Table of Contents
Q.1. Explain the various steps involved in personal selling process. Explain with suitable example from Hospitality Industry. (20)
Personal selling Process
1. Prospecting
Prospecting is the first and the most important component of personal selling.
Prospecting consists of identification of potential customers and then to rank them in order to select the customers with the purchasing power and the authority to make, the decision, to buy the product.
To be more productive, the sales personnel should plan as many of their activities as possible. In other words, they should always do the proper home work in order to utilise their time in the marketplace, more productively. Hence, they should plan their travel and call-schedules so as to spend maximum of the available time on meeting their customers. Moreover, the time available to the sales personnel should not be wasted in making an effort to convince those people about their products, who can not buy them. Thus, the planning which involves eliminating non-productive calls, is known as prospecting.
It goes, without saying that the time available should be spent on calling-on potential buyers rather than on non-buyers. The sales person who practice ‘ prospecting’ ultimately emerge out as more productive than others.
In a nut shell, the result-oriented prospecting is a two step process. Firstly, the identification of potential customers and secondly, the process of selecting / ranking them.
2. Preparation to Meet Individual Prospects
Before meeting a selected customer, the sales person should find out as much as possible about the same. In case of an organisation as a customer, the sales person should know what products the organisation is currently using and how his product is better than the one already in use. The sales person should also find out what is the purchase procedure in the organisation and what is the total budget earmarked by that organisation, for his kind of products. The sales person should also try to find out personal likes and dislikes of his prospective buyers so as to tailor make his presentation to suit the prospect. The sales person should also have a clear ideas about the questions that the prospect may ask so as to prepare himself to face them.
Now, the sales person is ready to contact the prospect and to make the presentation. It should be borne in mind that the sales person should take a prior appointment with the prospect so as to exercise a good time management. By doing so, he can save on his as well as the prospect’s time.
3. Making the Presentation
This is a very important component of the total process of personal selling. In essence, it amounts to using all the information, knowledge and skills of the sales person, so as to actually make the sales. In this stage, a sales person draws ATTENTION of the customers, holds INTEREST in his offering, builds the DESIRE for his product and finally stimulates his customer to take a favourable ACTION towards his product, i.e., the prospect purchases his product. As discussed in the theories of selling, it involves implementing the AIDAS theory of selling.
4. Draw Attention
The prospects, attention can be drawn by asking a creative question, or by pointing out a startling new fact about the product. By finding out the actual need of the customer and then phrasing the question in such a manner that it actually tells the customer that your product can meet the prospect’s needs.
5. Hold Interest and Build Desire
After drawing attention the sales person should hold the INTEREST of the customer in his sales talk. Here there is no set pattern. Also there is no choice other than actually demonstrating the perfornance of the product. In such instances where the sales person can’t demonstrate the performance of his product, he should creatively use various audio-video media to hold INTEREST of the customers. In a large number of cases the sales person uses various promotional inputs like literatures, gifts, visual aids, voice modulation, pitch, tone, body language, etc., to maintain the INTEREST of his customers in his presentation or the sales talk.
While making the presentation, the sales person uses various presentation inputs like brochures, literatures (as stated above). What should be emphasized here is that these inputs are just the promotional inputs, or the sales aids. Obviously they have no effect without proper use and effective handling by the sales man in presence of the prospect. Their effectiveness can be best utilised by a sales person possessing the requisite skills to use these presentation inputs, and without these skills they are mere objects.
6. Sales Resistance
This part of the selling process is also a very important part: It concerns with tine resistance that the prospect exhibits during a sales call. Even after proper prospecting, preparation to meet each individual and making a winning presentation, the sales personnel can face some resistance from the prospects. Such a resistance may be exhibited, typically, in terms of objections. The objections are the sincere or insincere reasons put forth by the prospects in order to circumvent or the culmination of a sales call into the actual purchase. An objection:, requires a tactful handling by the sales person at its best. Otherwise, it can spoil the sales person’s total effort in securing order .the sincere objections are the real objections or real reasons put forth by the prospect for not buying the product. Insincere objections, on the other hand, are the imaginary or unreal objections.
7. Meeting; the Sales Resistance
An objection indicates that the customer has, , attentively listened to the presentation and the sales person has been effective upto this stage.
