Introduction
Present-day business environment is rapidly changing importing certain changes into the process of selling goods and services. Some of these changes can be rather dramatic, affecting the most essential principles of sales management. Being a separate field of management, sales management performs fundamental functions, which influence the operation of a company in the market, its profitability or losses as result of successful or unsuccessful establishment of relationship with potential customers. Though sales managers perform multiple functions, it is possible to distinguish two main functions, which include to achieve company’s goals (dispose off the goods and services, receive a new market share and etc) and to provide company’s owners or top management with the report concerning the level of sales volumes. The job of a sales manager is very challenging due to the high rate of responsibility sales managers have to undertake upon accepting the job. Such high rate of responsibility is explained by the necessity to establish close interaction with the customers or groups of customers, which should be achieved as a result of sales manager’s work. Goods and services turnover represented in money means appears to be the main index, evidencing how a company was operating during a certain period of time, how many goods and services have been produced and sold to the consumers, and how much profit it brought to the company. And as the conditions of selling are constantly changing, it is up to sales management to adapt to these changing conditions and to develop methods of more effective selling of products to consumers.
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The main goal of designing current study is to speak about the role and main functions of sales management, the ways it uses to adapt to the changing business environment and the role of selling in the modern economy. The paper will also focus on the relationship between companies and their customers by the example of the company known as “Merck” which has been operating in pharmaceutical industry for a rather long period of time.
1. Key Concepts of Sales Management
Sales management as one of the key elements of management was designed to address the needs of companies in terms of selling their goods and services to as many customers as possible, while keeping records of the sales volumes. Sales management appeared rather long time ago, however, until now it remains an effective tool predetermining company’s either profits or losses. When speaking about sales management it is in the first place necessary to speak about so-called “direct executors” of the main tasks of sales management known as sales managers. So, who is a sales manager? A sales manager is a person, who is in charge of the process of selling of goods and services to consumers. Usually a sales manager is the head of the whole department, performing the functions of leader, supervisor, company’s representative, technical expert and etc. Thus, it is fair to note that sales managers “conceivably have one of the more eclectic, demanding, and crucial managerial jobs in business” [7]. Due to the reports that have been drawn up based upon multiple scientific researches “the sales manager’s responsibility for handling the entire interface with the customer is possibly the single most important factor in creating and perpetuating company success” [7].
1.1. Major Functions Performed by Sales Managers Daily
When a person accepts position of the sales manager he/she undertakes significant responsibility as the amount of duties of sales managers usually exceeds the amount of duties other employees have to fulfill. Duties, role and functions are what make sales managers different from usual salespeople or individual sales representatives. Sales managers are “charged with effectively managing and leading sales forces in their revenue-generating and customer relationship activities” [7]. The first function that sales managers perform is organizing the work of the sales department, which includes planning, motivating and controlling the work of salespeople, customer service representatives, sales representatives and other staff. Sales managers are responsible for interviewing and hiring new employees, and training and developing employees that have already been hired. They also have to develop schedules for work, where every employee will be assigned his/her specific duties. Another function of sales managers is to conduct daily oversight of the work of departments if a sales manager is employed at a large company with many departments. However, if a sales manager is equated to an individual sales representative, for example, when he/she is working in a small company, which does not require the establishment of a separate department, then sales manager’s functions are the following: “direct selling, customer service, working with managers, managing information, working with others, training/recruiting, entertaining, and out-of-town travel” [2]. Functions that are performed according to the duties of a sales manager or salesperson largely depend on the “job type, industry and country” [2]. For example, in pharmaceutical industry, it is more wide spread to have a sales manager employed at a pharmaceutical company, like it is done at Merck, where subsidiaries have their own sales managers, who are in charge of the whole sales departments, including the sales managers who are in charge of web-based pharmacies. This is done due to the growing necessity of “assuring the quality of medical care, guaranteeing the accuracy of exchanged information, fraud, and abuse have rapidly become evident” [5].
