2 - Sales management of commercial and service companies Flashcards
(29 cards)
What is the fundamental interpretation of sales management in commercial and service companies?
Sales is acting as the final stage in the distribution channel, connecting the end-user to the producer. Sales management is:
- Overseeing business activities related to selling goods and services to the ultimate consumer for personal, family, or household use.
- Focusing on fulfilling the exact requirements of the last user.
- Aiming to achieve operational efficiency at this final stage.
- Cultivating an environment so compelling that consumers are drawn to the offering and look nowhere else for their needs.
What are the primary requirements of business economics that sales management must address?
From a business economics perspective, sales management must ensure:
Profitability: Every decision (e.g., pricing, compensation) has economic implications affecting financial health.
Efficient Resource Allocation: Resources must be deployed effectively to maximize revenue and profit margins.
Adaptation to Economic Realities: Understanding and adjusting to factors like consumer purchasing power, inflation, and market demand.
Why is it crucial for sales management to ensure consistency with other functional strategies?
Maximizing Overall Value and Profitability: Alignment prevents conflicts and inefficiencies that can detract from financial goals.
How does sales management ensure consistency with Supply Chain Strategy?
Consistency with Supply Chain Strategy is ensured by:
Integration: Sales strategy must be deeply integrated with supply chain design.
Support for Goals: If sales aims for rapid delivery, the supply chain must support this with efficient logistics and inventory.
Impact on Planning: Sales decisions (e.g., promotions) directly impact supply chain planning (e.g., production schedules, inventory buildup).
Maximizing Surplus: Managing supply chain flows and assets to maximize surplus requires alignment with sales goals.
How does sales management ensure consistency with Marketing, Operations, and Finance Strategies?
Marketing Strategy: Sales management implements marketing strategy by directly engaging customers, ensuring sales messages align with branding, product positioning, and promotions.
Operations Strategy: Sales forecasts inform production schedules and capacity planning in operations; consistency prevents stockouts or excess inventory.
Finance Strategy: Sales revenue is critical for financial objectives like profitability and cash flow; sales strategies must be financially viable and contribute to overall economic health.
Customer Service Strategy: Sales initiates the customer relationship, which customer service sustains; consistency ensures a seamless customer experience.
What are the primary organizational elements involved in the retail sales process?
The primary organizational elements include:
Product Management and Organization:
- Keeping records of all incoming products.
- Arranging products well on assigned shelves (by size, color, gender, patterns, etc.).
- Dividing products into smaller groups called categories.
Store Layout and Atmosphere:
- Planning the store layout effectively.
- Creating a compelling store atmosphere (lighting, music, cleanliness, signage, displays).
What is the “Retailer Strategy Mix” and what are its key components?
The Retailer Strategy Mix is a firm’s unique combination of elements that define its approach to the market. Its key components include:
- Store Location: Decisions on store-based vs. non-store-based, type of area, and specific site.
- Store Hours: Operating hours based on target customers and demand.
- Operating Procedures: Internal processes for sales transactions and customer service.
- Personal Sales Management Style: Approach of sales personnel, training, interaction techniques.
- Goods/Services Offered: Product assortment (width and depth), quality, and types of services.
- Pricing Tactics: Strategies for setting prices (e.g., prestige, skimming, penetration).
- Customer Services: Services provided to enhance customer experience (e.g., personal attention, returns, delivery).
- Promotional Methods: Techniques to communicate with customers and stimulate sales (e.g., displays, advertising, personal selling).
What are the typical stages often found in a comprehensive sales process within a retail environment (as suggested by the “Sales Management Lecture”)?
While not detailed in the snippets, a comprehensive sales process in retail typically involves stages such as:
- Prospecting
- Pre-approach
- Approach
- Presentation
- Handling Objections
- Closing the Sale
- Follow-up
What are “Shop Productivity Indicators” and what do they measure?
Shop Productivity Indicators are crucial metrics, especially for retail environments, that measure how efficiently selling space is utilized to generate revenue and profit. They provide insights into the effectiveness of specific areas or product groups within a store.
Define “Turnover to m² utilization” as a sales performance indicator.
Definition: Measures the sales revenue generated per square meter of selling area.
Calculation: Total Sales Turnover / Selling Area (in m²).
Interpretation: A higher ratio indicates more revenue generated efficiently from the given space. It helps identify high-performing areas or product groups in terms of sales volume per square meter.
“Gross margin to m² utilization” as a sales performance indicator.
Definition: Assesses the gross profit generated per square meter of selling area.
Calculation: Total Gross Margin / Selling Area (in m²).
Interpretation: This is a profitability metric. A higher ratio suggests that the space is not only selling well but also contributing significantly to the store’s profit after the cost of goods sold. It helps understand which products/categories are most financially beneficial for their space.
Beyond shop productivity, what are some common general sales KPIs used in sales performance management?
Common general sales KPIs include:
- Sales Revenue: Total money generated from sales (can be broken down by region, salesperson).
- Sales Growth Rate: Percentage change in sales over a period.
- Customer Acquisition Cost (CAC): Cost to acquire a new customer.
- Customer Lifetime Value (CLTV): Predicted total revenue from a customer over their relationship.
- Conversion Rate: Percentage of leads/prospects that become paying customers.
- Average Deal Size: Average revenue per closed deal.
- Sales Cycle Length: Time from initial contact to deal closure.
- Sales Force Effectiveness: Productivity and efficiency of sales team members (e.g., sales per salesperson).