However , in order to handle the objections effectively , following objection handling system can be applied:
a. Listen to Objections
Usually the sales persons do not treat customers’ objections as opportunities. They treat them as customer’s resistance. In protecting themselves from such a resistance, the sales persons leap on an objection even before the customer has completed the same. However, the sales persons must listen to the objections very carefully. Otherwise, if he is not a good listener, he may inadvertently irritate his customer and may lose a winning sales. Moreover, a careful listening will also give an opportunity to the sales person to analyse the objection. whether it is sincere or insincere. Accordingly, then he can handle the objections.
b. Ask for Details
If the objection is not clear to the sales person, he should ask the customer to elaborate on his objection. Here the sales person must avoid sarcasm and have patience. If nothing else, this technique will give more time to a sales person to think how to utilise the opportunity.
c. Answer the Objection
More often than not the sales persons who have good knowledge on their product, competitors’ products, and customers, can answer the objections, effectively. All objections are questions and only a knowledgeable sales person can provide the answers.
d. Confirm the Answer
An effective sales person should not leave the objection by answering it. He should confirm whether the customer has understood the answer or not. The customer may have missed the point. He might have been thinking of something else at that point of time. To confirm the answer, a sales person can ask the customer, in specific statements like; “Now that’s settled entirely, isn’t it?” or “That solves your problem with (my brand), isn’t it’?”
e. Immediately go to the Next Step
After the answer has been confirmed with the prospect, the sales person should move on to the next step of personal selling process and that is to close of the sales call.
8. Closing the Sales
Closing a sales is nothing but helping prospects to take decisions. Unless a sales person bases his actions on this understanding he would be trying to build success on false premises.
Q.2. Differentiate between Advertising and Personal Selling? Substantiate your answer with suitable example from Hospitality Industry. (20)
Advertising is one of the widely used techniques of promotion, wherein modes like television, radio, newspapers, internet, etc. are used for creating demand or interest of the customers towards the product or services offered by the company. On the other hand, personal selling is the verbal communication of the message, to one or more customers, so as to create sales.
Both advertising and personal selling are two major elements of promotion mix, which is employed by the organization to reach communication objectives. Advertising differs from personal selling, in the fact that the former is a monolog activity, but the latter is dialogue.
Personal selling
1. It is the method of personal communication. It is the way of face- to-face communication.
2. Two-way, from seller to buyer and buyer to seller, communication.
3. It is more flexible. Salesman finds it easy to adjust with situation. He can alter his presentation as per situation.
4. Per contact cost is considerably high.
5. It is a slow process. At a time, one salesman can talk to one or limited people.
6. Comparatively more information can be communicated.
7. Maximum. Clarification is possible. On the spot, matter is clarified. It is more effective.
8. It is suitable for almost all the consumer products.
9. It is both promotional and distribution device.
10. Immediate and direct feedback can be measured. Salesman can know the buying intention of buyers.
11. It is not controllable. Salesman can present his talk and product as per his skills, knowledge and experience.
12. Creativity depends on ability of individual salesman. Comparatively, it more influential.
Example
A good example of personal selling is found in department stores on the perfume and cosmetic counters. A customer can get advice on how to apply the product and can try different products. Products with relatively high prices, or with complex features, are often sold using personal selling. Great examples include cars, office equipment (e.g. photocopiers) and many products that are sold by businesses to other industrial customers.
Advertising
1. It is the method of mass communication. It is the way of indirect communication.
2. One-way, from seller to buyer, communication.
3. It is less flexible. Once advertising programme prepared and implemented, there is less chance to alter or adjust it.
4. Per contact cost is extremely low.
5. It is a fast method. Millions of people can be conveyed the advertising message by using mass media.
6. Limited information can be communicated.
7. Minimum. Clarification is not possible. It is less effective.
8. Mostly, it is suitable for non-technical products.
9. It is a promotional device.
10. Immediate feedback cannot be measured. Even, net impact cannot be known.
11. Company has complete control over it. Advertisement takes place as per company’s plan.
12. It permits maximum creativity in preparing theme, message and spots. It is comparatively less influential.
Example
Coca-Cola Ad in Tv,
Amazon Ad in Newspapers TV
Q.3. What do you understand by the non-verbal communication? How does it help in Sales interaction? Furnish suitable example. (20)
Non – Verbal Communication
Non-verbal means of communication include all communication forms that involves neither written nor spoken words, but occur without the use of words.
Some of the types are as follows:
• Body Movements : Kinesics
• Space : Proxemics
• Voice Patterns : Paralanguage
• Time : Chronemics
• Touch
• Colour
• Layout/Design/Graphics
• Objects
Kinesics
When communicating. with others in a face-to-face situation our entire body participates in communication, which is called body language, like
• Facial Expression
• Eye Contact
• Gestures
• Posture, movements etc.
Like all other forms of communication, non-verbal message should be sincerely planned otherwise gesture & body movements usually appear to be just that faked.
Use gestures naturally to reinforce the meaning you are expressing through words.
Too much shuffling of gestures, postures is distracting & annoying.
Space : Proxemics
Special change gives tone to a communication. It accents it and at times even overrides the spoken words. Proxemics involves how we arrange personal space and what we arrange in it. It is said that each one of us have four space circles around us, which are as follows:
First, consider the one & half feet circle around you. Only special but a few people are permitted here – Intimate Space.