As the authors of the book “Sales Management: A Global Perspective” John B. Ford and D. Honeycutt note: “since sales activities vary by industry and location, then it appears certain that the sales job also differs by culture” [2]. That is why functions that are performed by sales managers in one country may significantly differ from functions performed by sales managers from other countries. For example, salespersons in Germany, Denmark, and the United States are “engaged in such common activities as closing a sale, monitoring competition, overcoming objections, studying market trends, and providing/receiving feedback” [2], while “few salespersons provided maintenance, delivered products, created advertising, stocked products, or installed equipment” [2]. In some countries, for example the USA, salespeople focus more “on prospecting (94 percent US versus 41 percent for German and 38 percent for Danish firms)” and the US salespersons also “expedited customer orders at higher levels than German and Danish salespersons” [2].
Though the functions of sales managers and salespeople vary greatly within industries, countries and cultures, common features can still be found. The first feature, which has already been mentioned above, is high rate of responsibility sales managers have to undertake when accepting the job. Another common feature is that usually sales managers work at least 40 hours a week and have to be prepared to work overtime during sales and holidays. Also, sales managers need to have certain qualities of a leader and be able to come up with creative ideas when necessary.
1.2. The Strategic Role of Selling Within the Organization
The following point to be discussed will be the strategic role of selling. The process of selling has a very long history, starting at the ancient times and continuing until now. Changing economic relations in society have been impacting the role and the meaning of selling greatly, altering and transforming it. Selling has a great role not only for organizations, who need to sell the goods they have produced, but also for all people, who are used to buying what they need, and if nobody is selling what they need, then they cannot satisfy their needs, including the basic ones. As a lot of scientists agree, the area of sales “remains an important strategic and operational focus for businesses” [3]. Though the process of selling has undergone certain changes it is still remains one of the core activities every company is engaged in. In order to reach success and create a highly profitable company, its owners need to establish an effectively working sales mechanism, which predetermines the success of the majority of firms operating in the market. At this point the role of selling and sales management is the greatest, as “without sales representatives and managers calling on customers, there is a strong likelihood of organizational failure” [3]. Why would it happen? The answer to the question is rather simple. A company, which may in theory produce the best product in the world, will end up losing everything in practice if it hasn’t established the relationship with customers and hasn’t sold anything. As the author of the article “Sales in the 1990s: A Decade of Development” David J. Good notices “the customers and sales have to originate from “somewhere”, while “this “somewhere” is the direct effort of the salesperson who creates an opportunity for the selling organization” [3]. Sales managers’ role at this point is to make the role of selling a reality, which means to develop the process of selling by introducing products to the market, by attracting potential customers, by establishing relationship with key customers groups with the help of market segmentation, product differentiation and other marketing strategies. Some scientists argue that the role of selling and sales management is not so important as compared to marketing, however, knowing marketing strategies a sales manager will be able to establish close relationship with customers, sell goods to them and keep records of the sales volumes.
Logically, if a company is unable to sell its products, it will not receive any profit as the revenue will be negative or equal to zero. In this case, a company will be losing money that it invested into the production of goods, and there will be no sense in continuing to produce the goods as it leads to losses rather than profits. With the money gained from selling, a company will clear its current liabilities, including bank loans, arrears of wages, taxes and etc. Net profit, the amount of money which is left after all liabilities are cleared, will be reinvested into the company for further operation.
Merck, being a giant in pharmaceutical industry, is nowadays a leading company according to its sales volumes, for example, “Merck’s overall sales in 1999 were valued at $32.714 billion” [8]. The role of selling for Merck is as important as for other organizations, because Merck is “one of the world’s leading drug firms, which discovers, develops, manufactures, and markets a broad range of innovative products to improve human health” [8].
2. Training and Motivation within the Organization
Training and motivation is of significant importance for any company, which is planning to stay competitive for a long period of time. Some companies provide training to new employees upon hiring, while others use training programs in order to add more skills to employees who have been already working at a company. Employee training is an effective method of improving qualification of employees and increasing their performance. However, training is not the only method of increasing employees’ performance, because other methods such as developing and motivation also exist. In order to motivate employees, a company may establish a system of bonuses for employees with higher performance; offer them additional days off, if the work is done in advance and etc.
It depends on what goals a company strives for, when individual and group bonuses are established, for employees who excel individually or for groups of employees who managed to create successful teams. For example, Merck believes that “individual endeavour is the key to performance” [4]. That is why it spends large financial resources on employee training and developing. In order to hire efficient employee, Merck at first “hires the best students and nurtures them in an environment that promotes both commercial viability and scientific recognition: within commercial constraints” [4]. At Merck people are motivated with by a so-called “noble purpose”, which lies in the goal “to preserve and improve life” [4]. This kind of motivation also works rather effectively, because people work thinking that they do something good for the whole humanity.
