due to out-of-stock products

Impact of Erroneous Sales Forecasts Inventory

Too high: overstock Too low: understock

Impact of Erroneous Sales Forecasts Pricing

Too high: reductions to sell excess products Too low: price increases to allocate scarce products

Impact of Erroneous Sales Forecasts Sales force

Too high: too many salespeople, high selling costs Too low: too few salespeople, market not covered

Impact of Erroneous Sales Forecasts Promotion

Too high: wasted expenditures Too low: insufficient expenditures to cover the market

T/F: "Gets to the point; emphasizes achievement; responses are relevant to interview objectives." These critical characteristics and behaviors of sales recruits refer to results orientation.

True

T/F: A growth/market share matrix displays alternative methods of growing sales.

True

T/F: Day to day actions that make up the strategic plan refer to tactics.

True

T/F: Diversification refers to a growth strategy that focuses on creating new products for entering new markets by introducing new product lines, purchasing new businesses, or achieving control over different levels of distribution channels.

True

T/F: Firms that have adopted a CRM perspective see benefits in assigning territories based on customer characteristics instead of geographic characteristic.

True

T/F: High-volume, important customers require added attention from the sales organization.

True

T/F: If salespeople are able to help customers launch advertising campaigns, distribute point-of-purchase displays, sell channel partners on cooperative advertising, or perform other work related to sales promotions, the results often are better when work is managed on a territory-by-terriroty basis rather than for the market as a whole.

True

T/F: Matrix organizations are typical in industries confronted with rapid technological changes and the need to quickly develop new products or services.

True

T/F: Parkinson's law is a theory that suggests that work tends to expand to fill the time allotted for its completion.

True

T/F: Regression analysis is a statistical approach for predicting a dependent variable such as sales using one or more independent variables such as advertising expenditures

True

T/F: Sales aptitude tests measure a person's innate or acquired social skills and selling know-how as well as tact and diplomacy.

True

T/F: Subjective forecasts based on knowledgable people's opinions instead of derived analytically refer to non-quantitative forecasting techniques.

True

T/F: The breakdown approach is particularly useful and reliable when forecasting for periods of six months or longer. The buildup approach becomes more attractive as the time frame gets shorter.

True

T/F: The characteristics recruits should have to perform a sales job satisfactorily are known as job qualifications.

True

T/F: The difference between actual results and sales budget expectations is known as budget variance.

True

T/F: The job description explains to job applicants and current sales personnel what the duties and responsibilities of the sales position are.

True

T/F: Vocational interest tests assume that a person is going to be more effective and stable if he or she has a strong interest in selling.

True

T/F: When deciding which recruiting sources to use, the factors to consider include the nature of the product, the policy on promoting from within, and the nature of the market.

True

T/F: When sales coverage is far below the sales potential of the market-that is, when there is more than enough business for every salesperson-then it is unnecessary to assign sales territories.

True

Prognosis

Where are we headed if no changes are made?

Diagnosis

Where are we now?

Objectives

Where should we be headed?; specific results desired within a designated time frame- usually the period covered by the annual sales plan

Parkinson's Law

Work tends to expand to fill the time allotted for its completion.

Moving averages

are forecasts developed using a moving average to predict future sales as a mathematical function of sales in recent time periods. As the forecasters add each new period's sales data to the average, they remove from the total the data from the oldest period.

Trends

are movements in a time series as a result of developments in population, technology, or capital formation

Metropolitan Statistical Areas

areas that serve as territories; they can include a major city as well as the surrounding suburban and satellite cities

Attitude and lifestyle tests

assess honesty and identify drug absuers

The fifth step in the procedure for developing sales territories is to

assign salespeople to territories

Vocational interst tests

assume that a person is going to be more effective and stable if he or she has a strong interest in selling

Naive forecast

assumes that the next period's sales will be the same as they were in the previous period.

Equalized workload

assumes that the total workload in covering the market consists of three factors: a) customer size b) sales volume potential c) travel time

Incremental productivity

assumes the sales force should be increased until profits added by the last salesperson hired equal the costs of employing that salesperson.

Correlation-regression analysis

attempt to identify the factors affecting sales and to determine the nature of the relationship between them.

Econometric models

based on a series of regression equations.