Second, inspect the four feet, beyond the first circle, friendly conversations and spontaneous communications normally occur here – Personal Space
Third, examine the personal space 4-12 feet around you. It is used more formally – i.e., for business or social situations
Last, observe the space beyond 12-16 feet things of least significance occur here – Public Space
A “Superior” can, by placing himself physically extremely close to a subordinate create a certain type of atmosphere or otherwise.
Voice & Non-Verbal Vocalisation – Paralanguage
When we speak apart from the spoken words, the manner in which a word was spoken, relates to paralanguage. In paralanguage we consider two aspects. First is the voice set which includes various measurements of voice in terms of intensity are pitch. Rhythm and resonance. These can be measured through some physical instruments used for measuring sound.
The second is the -un-Verbal Vocalisation which includes laughing, crying, verbal pause & interludes of silence like: “AH’s,” “OH’s” etc.
Non-verbal communication skills for selling
When selling to customers, your non-verbal communication skills — such as active listening and interpreting non-verbal cues – are just as important as what you say. Developing these skills will help you understand what your customers want, so you can offer them the most suitable products and services.
Listening skills
Listening to your customer to discover their needs helps you suggest appropriate products or services to meet those needs.
Active listening is the process of confirming what you think your customer has said, and meant, by observing their verbal and non-verbal cues. To be a good active listener you should:
- Focus your full attention on your customer
- Briefly summarise your understanding of what your customer has said
- Take notes if necessary
- Use appropriate non-verbal cues such as nodding your head, inclining your body forward and maintaining eye contact
- Note your customer’s non-verbal cues — are they eager, reluctant, impatient?
- Use appropriate, well-timed probing questions and summary confirmation questions.
- Understanding non-verbal cues
Interpreting your customer’s non-verbal signals and behaviours allows you to read their attitude and better understand their needs. Projecting the right non-verbal cues yourself can help your customer feel at ease. Here are some positive and negative examples of non-verbal cues:
Facial expressions
Bad — wrinkling the nose, furrowing the brow or rolling the eyes
Good — smiling, raised eyebrows, relaxed mouth
Eye contact
Bad — avoiding your customer or looking outside your sales space
Good — looking back to your customer’s face and at your products
Smile
Bad — closed, firm or expressionless mouth
Good — smiling or relaxed mouth
Hands
Bad — hands folded to the chest or near the face
Good — hands moving freely, relaxed, touching the product
Gestures
Bad — closed arms, dismissive hand gestures
Good — open arms, nodding the head
Posture
Bad — slouching, shoulders turned away
Good — standing upright, inclining the body forward
Position
Bad — moving too close, facing away
Good — observing personal space accommodating cultural differences.
Q.4. What do you mean by “Presentation” and “Presentation Skills” ? Discuss some principles of effective presentation. (20)
Presentation
A presentation is a commitment by the presenter to help the audience to do something for solving a problem. An interesting thing to note is that in a presentation commitments are made by the presenter and the audiences are making judgement, simultaneously. The presenter advocates and audience evaluate, to render a verdict. In terms of content and structure, presentations and speeches have a good deal in common with formal reports – many of them are oral version of a written document.
Presentation Skills
Skills required for giving the presentation so tgat everyone understands is known as Presentation Skills. All preparations on the ‘structure’ and ‘strategy’ of your presentation will have limited impact on your customers or audience if you don’t have the right presentation skills. For example, it is very important that you should be able to have control on yourself.
The moment you rise to speak you convey some signals to yourself, which might decide ultimately the success or failure of your presentation.
They are
a. Personal Aspects such as Sincerity, Thoroughness, Confidence
b. Non-verbal Behaviour such as Movement, Gesture, Posture, Eye contact, Facial Expression
c. Oral Delivery such as pitch, rate, volume, pronunciation, vocal quality.
Principles of effective presentation
1. Start Ralf Way
In preparing your presentation, may be you should start about halfway through. There isn’t an audience in the world that hasn’t said to itself, “When is the presenter going to stop talking about his business and start about mine”. So instead of “Opening Remarks”, why not structure your outline to begin with, ” an issue of direct concern to my audience”. The sooner you can stop being self-conscious and start being audience-conscious, the better your chances of winning a positive verdict.
2. Plan Out Content
Content is always the first requirement of any presentation. Once content breaks down, delivery is never far behind. If you don’t know your subject, your voice is going to tighten. If you don’t believe what you are saying, your gestures are going to be half-hearted. If you get a question that catches you unprepared, your body language is going to answer for you. How much substance do you need in order to feel supremely confident about your next presentation? The answer is, have in your head about seven times as much information as you are likely to use in your presentation.