- Market Share: Company’s sales percentage within the total industry sales.
How are sales performance indicators generally interpreted and used by managers?
Sales performance indicators are interpreted by:
1. Contextual Analysis: Understanding the numbers within their specific context.
2. Trend Analysis: Observing performance changes over time.
3. Benchmarking: Comparing against industry averages, competitors, or internal goals.
Managers use these interpretations to:
1. Identify strengths and weaknesses in sales efforts.
2. Optimize resource allocation.
3. Adjust sales strategies (e.g., pricing, promotions, processes).
4. Forecast future performance more accurately.
5. Motivate sales teams by setting targets.
What are the key areas to analyze when evaluating a company’s sales strategy?
Key areas for sales strategy analysis include:
- Strategic Intent: Assessing clarity and alignment with revenue/market share objectives.
- Forecasting Accuracy: Reviewing how well sales forecasts align with actual results.
- Competitive Landscape: Evaluating competitive positioning and differentiation.
- Customer Relationship Management (CRM): Assessing contribution to customer satisfaction and retention.
- Performance Metrics Review: Analyzing KPIs (e.g., sales growth, conversion rates) to gauge effectiveness.
What essential resources must be considered during the analysis of a sales strategy?
Essential resources to consider are:
- Sales Force Organization and Management: Evaluating size, structure, skills, training, compensation, motivation, and recruitment.
- Financial Resources: Assessing budget allocation for sales activities and its efficiency.
- Technological Resources: Reviewing CRM systems, automation tools, data analytics, and their impact.
- Product and Service Portfolio: Ensuring offerings meet market demand and competitive pressures.
- Supply Chain Capabilities: Confirming the ability to deliver on sales promises (product availability, timely delivery).
What are the main types of market challenges that impact a company’s sales strategy?
Main types of market challenges include:
- Economic Fluctuations: Such as recessions, inflation, unemployment rates, and changes in purchasing power.
- Competitive Pressures: From new entrants, aggressive pricing, or superior competitor technology.
- Technological Disruptions: Like e-commerce growth and the emergence of new sales-related technologies (AI, automation).
- Changing Consumer Behavior: Evolving preferences, demand for personalization, and increased access to information.
- Regulatory and Legal Environment: New laws or regulations impacting sales practices.
- Supply Chain Disruptions: Global events affecting product availability and delivery.
What are the key steps involved in creating a sales strategy?
The key steps in creating a sales strategy are:
- Define Vision and Objectives.
- Conduct Market and Customer Analysis.
- Assess Internal Capabilities and Resources.
- Develop Core Sales Strategies and Tactics.
- Implement and Execute the Strategy.
- Monitor, Measure, and Adapt.
What is involved in the “Define Vision and Objectives” step of creating a sales strategy?
This step involves:
- Establish the Sales Vision: Articulating the long-term aspirations for sales efforts.
- Set Measurable Objectives (SMART): Translating the vision into specific, measurable, achievable, relevant, and time-bound goals (e.g., revenue targets, market share, customer acquisition).
What does the “Conduct Market and Customer Analysis” step entail?
This step entails:
- Market Research: Understanding market size, growth trends, industry dynamics, and the external environment.
- Target Audience Identification: Defining ideal customer segments based on demographics, psychographics, needs, and buying behaviors.
- Competitive Analysis: Assessing competitors’ strategies, strengths, weaknesses, and market positioning.
What is covered in the “Assess Internal Capabilities and Resources” step?
This step covers:
- Resource Audit: Evaluating existing resources like the sales force (size, skills, training), technological tools (CRM, automation), financial budget, and product/service portfolio.
- Capability Gaps: Identifying discrepancies between current capabilities and resources needed to achieve objectives, including supply chain support.
What aspects are developed in the “Develop Core Sales Strategies and Tactics” step?
This step involves developing:
- Targeting and Positioning: Deciding on customer segments to focus on and how to uniquely position offerings.
- Sales Channel Strategy: Determining effective channels (direct, indirect, online, retail).
- Sales Process Design: Defining and optimizing the stages of selling (e.g., prospecting, presentation, closing).
- Pricing Strategy: Setting competitive and profitable pricing models.
- Promotional and Marketing Alignment: Integrating sales with marketing campaigns.
- Sales Force Structure and Deployment: Organizing the sales team and assigning territories.
What happens during the “Implement and Execute the Strategy” step?
This step involves:
- Action Planning: Creating detailed plans with assigned responsibilities and timelines.
- Sales Training and Development: Equipping the sales team with necessary skills and tools.
- Incentive Programs: Implementing compensation and motivation structures for the sales force.
What does the final step, “Monitor, Measure, and Adapt,” involve?
This final step involves:
- Performance Tracking: Continuously monitoring KPIs (e.g., turnover, gross margin, conversion rates).
- Regular Review and Analysis: Periodically assessing performance to identify successes and areas for improvement.
- Feedback Loops: Gathering input from the sales team and customers.
- Adaptation and Optimization: Adjusting the sales strategy based on data, market changes, and new insights to ensure ongoing effectiveness.
What is the primary role of Corporate Strategy in a company?
The primary role of Corporate Strategy is to:
Define the overall scope and direction of the company.
Set the long-term objectives.
Determine the grand plan to achieve these objectives across all business units and functions.
Answer fundamental questions about what business the company is in, where it will compete, and how it will create sustainable competitive advantage.
