MSU MKT 383 - Chapter 5- Sales forecasts and Sales Quotas

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Chapter 5- Sales forecasts and Sales Quotas- Sales Forecast: an estimate of the dollar or unit sales for a specified future period - Key input for sales goals/ quotas and budgetso Used in all sections of organization (finance, production, HR, etc)- Methods of Sales Forecasting: o No conclusion to if subjective or quantitative methods work better, but the ‘best’ approach would be to use a combo o Subjective: 1. User Expectations- Buyers intention method, relies on answers from customers regarding expected consumption of purchases of product 2. Sales Force Composite- MOST COMMON- Initial input is the opinion of each salesperson, historical information is used, people aren’t accurate and sandbagging can occur  3. Jury of Executive Opinion- Poll of key executives (done by averaging or group discussion, must be experienced)  4. Delphi Technique- Anonymous approach that avoid debate or confrontation (each individual prepares a forecast…the median will find the correct answer)o Objective:  1. Market Test- Placing a product in several representative geographic areas to see how well it performs and then projecting that experience to the market as a whole (new product, costly) 2. Time Series Analysis- historical data to predict future - Moving average- average of recent years- Exponential smoothing- recent values have more weight - Decomposition – seasonality  3. Statistical Demand Analysis- regression analysis, sales and time - Sales Quotas: are sales goals assigned to a marketing unit for use in managing sales efforts (could be individual sales personal, territory, office or region)o Sum of sales quotas = higher level sales forecasts o Closely monitored by top management o Can be compensated if meeting these goals - Purpose of Quotas:o 1. Motivating sales force to work hard  Can’t be too high, too low, too easy or too hard o 2. Help sales management evaluate performance - Types of Quotas:o 1. Sales Volume ** MOST POPULAR Unit quota & point quota (different points assigned to different products) Beat last year o 2. Activities Sales Rep Engage1 Investment nature of a salespersons efforts (ex/ sales calls made, proposalssubmitted, products displayed) If the quota system emphasizes only sales volume (output), sales people may be inclined to neglect important activities (input)** Sales reps & managers, salespersons reports, market research & potential o 3. Financial Criteria Cost and profit of what they sell- not popular  Typically set to reflect the financial goals of the firm 2Chapter 6- Salesperson performance: Behavior, Role Perceptions and Satisfaction - **Three Drivers of Performance:o 1. Skill (& aptitude)o 2. Motivationo 3. Environment (personal, organizational and environment variables) Internal Environment: sales territory, firm resources, company structure External Environment: Territory Potential, customers, competition - Role perception is the only main difference between new and old model - All lead to performance  rewards  satisfaction - Salespersons Role: Represents the set of activities and behaviors to be performed by anyone occupying that position, defined by expectations, demands and pressures - Role Partners: People within the company (sales managers) and outside the company (sales persons family) who are directly affected by the way the salesperson performs the job - Role Conflict: when a sales person believes the role demands of two or more of his role partners are incompatibles (ex/ customer wants 90 days to pay bill, but billing departmentwants cash up front)- Role Ambiguity: when salespeople believe that they do no have enough information necessary to perform the job adequately o These affect job satisfaction, motivation, performance and turnover - Aptitude- enduring personal characteristics (innate gifts)- verbal intelligence and mathematical ability - Skill Level- learned proficiency at performing necessary tasks (interpersonal skills, leadership, technical knowledge). Influenced by past experiences- Motivation – the amount of effort that salesperson desired to expend on each activity or task associated with the job o 1. Can I do it? (Expectations) Expectancieso 2. Is it worth it?  Valences for performance – compensation - Sales managers goal is to understand self –interests and dreams of each team member - 1. Extrinsic Rewards- controlled and offered by people other than the salesperson, such as managers or customers (pay, financial incentives, security, promotion)- 2. Intrinsic Rewards- salespeople primarily attain for themselves (feelings of accomplishment, personal growth, self-worth)- Job Satisfaction: all the characteristics of the job that representatives find rewarding, fulfilling and satisfying or frustrating and unsatisfying - Why do sales people leave?o 1. Supervision Issueso 2. Career Issues (pay, promotion, etc.)- *Rewards & role perceptions have a direct impact on satisfaction Role Perception:1. Role partners communicate expectations a. Members try to influence the salesperson behavior through former policies, training programs or social pressures and rewards2. Salespeople develop perceptions 3a. Role ambiguity and conflict can occur (or perceived ambiguity and conflict)3. Sales people convert perceptions into behaviors a. The salespersons job behavior and psychological well-being can be affected if there are perceptions of role ambiguity and role conflict b. High levels of ambiguity and conflict are related to high mental anxiety and tension and low job satisfaction - Sales person can be caught in the middle between two organizations that don’t understand or appreciate the policies, expectations, constraints or demands of the other party - Little contact with sales force/ managers increases conflict and ambiguity - Customers, engineering dept, credit dept, and team selling hold definite beliefs about howthe sales person should perform his or her job and they will all pressure the sales person to conform to their expectations- Negative Consequences: o Role Conflict- increase job tension, and worry more about work conditions o Ambiguity- when salespeople are uncertain they lose confidence in their ability toperform that sales role successfully  mental anxiety and decrease job satisfaction- Sales managers can help with ambiguity and conflict:o Sales training programso Giving sales people a greater voiceo Supervisory style4Chapter 7- Salesperson performance:


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MSU MKT 383 - Chapter 5- Sales forecasts and Sales Quotas

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