3. Clarity
It’s impossible to be too clear. Many presentations are so muddled that members of the audience say to themselves, “What in the world is that person talking about?” or, “What on earth am I doing here
Here is a simple but effective exercise: Ask yourself “If I were going to put a fifteen-word headline on my presentation, what would it say?” Isolate the meat of what you want to communicate and make sure you say it – clearly, prominently. Also ask yourself, “What do I really want my audience to do as a result of this presentation?
4. Partial Receptivity
Keep in mind that your audience is going to remember about one quarter of what you say. A surprising number of presenters will assume that once a statement is made, the audience retains it. Iii reality, an average audience retains approximately 25 per cent of a presentation if the verbal content is given visual reinforcement (slides, charts, videotapes). If the presenter is simply standing there, going through a manuscript, flooding the atmosphere with words, he or she will be lucky to have one tenth of the total message retained by the audience.
5. Encourage Participation
Participation by your audience will help them remember you and your message, but “handle with care”. Participation can backfire. You, the presenter, can ask you-audience to do almost anything. Most audiences are surprisingly agreeable. They will do almost anything. Nonetheless, a few words of caution.
6. Control Nervousness
Nervousness is not all bad, but it can become serious when your audience becomes more concerned about your nerves than your subject. Nervousness is the number one problems of people who make important presentations in advertising, or in any other business. But nervousness (sometimes known as “stage freight”), is not all bad.
7. Eye Contact
Eye contact is the strongest force* in your favour during a “Live” Presentation. When you make your next presentation, you will know whether you are making eye contact or not because you can see your audience.
There is a big difference between staring at people and eye contact. Staring is intimidating, confrontational. Eye contact reduces the distance between people. It reaches out, asks for understanding on a one-to-one basis.
8. Body Language
“People may lie, but body language never does.” Body language, once you have learned how to read it, is going to tell you more than what your audience will say.
You can rate people by their body language, and use your ratings to apportion the amount of time you spend with each member of your audience. Obviously, you will want to work a little harder – with eye contact and participation techniques – on the person who is scoring low on your body language scale
Q.5. Explain different steps of negotiations. Also describe the various skills required for each step. (20)
Negotiation can be defined as a process for resolving conflict between two or more parties where both or all modify their demands to achieve a mutually acceptable solution.
• Negotiation is a process of resolving conflicts and if there are no conflicts, there is no need to negotiate.
• There is a need to resolve conflicts, more so with our customers. If we don’t resolve conflicts we may even loose them.
• Negotiation does not mean persuading the others to accept our offer. Rather we should listen to others, and their propositions. If possible modify one stand or suggest/guide the others to modify there demand.
• Through negotiations we try o reach at a mutually acceptable compromise to solve a problem.
Steps of Negotiation
1. Prepare
What you do, or don’t do, before you arrive at the negotiating table will become evident when you get to negotiations. If you are not fully prepared you can only react to events, you cannot lead them. In the preparation phase you define what needs to be achieved and also decide how it will be achieved, As a negotiator you must know what you want in the short term and in the long term. You must be clear why you want them. You must be aware of your opponents expectations and environment. For easy understanding we can sub-divide preparation under a number of key headings: – objectives, information, concessions, strategy and tasks.
The first priority in preparation is to decide your objectives as everything else will follow this.
2. Discussion or Arguing
The second step in the process of negotiation is the discussion. This step is also called arguing. Within the second step of discussion we will also look at another important aspect of negotiations i.e. signalling.
When the parties involved in negotiation first meet each other, they are aware of the conflict of issues between them. In the instance where the parties have not met each other before this they are most wary of each other. Thus, during the opening phase of the negotiations the atmosphere tends to be very tense.
The discussion step is a major opportunity as you can gain all kind of information regarding the other party’s behaviour, his intentions, his objectives from him only. To gather more and more useful information about your opponent, however you must avoid the habit of interrupting your opponent when he is speaking.
3. Signalling Behaviour
When you are involved in negotiations the way to handle concessions with confidence is to develop skills in signaling behavior. A good negotiator always tests how strong is his opponent’s apparent stonewall position. This is the same situation which any salesman recognizes when he is facing objections from his customers. The first thing that a good salesman does in such a situation is to test whether the objection is real or false. So he will ask his customer, “If I was able to overcome this problem, would you be prepared to buy?”
For a real objection the customers answer to above question is yes. With the help of signals, the parties involved in negotiations indicate their willingness to negotiate.
4. Proposing
Discussions, opinions and prejudices cannot be negotiated, only proposals can. When an argument is prolonged, the way out is by a signal which leads to a proposal. In the context of negotiation a proposal is an offer which establishes a realistic opening position.