Sales potential (size of salesforce)

based on assumption of what the average sales representative will achieve in annual sales volume, then divide by year sales forecasted

Build up Approach

based on primary research

Initial socialization

begins with the recruiting and selection process and ends with the initial orientation of the salesperson to the firm's procedures and policies

In developing sales territories, the optimal size is

big enough to represent a reasonable workload for the salesperson

The focus of monthly and weekly planning is on

branch plans and budget

Benefits offered

brand names, prices, packages, and service

Firms that sell products to the government, military, and commercial markets are usually organized

by customer market

Which of the following would not be a way for sales management to organize the sales department? A. by market B. by supplier C. by product D. by geographic area

by supplier

Distribution systems

channels of distribution, channel partners, storage and transportation facilities, and intensity of distribution

Job Qualifications

characteristics recruits should have to perform a sales job satisfactorily

The fourth step in the procedure for developing sales territories is to

combine geographic control units into territories

Semi-structured interview

combined approach in which a fixed set of questions is applied but time for discussion and interaction is left after each

Competition

competitor: numbers strengths, weaknesses products prices market shares sales trends for each brand

Input-output models

complex systems showing the amount of input required from each industry for a specified output of another industry

When beginning the planning process, sales managers should consider six basic questions. "What measures must be monitored so that we know how we're doing?" is associated with

control

Casual or association method

correlation-regression econometric model Input-output models

Market penetration

current product, current market; focuses on increasing sales of current products in current markets by more intensive marketing efforts.

Market development

current product, new market; seeks to open up new markets for current products.

Firms that have adopted a _____ perspective see benefits in assigning territories based on customer characteristics instead of geographical characteristics.

customer relationship management

Even though most companies establish sales territories on a geographic basis, the major emphasis should be on

customers and prospects

When using time-series methods, forecasters look for all of the following factors except A. periodic movements B. cyclonic movements C. cyclic movements D. erratic movements

cyclonic movements

Here are some examples of salesperson time allocation problems:

deciding which accounts tocall on dividing time between selling and paperwork allocating time between present customers, prospective customers, and service calls allocating time to spend with demanding customers or new prospects

The general sales manager and director of marketing engage in

departmental, yearly, and quarterly plans, policies, procedures, and budgets

person-organization fit (POF)

describes how consistent a salesperson's value system is with those of the firm.

Territorial routing

devising a travel plan or pattern to use when making sales calls to efficiently cover a territory.

program evaluation and review technique (PERT)

diagram specifies a project's critical path

Budget variances

differences between actual results and sales budget expectations

Benefits of Preparing the Annual Sales Budget

ensure a systematic approach to allocation resources develop the sales manager's knowledge of profitable resource use create awareness of the necessity of coordinating selling efforts with other divisions of the company establish standards for measuring the performance of the sales organization obtain input from all areas of the company in the profit-planning process

Salesperson workload analysis

estimate of the time and effort required to cover each geographic control unit

Sales budget

expected expenditures required to achieve projected sales revenues; financial sales plan outlining how to allocate resources and selling efforts to achieve the sales forecast

Job Description

explains to job applicants and current sales personnel what the duties and responsibilities of the sales position are

The Purpose and Benefits of Planning

improving morale when the entire sales organization actively participates in the planning process providing direction and focus for organizational efforts improving cooperation and coordination of sales force efforts developing standards by which sales force performance can be measured and deviations can be identified to take corrective actions increasing the sales organization's flexibility in dealing with unexpected developments

Selling teams

include individuals from diverse functional areas such as operations, finance, research and development, marketing, and sometimes even the CEO.

Sales objectives

increase sales by 15% next year reduce customer complaints by 10% next year increase the number of new customer accounts by 20% in the next six months

If a sales manager is trying to stimulate sales growth by using a market penetration strategy, what would best describe this approach?

increase sales of current products in current markets

The first step in the systematic process for selecting salespeople is

initial screening

Here are some critical personality traits of salespeople:

intelligence decisiveness energy and enthusiasm results orientation maturity assertiveness sensitivity openness tough-mindedness

Manufacturing, marketing, procurement, customer service, and sales all improve with an effective sales and operational planning process. All of the following are characteristics of successful sales and operational planning programs except A. strategy B. intent C. process D. performance

intent

Compare these traits in candidates:

interviewing skills, background/job skills/ experience, personality traits, summary points

Sales managers often use management by objectives (MBO) to

involve subordinates in planning and budgeting

Contingency planning

is a backup plan to the one adopted, and it will be executed only if events occur beyond the control of the major plan.

Return on time invested (ROTI)

is a financial concept that helps salespeople spend their time more profitably with prospects and customers (designated return/hours spent)

An autoregressive integrated moving average (ARIMA)

is based on the moving average concept. The model incorporates information about trends by spotting patterns in the fluctuations in data.

Managers evaluate and adjust each salesperson's estimate before combining them to form an overall forecast. All of the following are disadvantages of sales for composite approach except: A. it allows estimates to be prepared by products, customers, and territories so that a final detailed forecast is readily available B. it allows salespeople to deliberately underestimate their forecasts so that they can reach their quotas more easily C. it yields forecasts based on present rather than future conditions because salespeople often lack the perspective for future planning D. it required a considerable amount of sales force time that otherwise could be spent in the field attracting new customers

it allows estimates to be prepared by products, customers, and territories so that a final, detailed forecast is readily availble

Managers evaluate and adjust each salesperson's estimate before combining them to form an overall forecast. All of the following are advantages of the sales force composite except: A. it relies on input for salespeople who are not trained in forecasting, so the forecasts are often too optimistic or too pessimistic B. it assigns forecasting responsibility to those held responsible for making the sales C. it helps salespeople accept sales quotas assigned to them because they participate in developing forecasts D. it yields results that are often more reliable and accurate because a larger number of knowledge individuals contribute to them

it relies on input from salespeople who are not trained in forecasting, so the forecasts are often too optimistic or too pessimistic

background/job/experience skills

job stability career pattern recommendations

Extended socialization

makes new salespeople feel they are an integral part of the company by exposing them to the corporate culture (values, philosophy, group norms, different work groups, corporate officers)

The procedure for setting up sales territories does not include

making an analysis of the skills and abilities of each salesperson

Unsuccessful planning may result from

making erroneous assumptions.

