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Chapter Code: SDMC10
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Control is one of the most critical functions performed by a sales manager as it measures the performance of the system and helps the manager take corrective action if the performance of the system is not in agreement with the formulated plans. The present day dynamic marketplace has forced sales managers to shift their focus in sales control from sales volume alone and to lay equal emphasis on costs incurred in implementing the sales effort.
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A typical sales analysis involves deciding on the purpose of evaluation, comparing the sales figures with some standards and processing the data to generate reports. A sales analysis can be most informative when the sales data is broken down hierarchically. An analysis of volume of sales by categories is very helpful in identifying the root causes of the problems in the sales activities of the firm. Though a sales analysis helps identify the problems associated with the sales activities of the firm, it is also bound by a few limitations like dependency on accounting records, inability to reflect the profitability of sales, etc.
Sales analysis involves analyzing the sales volume or the total sales of the company. It includes the total sales of the company by territory, customer, and product category. A sales audit is periodically taken up by the sales management to examine the entire selling operations of the firm. The audit involves an audit of the sales organization, the sales environment, planning systems, and sales management functions. While a sales analysis measures the sales volume achieved, the marketing cost analysis looks into the costs and expenses incurred to achieve the sales volume and their justification.
A cost analysis involves spreading the natural costs, allocating them to functional units, studying the profitability of the units, and implementing appropriate action depending on the findings of the analysis. Just as a sales audit examines the entire sales operations of a firm, a marketing audit evaluates and enhances the effectiveness of a firm's marketing operations by studying its marketing strategies, policies, and practices.
Sales managers use profitability analysis to relate the sales revenues to marketing costs. This helps sales managers to take necessary measures to ensure higher profitability of the firm's sales transactions. A number of principles such as the iceberg principle, the 80/20 principle and cross-classifications guide sales managers in conducting effective sales and cost analysis. These principles reveal the behavior of sales data and the actual reasons underlying them. They forewarn sales managers of impending dangers and help them to take measures to counter them.
Sales manager's responsibility to ensure profits
Nature of sales control
Objectives of sales control
The sales control process
Difficulties in sales control
Sales analysis
Elements of sales analysis
Steps in sales analysis
Variations of Sales Analysis
Problems in sales analysis
Sales audit
Elements of sales
Marketing cost analysis
Types of costs
Procedure for cost analysis
Marketing audit
Procedure for a marketing audit
Components of a marketing audit
Profitability analysis
Break-even analysis
Capital budgeting tools
Principles of analysis
Iceberg principle
80-20 Principle
Cross-classifications