When you are presenting an initial proposal you would most likely state your ideal position, and your language will effect the firmness of your position, `I had expected much better service’.
When you present a secondary proposal you are trying to initiate a move forward to common ground. Thus the language used for secondary proposals in most cases is tentative.
5. Packaging the Offer
Offer moves the negotiations into the bargaining arena. But before the bargaining begins, one should package the offer, suitably.
What is an offer: In the context of negotiations, an offer is a considered activity in response to the opening moves of the negotiation. When you present an offer, you present the variables in a form which more clearly matches the other party’s interests and inhibitions.
Before presenting the offer you must think carefully and creatively about all the possible variables.
6. Bargaining
Bargaining is about exchange – you give up something and gain something. This is the most intense phase of negotiation.
The single most important rule of bargaining is to make all propositions and concessions, conditional. Thus while bargaining you give away nothing absolutely nothing free. You always use the big IF.
“If you agree to X, I will agree to Y’
Another point to keep in mind is put your bargaining proposals as statements and not as questions ‘
If you inform the discounts, and promise to deliver in seven days, then I will process the order’.
Very often in negotiation, a party will present a list of demands, objections, requirements etc. followed by the `logical’ suggestion that each item is dealt with one at a time. If other party presents such an idea, don’t agree to such a demand. Always try to ensure that you keep all the issues in dispute linked. If you agree to negotiate item by item the other party has good chances of squeezing you.
7. Closing and Agreeing
The purpose of closing is to lead both the parties to final agreement. Thus closing must be credible. Your closing package must meet enough of your opponents needs to be acceptable. Two common types of closes used during negotiations are concession close and summary close.
Concession Close: When you use a concession close you terminate the bargaining step by offering a concession to secure agreement.
Summary Close: Summary close terminates the bargaining step by summarizing everything that has been agreed upto then, highlighting the concessions that the customers have secured from your side, and emphasizing the benefits of agreeing to what is on the table.
Agreeing is the last step towards which both the parties have been working. The purpose of closing is to secure agreement to what is on offer. It is of utmost importance that both or all the parties involved are absolutely clear on what they have agreed to before they leave the table.
8. Deadlock
During any of the steps negotiations could enter deadlock. A deadlock stops the negotiation process deadlock has a price. Its most obvious price is the fact that the time spent in trying to negotiate a deal becomes a dead loss to the organisation, if the deadlock is irresolvable.
Deadlocks occur in many negotiations despite the best efforts of the negotiators. Some deadlocks are temporary, others can be permanent. The way to handle deadlock is to keep your emotions, prejudices out of the issue and work towards finding some common objectives. Your basic intention should be to get negotiation process moving again, so as to enable a solution, acceptable to both parties.
Q.6. Write a brief essay on “Tools for selecting salesman”. (20)
Selection
Selection is the process of identifying an individual from a pool of job applicants with the requisite qualifications and competencies to fill jobs in the organization. This is an HR process that helps differentiate between qualified and unqualified applicants by applying various techniques.
The term ‘selection’ comes with the connotation of placing the right person in the right job. Selection is the process in which various strategies are employed to help recruiters decide which applicant is best suited for the job.
Some activities include:
• Screening
• Eliminating unsuitable candidates
• Conducting an examination (aptitude test, intelligence test, performance test, personality test, etc.)
• Interviews
• Checking references
• Medical tests
The selection process is a largely time-consuming step in an employee’s hiring experience. HR managers must carefully identify the eligibility of every candidate for the post, being careful not to disregard important factors such as educational qualification, background, age, etc.
Selection Tools for Salesman
1. Application Form
It is one of the two most widely used selection tools (the other is the interview).
Generally, the application forms used by most of the companies fall under two categories
a. Short Application Form
Short application form is ordinarily used as an initial screening device. It asks for the factual information about the candidate in brief, so as to serve its purpose of eliminating the obviously unqualified applicants at the least cost and quickly. It includes items such as personal background, education and experience. This form can either be provided by the company or in the alternate, the applicants are asked to apply by sending their bio-data in brief.
b. Detailed Applications Form
Detailed application form is more extensive and covers each topic in depth. It is designed by each company according to its own information requirements. It varies widely from one company to another, for the designing depends upon the detailed description of the sales job. For example; a detailed application for sales engineer will be quite different from the detailed application form for medical representative.