Probably the most important performance standard is ___________ because is is based on the organization's objectives, forecasts, and budgetary support.

managerial expectations

_______ focuses on increasing sales of current products in current markets by more intensive marketing efforts.

market penetration

Socialization contributes to

person-organization fit (POF)

In-depth interviews can be used to gather which of the following types of information not available from other selection tools?

personal characteristics

The buying power index for a geographic area is a weighted combination of the area's

personal income, retail sales, and population

Promotional mix

personal selling, advertising, sales promotion, and emerging Internet strategies

Dialectic planning

planning examines the validity of assumptions in a forecast. Calls for making a new set of assumptions to revaluate previous plans. Plans are rigorously challenged; a second plan is prepared.

Factors that lead to rejection of applicants:

poor appearance overbearing, overaggressive, conceited attitude inability to express self clearly; poor voice, diction, grammar lack of knowledge in field of specialization low moral standards intolerance; strong prejudice inability to take criticism condemnation of past employers

Policies

predetermined approaches for handling routine matters or reoccurring situations

Detailed descriptions of specifics steps for carrying out actions are known as

procedures

Initial Screening

process by which undesirable job candidates are eliminated as soon as possible

Job analysis

process identifying the duties, requirements, responsibilities and conditions of a job

Strategy planning

process of setting overall objectives, allocating resources, and developing broad courses of action

Socialization

proper introduction of the recruit to company practices, procedures, and philosophy and the social aspects of the job through which the salesperson is integrated into the organization

Purchase intensions

the likelihood customers will actually purchase a given product

In-depth interviews

the most used and least scientific of the various tools for selecting employees and is very affective for finding if an employee is right for the job through a two-way discussion involving probing questions

Market characteristics

the number and types of potential buyers, their demographic and behavioral profiles, their attitudes and buying patterns, and their servicing needs

Sales potential

the portion of market potential that one among a set of competing firms can reasonably expect to obtain; the maximum possible sales for a company

Before assigning salespeople to a territory look for congruity in terms of the following:

the salesperson's physical, social, and cultural characteristics

Critical path

the sequence of tasks to be completed, the time to complete each activity, and the responsible individuals.

Using historical data to predict future sales is called

the time series technique

Market capacity

the units the market will absorb if the product or service is free

To determine the return on time invested for different activities, it is necessary to keep accurate records on all the following activities except A. time spent on non-selling activities B. time spent on preparing sales call C. time spent on making a sales presentation D. time spent with customers

time spend on non-selling activities

Muiltiple regression

tool for forecasting a dependent variable like sales using several independent variables simultaneously

"Discusses persons and events critically; doesn't allow emotions to cloud perceptions." These critical characteristics and behaviors of sales recruits refer to

tough-mindedness

Firms that sell through channel partners (wholesalers and retailers) often use _______ as control unites.

trading areas

Many new sales recruits have difficulty with the in-depth personal interview. Because of this fact, Raymond Tourmin's older brother has spend time coaching him for his first important interview. Raymond has been advised to be aware of (and definitely avoid) some negative factors that frequently lead to rejection of applicants. Which of the following does not indicate such negative factors?

under emphasis on money and a sense of humor

Time-series technique

use of historical data to predict future sales

sales territory

usually a specific geographic area that contains present and potential customers and is assigned to a particular salesperson

Cyclical movements

wave-like movements of sales that are longer in duration than a year, such as business recessions

Breakdown approach

way of developing forecasts based on general economic conditions, typically projected gross national product (GNP) in constant dollars along with projections of consumer and wholesale price indexes, interest rates, unemployment levels, and federal government expenditures

In-depth interviews help determine issues such as these:

whether a person is right for the job source and quality of candidate's past sales leads length of sales cycle the candidate has been successful with level candidate has been selling to whether candidate has worked alone or as a team member why the candidate wants to change sales positions

Time and territory management strategies help determine these things:

which accounts are called on when accounts are called on how often accounts are called on

Morale problems will emerge if there are

wide variations in territory potential

Ineffective recruitment and selection can result in the following:

wrong salespeople being hired thousands of dollars a year spent in training lost productivity lost sales

Weighted application forms place more importance on the following:

years of selling experience employment length career objectives educational level