Page 93 - DMGT507_SALES AND PROMOTIONS MANAGEMENT

Division Product
Budget for 1999
Budget for 1998
Value
Price
Qty
Price

Rs.
Rs.
Rs.
Rs.
Rs. Value Qty Price Value Qty Actual for 1998
Rs.
Delhi A 2,16,000 16 34,56,000 2,00,000 16 32,00,000 2,50,000 16 40,00,000

B 1,50,000 10 15,00,000 14,0,000 10 14,00,000 1,50,000 10 15,00,000
3,66,000 49,56,000 3,40,000 46,00,000 4.00.000 55,00,000
Unit 4: Sales Meetings, Sales Contests and Sales Budget
Jaipur A 50,000 16 8,00,000 — — — — — —

B 2,46,000 10 24,60,000 2,20,000 10 22,00,000 2,50,000 10 25,00,000
2,96,000 32,60,000 2,20,000 22,00,000 2,50,000 25,00,000
Notes
Lucknow A 3,20,000 16 57,20,000 3,00,000 16 48,00,000 3,10,000 16 49,60,000

B 36,000 10 3,60,000 — — — — —
3,56,000 54,80,000 3,30,000 48,00,000 3,10,000 49,60,000
Total A 5,86,000 16 93,76,000 5,00,000 — 80,00,000 5,60,000 — 89,60,000

B 4,32,000 10 43,20,000 3,60,000 36,00,000 4,00,000 40,00,000
10,18,000 136,96,000 8,60,000 116,00,000 9,60,000 129,60,000

4.3.3 Methods of Allocating Sales Budget
The methods commonly used are:
1. 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.
2. 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.

3. Competitors Parity Method: This method is used by large size companies facing tough
competition. It presumes knowledge of competitors’ activities and resource allocation.
4. 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.
5. 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.

Task Consider any two companies and study their annual reports available on
their website. Analyse their budget and where they spent most of their
money.

Case Study Dilemma of a Sales Manager

ales manager use diverse system to motivate their team. It is the responsibility of
the sales manager that their team should achieve the target at the given interval of
Stime. So sales manager inspire and motivate their team to achieve the target. Good
sales managers appreciate their team by providing them financial incentives for their
performance.
Carpet Products Limited manufactures a special variety of industrial carpet which is used
by other manufacturing units to produce shoes and chappals. The market for the company’s
product comprises a few large public limited companies and a number of small units run
Contd...

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