2. Interview
The interview is the most widely used selection tool and in some companies, it comprises the entire selection system. This tool may be used as preliminary interview for initial screening of applicants and plays an important part in the subsequent stages of the hiring process as final interview. This is the most satisfactory tool to find out something about conversational ability, general appearance, personal impact on others and certain behavioural aspects. Personality traits like initiative, imagination, aggressiveness, tactfulness; enthusiasm can ‘Come out, when an applicant is talking.
a. Patterned interview
Also called guided interview, this method employs a list of prepared questions that the interviewer asks in order to obtain the required information.
b. Unstructured interview
Also called a non-directed interview, this method has no set format or plan. It involves a relaxed discussion in which the interviewee is encouraged to talk.
c. Semi-structured interview
Also called an outline interview, this interview format combines the characteristics of both structured and unstructured interviews.
d. Stress interviewing
An interview technique in which stress is placed on an applicant through interruption, criticism or silence.
e. Rating scales
A widely used sales evaluation method that uses specific desired traits, behaviour factors or performance criteria.
3. Psychological Tests
Use of psychological tests as selection tool, though still in its infancy, is increasing for the reasons like-greater importance being given to selection as the sales management is becoming more formalised, rising cost of selection and training, increased size of sales force and increased knowledge of psychological tests and their applications.
Psychological testing refers to having the recruit answer a series of written questions, the proper answers to which have been previously determined.
Types of Psychological Tests
A. Tests of Ability
a. Tests of mental ability
Give the administrator some idea of the man’s present abstract intelligence. These tests are designed to show how well a person reasons, thinks, and understands and thus measure the abilities like problem solving and learning. Beyond a minimum level, this type of intelligence is seldom of vital importance in selling. In the alternate, if the sales job requires a man with higher than average intelligence, because of its being a complex job, then probably such intelligence tests should be made a part of the selection process.
b. Tests of special abilities
These tests measure the sales aptitude and the special abilities required for a person to be successful in sales position. Sales aptitude tests are designed to find out the recruit’s behaviour in certain common selling and social situations.
B. Tests of Habitual Characteristics
These tests gauge how the prospective employee would normally act in his daily work, i.e. when he is not at his best behaviour.
a. Attitude tests
Are more appropriate as morale measuring techniques. They are used to ascertain employee’s feelings towards working conditions, pay, advancement opportunities and like. Used as sales personnel selection device, they make limited contribution by identifying abnormal attitudes on general subjects.
b. Personality tests
Success in selling depends mainly on the multitude of behaviour traits called personality. By adroitly asking many questions concerning what the test taker would do in certain situations, how he feels about certain things and what his attitudes are towards various occurrences, the test hopes to uncover specific personality traits. These tests attempt to identify and measure the traits like stability, tact and diplomacy, self-sufficiency, self-control, dominance,-initiative, etc.
c. Interest tests
The basic assumption implicit in the use of interest tests is that a relationship exists between interest and motivation. Hence, if two persons have equal ability the one with greater interest in a particular job will be more successful salesman. Interest tests measure the extent to which one’s interests are similar to those of successful people in a given occupation: Probably, a person who scores low on an interest test will not make a good salesman. These tests are relatively easy and inexpensive to administer.
C. Achievement Tests
Provide an assessment of expertise, an applicant possesses in such areas as customer relations, marketing channels. product, etc. These tests seek to deter-nine how much an individual has learned from his education, training and his knowledge about certain subjects.
Q.7. Enumerate the factors influencing design of compensation schemes for a large hotel chain. Substantiate your answer with suitable example. (20)
Designing of Compensation Packages
Criteria which must be kept in mind while designing a salesforce compensation package. These are primarily
1. The budget set for the compensation of salesforce;
2. A proper study of job requirements is the second step followed by a concise job description;
3 Defining the organisational hierarchy of the salesforce the role and function of each responsible person in the structure;
4. The current trend in the competitors selling similar products in the similar markets;
5. The company’s policy of motivating salespeople whether through an in-built incentive system or through provision of indirect benefits like entertainment allowance/liberal travelling allowances, other out of pocket expense reimbursements;
6. Formal and compulsory training programmes for all sales personnel to make them feel a part of the company as well as to develop their skill and provide them with the necessary break from the monotony of daily routine sales reports;
7. Human resource development programmes to create a feeling attachment towards the task at hand and imbibe the culture of the organisation.
The present day trends lay greater emphasis on the last two mentioned considerations along with a direct compensation programme inclusive of direct salary. With selling having become more and more difficult a satisfactory compensation package is a must to avoid high turnover within the salesforce.
There are some factors which affects the design of compensation package
1. The Relation with product life Cycle
The amount of selling effort is directly related with the stage at which a product is in its life cycle. The compensation structure is a function of selling effort. So, in effect, the compensation structure is an indirect function of the selling effort.
2. Compensation Related with Demographic Characteristic
In practical situations the compensation package preferred by the salespeople depends upon their demographic characteristics also. Their age and size of family or number of dependents play an important part in the preference for a basic salary and/or incentives. However, this cannot be generalised and depends largely on the individual.
