SALES Budget

1
SALES Budget sales QUOTA
2
BASIC TERMS
3
POTENTIAL

• This refers to the highest possible level of
  achievement, whether at the company level or at
  the industry .
• In practice, full potential is almost never
  reached, so actual sales are typically somewhat
  less than potential.

4
Market potential

• it is the maximum market ( industry) demand,
  resulting from a very high level of industry
  marketing expenditure, where further increases in
  expenditure would have little effect on increase
  in demand

5

• Company sales potential is the maximum
  estimated company sales of a product or service,
  based on maximum share (or percentage) of market
  potential expected by the company

6
sales forecast

• A sales forecast is a projection of the expected
  customer demand for products or services at a
  specific company, for a specific time horizon,
  and with certain underlying assumptions.

7
Forecasting Approaches

• Top-down or Break-down approach
• Bottom-up or Build-up approach
• companies usually use both approaches to
  increase their confidence in the forecast

8
Steps followed in Top-down / Break-down
Approach

• Estimate industry sales or market potential
• Calculate company sales potential market
  potential x company share
• Decide company sales forecast (lower than
  company sales potential because sales potential
  is maximum estimated sales, without any
  constraints)

9
Steps followed in Bottom-up / Build-up

• Salespersons estimate sales expected from their
  customers
• Area / Branch managers combine sales forecasts
  received from salespersons
• Regional / Zonal managers combine sales forecasts
  received from area / branch managers
• Sales / marketing head combines sales forecasts
  received from regional / zonal managers into
  company sales forecast, which is presented to CEO
  for discussion and approval

10
Sales budget

• Sales budget is the estimate of expected sales
  volume in units or revenues from the companys
  products and services, and the selling expenses.

11
Purposes of the Sales Budget

• Planning
• Coordination
• Control

12
Requirement of a successful budget

• Support, interest and involvement of top
  management
• Flexible budgeting

13
SALES QUOTA IS

• Sales quotas are sales goals or targets
  (quantitative objectives) set by a company for
  its sales units for a time period
• sales units are regions, branches, territories,
  salespeople, and intermediaries
• Generally, company sales budget is broken down
  to sales quota.

14
IMPOTANCE OF QUOTAS

• ACHIEVE ORGANIZATIONAL TARGET
• PROVIDE PERFORMANCE TARGET
• PROVIDE STANDARD
• PROVIDE CONTROL
• PROVIDE DIRECTION
• TOOL FOR MOTIVATION

15
CHARACTERISTIC OF GOOD SALES QUOTA

• Fair
• Challenging
• Flexible
• Easy understandable

16
Types of Quotas

• Organizations set many types of sales quotas
• sales volume
• units
• activity
• combination