Page 91 - DMGT507_SALES AND PROMOTIONS MANAGEMENT

Unit 4: Sales Meetings, Sales Contests and Sales Budget

4.3.1 Significance of Sales Budget Notes

The importance of a sales budget cannot be over-emphasised. Its significance can be gauged
from the factors given below:
1. It serves as a scale, or a yardstick, to measure the performance/progress of the company in
terms of the performance of the sales personnel, regions, products, marketing channels
and customers.
2. It helps identify the areas in which the company needs to strengthen or improve its
performance.

3. It serves as an indicator to control the expenses associated with the sales activity and to
keep a constant watch on the net profits of the company.
4. It helps in comparing the actual performance with the budgeted performance and takes
corrective measures if drawbacks appear or to follow the strategy if the performance is
good.
5. It helps the planners to frame policies for actual market situations and provides the platform
to establish ways and means to get the business where they want it to be.
6. It provides vital statistics to relate and dedicate the resources in an effective manner so as
to realise the forecasted sales and convert these figures into reality.
7. It helps keep expenses under control so that by using scarce resources, the objective of net
profits may be achieved.
4.3.2 Factors affecting Sales Budget

The sales manager should take into consideration the following factors while preparing the
sales budget:

1. Past sales figures and trend
2. Salesmen’s estimates
3. Plant capacity
4. General trade prospects
5. Orders on hand

6. Proposed expansion or discontinuance of products
7. Seasonal fluctuations
8. Potential market

9. Availability of material and supply
10. Financial aspect
11. Other factors
(a) The nature and degree of competition within the industry
(b) Cost of distributing goods

(c) Government controls, rules and regulations related to the industry and
(d) Political situation — national and international — as it may have an influence upon
the market.

LOVELY PROFESSIONAL UNIVERSITY 85