Q.8. Describe the importance of monitoring and performance appraisal of Salesforce. Mention some of the parameters used to monitor the Salesforce. (20)
Importance of Monitoring
A good monitoring system helps the sales management in determining what can be done to secure more and larger orders. The data furnished by the sales reports is processed to gain insights in the type of direction and help that can be given to field sales personnel.
A well designed monitoring system also aids in the self improvement of the salesmen. Regular recording of their own accomplishments forces individuals to take a stock of their own work, compare it to their own past performance or their aspirations, and leads them to a periodic self-evaluation, which may become an effective motivating force. The basic purposes for which a good monitoring system is designed could be :
• To keep the sales manager informed, about all the sales activities of the sales personnel.
• To enable the sales manager to get data for evaluating performance; for example, details of prospects called upon, number of calls made, number of orders obtained, days worked, kilometres travelled, selling expenses incurred, displays arranged, missionary work performed etc.
• To enable the sales manager to detect deviations from standard performance and take timely remedial action.
• To help the salesperson plan his work e.g. in planning specific approaches for specific accounts; planning a travel schedule etc.
• To record consumers reactions and complaints in respect of new products, price changes and service policies.
• To record information on competitors activities e.g. new products, changes in promotion and pricing, changes in service and credit policy etc.
• To record information on local changes.
• To build a rich database of territorial information which can be put to a variety of uses.
• To furnish information requested by marketing research- i.e. data on dealers sales, product wise.
Parameters used in Monitoring
The monitoring of salesforce is closely related with the monitoring of sales. One depends on the other. The sales performance of a company and its salesforce is measured using a number of parameters on a continuous basis. Some of the commonly used parameters are :
• Sales per salesman, per dealer, per product
• Expense to salesman, ratio for each dealer and salesman
• Calls per day
• Order call ratio
• Average cost per call
• Direct selling expenses
• Profit contribution analysis
• Number of accounts
• Number of customer complaints.
The emphasis in monitoring is on gathering information on day-to-day activities with respect to the chosen parameters and taking a timely stock of deviation from expected performance.
Importance of Performance Evaluation
Performance evaluation consists of setting performance standards, both quantitative and qualitative and then periodically comparing them with actual sales performance to judge salesmen in terms of their contribution to the sales objective. The concept of productivity is relevant here. A salesman is considered to be productive only when the results achieved by him offset not only the costs incurred by the company on his account, but also show some contribution towards the corporate profit. Appraisal and performance evaluation systems besides enabling the sales manager in judging the contribution of his sales team and improving its efficiency have also been found to be useful in :
• Developing salesmanship as an interpersonal influence process.
• Motivation of salesmen and supervisory leadership.
• Identifying the need for continuous training and development of salesforce.
• Improving selling aids like demonstration materials, working documents etc.
• Determining and restructuring salesmen’s territories and work assignments.
• Improving sales planning for example, planning call cycles routes and visits, job preparation etc.
• Introducing sound compensation and incentive systems supported by a national evaluation system.
Q.9. Critically examine the workload approach for designing sales territories. What measures can be taken to improve the territory productivity? (20)
The two basic approaches commonly used for designing sales territories are discussed below:
1. The Market build up approach
2. Workload approach
The Workload approach
W. J. Talley’s Workload approach of territory design is based on creation of territories that are equivalent in terms of workload performed by sales persons. The steps involved in the creation of sales territories under this approach are:
1. Customers are grouped into Class Sizes according to the annual Sales Volume that the Company has.
2. Optimum Call frequencies for each Class of customers are estimated e.g. In one case present and potential customers are grouped into volume classes and then theoretical. Call frequencies are assigned to them.
3. Present and potential customers are then located geographically and arranged volume and value-wise.
4. The number of present and potential customer in each volume/value group is then Multiplied by the desired Call frequency to get a total number of planned calls required for each geographical control unit.
5. This is followed by determination of geographical control units in these that the carved out territory is combed to the maximum, giving adequate workload to the sales person as well minimising, if not eliminating the unproductive time spend in covering distance between two calls and post call activities.
The basic weakness of this approach is that, since the call frequency is already established it may not provide for development of mediocre or neutral customer accounts .into Super accounts due to lesser number of calls assigned to them. The other shortcoming lies in establishing parity in workload and potential territories, in different markets. In practice no two territories are equal in terms of travel time, current sales or potential. For example territory A may cover only two cities of state and be reasonably compact, whereas territory B might include five cities of a state.
These inequities affect such sales persons the most, who are dependent mainly on commission on sales as their income in a specific territory. The workload approach to territory design, therefore would be more suitable in situation where sales persons are employed on fixed salary basis. If may be noted that as the market conditions change sales territories need adjustment and even redesigning. The principle of equating territories on marginal profit values make useful contribution in this regard.
