Chapter 5
Formulating Personal-Selling
Strategy
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Learning Objectives
• Understand the competitive settings and
personal-selling strategy
• Comprehend sales-related marketing policies
and personal-selling strategy
• Determine the kind of sales personnel
• Determine the size of the sales force
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Competitive Settings
• Pure competition: a marketing situation in which
there are a large number of sellers of a product
which cannot be differentiated and, thus, no one firm
has a significant influence on price. Other prevailing
conditions are ease of entry of new firms into the
market and perfect market information. Also referred
to as Perfect Competition and Atomistic Competition.
• Monopolistic competition: is a form of imperfect
competition and can be found in many real world
markets ranging from clusters of sandwich bars,
other fast food shops and coffee stores in a busy
town centre to pizza delivery businesses in a city or
hairdressers in a local area.
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Competitive Settings
• Oligopolistic competition: a competitive
situation in which there are only a few sellers (of
products that can be differentiated but not to any
great extent); each seller has a high percentage
of the market and cannot afford to ignore the
actions of the others.
• No direct competition: is competition between
companies that make slightly different products
but target the same customers. We can also use
the term for providers of services. Apart from
targeting the same group of customers, they also
aim to satisfy the same needs.
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Determining the Kind of
Sales Personnel
• Product market analysis
• Analysis of salesperson’s role in securing
orders
• Choice of basic selling style
– Trade selling
– Missionary selling
– Technical selling
– New-business selling
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The Size of the Sales Force
Breakdown method:
Divide forecasted sales revenue by average sales
value per salesperson
Forecasted sales 200 crore
50 sales persons
Average sales per person 4 crore
Workload method:
1. Compute total sales call workload
2. Determine amount of work performed by each
rep
3. Factor in additional work responsibilities
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Workload Method
Number of accounts:
A : 500
B: 1500
C: 8000
Frequency of calls:
A: 1 in 15 days
B: 1 in 30 days
C: 1 in 45 days
Need to meet 10 customers per day
22 × 12 = 264 working days
20% of time go to non-selling activities
Calculate the number of salespersons required.
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Workload Method
Frequency of calls:
A: 1 in 15 days ( 500 × 24 = 12000)
B: 1 in 30 days ( 1500 × 12 = 18000)
C: 1 in 45 days ( 8000 × 8 = 64000)
Total calls = 94000
Total working days: 264 ( 22 × 12)
Calls per day: 94000/264 = 356
Salespeople required: 356/10 = 35.6 or 36
20% of time go to non-selling activities, so 36/0.8= 45
salespersons.
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Sales Potential Method
N= S/P + T ( S/P)
This reduces to
N = S/P (1 + T )
Where,
N = Number of sales personnel units
S = Forecasted sales volume
P = Estimated sales productivity of one sales
personnel unit
T = Allowance for rate of sales force turnover
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Sales Potential Method
Consider a firm with forecasted sales of $1
million, estimated sales productivity per sales
personnel unit of $100,000 and an estimated
annual rate of sales force turnover of 10 per
cent. Inserting these figures in the equation,
we get
N = $1,000,000/$100,000 × 1.10
N = 11 salespersons
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