3. Relationship between Customers and Sales Representatives
As it has been mentioned above, one of the key functions of sales managers and sales representatives is to establish relationship with customers. However, the establishment of long-term relationship with customers requires certain skills and knowledge. So, in order to reach a success a sales manager needs to learn customer’s needs and preferences in order to meet them, he/she needs to have certain knowledge of cultural differences within different countries if a company is operating worldwide. Knowing cultural heritage of a foreign country is necessary in order to “understand the cultural forces which shape and affect the interactions between salespeople and customers as well as the interactions between salespeople and sales managers” [2]. Because modern business environment is considerably impacted by culture, sales managers and sales people, who work directly with customers, have to understand the language, manner of speaking, body language and other cultural peculiarities of a target audience, in a way so “their words, actions, and body language can all be strategically shaped to enhance the potential for not only a positive interaction, but also the development of a long-term profitable relationship with that customer” [2]. Operating worldwide Merck’s sales managers are adapting their patterns of working to every foreign environment they have to work at. Thus, sales managers and salespeople at Merck are aware of not only needs and preferences of their customers, but they also have sound knowledge of cultural background of their clients, which helps them to win the hearts of more and more customers.
In conclusion to this point it is necessary to emphasize that nowadays many “firms believe it is more efficient to build relationships that result in long-term business” [2] rather than spending a lot of money on advertising and promotional campaigns.
4. Changing Role of Selling and Sales Management
Due to multiple changes that occur (technological, demographic, economic changes) in the modern society selling and sales management also undergoes certain changes. With the wide spread of Internet and other communication means, the role of selling has changed, as new ways of selling, such as selling through the Internet, appeared. Nowadays, very often sales managers do not have to establish direct communication with customers, as they can “construct web sites on the worldwide web to provide their publics with information about the firm and its offerings” [2]. In their turn, consumers can order goods and services also over the web. In this case “the sales manager transitions from being the manager of sales to the manager of the sales force – the latter being a true managerial position” [2]. Hence, in order to work effectively in the e-commerce “the sales force must be properly selected, trained, led, and compensated to become expert at solving customer problems” [2]. Demographic changes and the creation of the global market also impact the role of selling and sales management. Under these circumstances sales managers have to work with sales people from different countries and different backgrounds, which means that sales managers will have to “understand different cultures and establish management parameters that are inclusive of diverse people within the emerging workplace” [2].
Conclusion
Having spoken about the role and changing nature of sales managers it is necessary to make a conclusion. Modern sales management differs from the sales management that existed 20 years ago. Though the rate of responsibility for sales managers still remains very high, they have to adapt to technological, economical changes as the world of economy continues to develop. With the creation of the Internet the role of managers changed, as they do not have to be directly involved into the communication with customers, but can communicate with them through World Wide Web. Also, the role of managers seems even greater than it was 20 years ago, as nowadays companies wish to establish long-term relationship with customers, which appears to be one of the essential tasks of sales management.
Bibliography
Cron, William L., DeCarlo, Thomas E. Dalrymple’s Sales Management: Concepts and Cases. Wiley. 2005.
Ford, John B., Honeycutt D. Sales Management: A Global Perspective. Routledge, 2003.
Good, Dacid J. “Sales in the 1990s: a decade of development”. Review of Business, Vol. 12, 1990.
Grady, D., Harrington, D., Miles, H., Watkins, A., Williamson, A. “Putting People Values to Work”. The McKinsey Quarterly, No. 3, 1996
Haney, Sean P. “Pharmaceutical Dispensing in the “Wild West”: Advancing Health Care and Protecting Consumers through the Regulation of Online Pharmacies”. William and Mary Law Review, Vol. 42, 2000
Ingram, Thomas H. “Improving Sales Force Productivity: A Critical Examination of the Personal Selling Process”. Review of Business, Vol. 12, 1990.
Rajiv Mehta, Rolph Anderson, Khalid Dubas, Alan J. Dubinsky , Sandra S. Liu . “How Do Sales Managers Perceive Their Roles?” Journal of Managerial Issues, Vol. 11, 1999.
“Merck Client Spotlight”. 21 Nov. 2006. www.kenblanchard.com/results/pdf/Merck.pdf
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