Measures that can be taken to improve the territory productivity
For obtaining maximum productivity out of 2 sales territories, it is essential that the sales force lay emphasis on its effective management, than on mere coverage. In practice its means that sales territories be mapped and managed on profit oriented basis taking into consideration, the following points:
• Profit contribution made by different customers, clarity of approach to account development, as well as to small/marginal customer.
• Profit generators and detractors in the territory
• Allocation of sales, marketing and other resources based on territory’s profit contribution potential.
• Effective utilization of sales force time.
The process of improving territory production, therefore, requires establishment of a system of monitoring and review of the sales territory.
The system should focus on:
a. Sales territory performance in terms of its market potential, resources deployed and required, and profit contribution potential.
b. Sales force itinerary planning, covering call planning, journey planning, appointment scheduling, preparation and usage of sales aids and equipment during sales calls, and post call planning.
c. Documentation of customer call records, daily activity reports, cost and time on,various activities, market intelligence, etc.
d. Individual sales person’s productivity.
In brief, attention to every single profit detractor and timely action on all profit generators helps a company to optimise the sales territory; productivity. Superior quality of the sales force facilitates in the attainment of this goal.
Q.10. Write short notes on the following (2×10=20)
a. Sales Quotas
A sales quota is a quantitative goal assigned to a sales unit relating to a particular time period. A sales unit may be a sales person, territory, branch office, region or distributor. Sales quotas are used to plan, control and evaluate selling activities of a company. They provide a source of motivation,’ a basis for incentive compensation, standards for performance evaluation of sales person and uncover the strengths and weaknesses in the selling structure of the firm.
For example, a company manufacturing electronic office equipment discovered that it took twice as long as to sell an electronic typewriter than to sell other similar products in the product Iihe. Since the electronic typewriter was considered more important by company, quotas on the electronic typewriter were set for each sales person. The result was that a sales person in a control group having a rigid electronic typewriter quota outsold the uncontrolled quota group. This example shows that generally speaking sales persons are quota achievers and their motivation may fall off if easy or no quotas are set for them to achieve.
Sales quotas serve several purposes.
The principal purposes
• Providing Goal and Incentives
Quotas provide sales persons, distributive outlets and others engaged in the selling activities, goals and incentives to achieve certain performance level. Many companies use quotas to provide their salesforce the incentives of increasing their compensation through commissions or a bonus if the quota is surpassed and/or recognised for superior performance. Needless to mention to be true motivators sales quotas, set should be perceived as being realistic and attainable.
• Controlling Sales Persons Activities
Quotas provide an opportunity to direct and control the selling activities of sales persons. Sales persons are held responsible for certain activities of customer per day, calling on new accounts, giving a minimum number of demonstrations and realisation of company’s account. If the sales person fails to attain these quotas, the company can take corrective action to rectify the mistake.
• Evaluating Performance
Quotas enable the company to evaluate performance of its sales person, territory or distributive network. Performance against quotas also helps identify the strong and weak points of the sales persons.
• Controlling the Selling Expenses
Quotas are also designed to keep selling expenses within limits. Some companies reimburse sales expenses only upto a certain percentage of sales quota. Other tie expenses to the sales person’s compensation in order to curb wasteful spending. Expense quota helps companies to set profit quotas.
• Making Effective Compensation Plan
Quotas play an important, role in the company’s sales compensation plan. Some Indian companies follow the practice that their sales person will get commission only when they exceed their assigned quotas.
Companies may also use attainment of the quotas in full or in part as the basis for calculating the bonus. If the sales person does not reach the minimum desired quota, he/she will not be entitled for any bonus.
b. Purpose of Sales Budget
A sales budget generally serves three basic purposes.
1. A Planning Tool
In order to achieve goals and objectives of the sales department, sales manager must outline essential tasks to be performed and compute the estimated costs required for their performance. Sales budgeting, therefore, helps in profit planning and provides a guide for action towards achieving the organisational objectives.
2. An Instrument of Coordination
As we all know selling is only one of the important functions of marketing. To be effective it needs support from other elements of the marketing mix. The process of developing realistic sales budget draws upon backward and forward linkages of selling with marketing and in turn brings about necessary integration within the various selling and marketing functions, and co-ordination between sales, finance, production and purchase function.
3. A Tool of Control
The sales budget on adoption becomes the mark against which actual results are compared.
Preparation of Sales Budget
Preparation of sales budget is one of the most important elements of the sales planning process.
Generally three basic budgets are
• The sales budget
• The selling expense budget
• The sales department administrative budget.
Mostly sales organisations have their own specified procedures, formats and timetables for developing the sales budget. While all sales budgets relate to the sales forecast, the steps taken in systematic preparation of budget can be identified in the following sequence.