Chapter 14

1. Chapter 14 Analysis of Sales Volume

2. Learning Objectives • Strategic relationship between Planning and Evaluation • Sales Force Performance Evaluation • Bases for Analyzing Sales Volume • Sales Force Automation

3. Interrelationship of Planning, Implementation, and Evaluation • Planning • Set goals • Determine strategies & tactics • Implementation • Organize • Staff • Operate • Evaluation • Compare goals and results • Explain variances Planning, implementation and evaluation are conducted in an interrelated and continuous manner.

4. Planning, Implementation and Evaluation • (1)Effective planning, (2)implementation and (3) evaluation. • Evaluation follows and precedes planning. • Effective evaluation will tell: • Whether its plan has worked • To what degree it has been successful • What the reasons are for the plan’s success or failure

5. The Evaluation Process (Fig 14-2) To Find Out: Whathappened Whatto do about it Whyit happened A marketing audit – a comprehensive, periodic review and evaluation of the marketing function in an organization – its marketing goals, strategies, and performance. (e.g., appraisal of the organization, personnel and tactics employed to implement the strategies and reach the goals).

6. Sales Force Performance Evaluation MPA may be taken to correct the misdirected marketing effort found in many companies. Evaluation of sales performance covers: • The analysis of sales volume (SVA) – (is a careful study of a company’s records of income statement in the net sales section). • Marketing cost analysis (MCA)(a study of marketing expenses determine the profitability of various marketing segments in an organization) and marketing profitability analysis (MPA) – SVA+MCA=MPA • Various analytical measures used to evaluate an individual salesperson’s performance

7. Nature of Misdirected Marketing Effort • A company does not enjoy the same rate of net profit on every sale. In most firms a large proportion of the orders accounts for a small share of the profits. • The 80-20 Principle (the relationship between selling units and profits). • 80 percent of the orders, customer, territories, or products contributes only 20 percent of the sales volume or profit. • Demonstrates misplacement of marketing efforts. Because lack of sufficient detailed information, many executives are unaware of misdirected marketing effort in their firms.

8. Total Sales Figures May Hide Significant Problems (Fig. 14-3) Many have shown satisfied overall sales, however, when totals were subdivided by territory or products, serious weaknesses may be discovered. Total Sales Volume Territory A Time (years)

9. Bases for Analyzing Sales Volume • Total Sales Volume – the combined sales of all products in all territories for all customers. • Sales by Territories – can identify further (e.g., which territories are strong) • Sales by Products – few products may bring most of the volume. • Sales by Customer Classifications – can analyze its volume by customer groups in several ways (e.g., industry basis, channels of distributions)

10. Information Used In Analysis of Total Sales Volume, Colorado Ski Company (Fig. 14-4)

11. Analysis of Territorial Sales Volume in Five-Territory Western Division, Colorado Ski Company (Fig. 14-5)

12. Analysis of Product Sales Performance in Two Territories, Colorado Ski Company (Fig. 14-6)

13. Q4 Timing(in Quarters) Q3 Q2 Q1 0.9 0.2 0.5 0.1 0.2 0.1 0.9 0.5 0.1 C1 C2 Customers . . . Cn P1 P2 P3 P4 Products Customer Probability Cube (Fig. 14-7) • Shows salespeople what to sell, when and to whom…

14. Sales Force Automation • Typically a single part of an overall CRM (Customer Relationship Management) system • Analyzes information from a variety of the firm’s different business functions (e.g. sales, marketing, accounting, purchasing, manufacturing). • Salespeople are sometimes resistant to SFA initiatives.

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