Page 168 - DMGT205_SALES_MANAGEMENT

Sales Management

Notes
Did u know? A sales quota refers to an expected routine assignment to sales units, such as
territory, districts and branches, etc. Sales quotas are also assigned to individual salespeople
over a particular time period and are used to plan, control and evaluate the selling activities
of a company.

11.3 Methods of Sales Budgeting

Affordable Method: What is affordable? Many companies set the promotion budget at what they
think the company can afford. This method is used by firms dealing in capital industrial goods.
Also companies having small size of operation make use of this method.
Rule of Thumb (Percentage of Sales Method): Most companies set their sales budget as a specified
percentage of sales (either current or anticipated). Mass selling goods and companies dominated
by finance are major users of this method.

Competitors Parity Method: This method is used by large size companies facing tough
competition. It presumes knowledge of competitors' activities and resource allocation.
Objective and Task Method: This method calls upon marketers to develop their budgets by
identifying the objectives of sales function and then ascertaining the selling and related tasks to
achieve objectives. Later the cost of each task/activity is calculated to arrive at the total budget.
Adjustment to task or budgets can be made.
Zero Base Budgeting: A process in which sales budget for each year is initiated from zero base
thus justifying all expenditure and discarding all conventions and rules of thumb. Its limitation
is that it is very elaborate and time consuming process.
In practise, companies use a combination of these methods.

Self Assessment

Fill in the blanks:
1. ........................ becomes a key task of sales management.
2. A sales budget is a ........................ depicting how resources should best be allocated to
achieve the forecasted sales.
3. ........................ goods and companies dominated by finance are major users of this method.
4. Selling is one of the functions of marketing and needs support from the elements of
........................ .
5. One of the most important responsibility of a sales manager is to exercise control over
sales and the ........................ of selling activities.

6. The purpose of sales management ........................ is to evaluate the soundness of the sales
management of firm.
7. Sales analysis and marketing cost analysis focus on routine and ........................ aspects.

11.4 Preparation of Sales Budget

Sales budget is the most important element of sales. Generally, three basic budgets are developed:
1. Sales budget

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