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