The various functions of sales department are: 1. Market Research 2. Advertising 3. Sales Correspondence 4. Sales 5. Service 6. Packaging 7. Warehouse.
Function # 1. Market Research:
It means study of market, which includes forecasting, intelligence and statistics. It is an important factor for the sale of products. Failure to do this accurately may lead to the production of more goods that the market can absorb. This may mean financial losses to the firm. It may also lead to under-production, the results of which are equally unpleasant.
In estimating sales for a future period, number of factors has to be considered, the most important of these are:
(a) Secular Trends:
Means due to increase of population, the demand of products may also increase in proportion.
(b) Cyclical Changes:
These are changes due to agricultural crops, wars, inventions, discoveries etc.
(c) Seasonal Fluctuations:
These are changes in the volume of sales due to climatic conditions or festive buying. There are many products like umbrellas, woollen wears, neckties etc. which have a seasonal demand while products like soap, tooth paste, blades etc. are free from such seasonal fluctuations.
(d) Nature of Products:
Products are classified as consumer goods and capital goods. Articles of food, toiletries, shoes, toys, papers, pencils come in the first category while machinery, machine tools etc. come in the second category.
Consumer goods such as shoes are rapidly used and must be continually replaced. So there is more regular demand for them. But capital goods, such as lathe whose life is long enough, have more fluctuations in their demand than consumer goods.
Hence in estimating future sales, a manufacturer must take into account the nature of his product and study how changing business conditions will affect the demand for his product,
(e) Competition:
This makes it necessary to study the recent or proposed production, sales and pricing policies of the competitors. Most important of these is the analysis of the quality of the competitor’s products to ascertain how a potential customer would compare with one’s product.
The sales department should ask its salesmen to report and comment by a potential customer about the firm’s product or the products of its competitors. It should also study the research and product development work that the competitor may be carrying on in order to forecast as to how these will affect future sales.
(f) Government Action:
Effect of large government buying, levy, excise duties, policy regarding taxation of personnel income, monetary policy of deficit finance etc.
Function # 2. Advertising for Sales:
Advertising is the publication of information regarding articles (products) put up for sales and is a method to bring the producer into touch with customers. This informs the customers about the product and the place from where they can get it.
Advertising promotes trade and creates demand and hence it is the pivot of modern trade, commerce and business. The most appealing definition of advertising is- “advertising bring to the greater number of people, actual knowledge concerning useful things, thus it is essentially a form of education of the people about the product.”
Functions of Advertising:
Following are the main important functions (or objects) of advertising:
(i) Advertising is the powerful media of demand creation by reaching to the customers and telling them about good qualities of the product.
(ii) To prepare ground for a new product by way of introducing its product to the public,
(iii) It enhances the goodwill of the company among customers.
(iv) Advertising helps the product to stand against its competitor products.
Advantages of Advertising:
(A) To Manufacturers:
(i) It increases sales by way of increasing demand.
(ii) Helps salesmen by preparing ground for them.
(iii) Creates good-will by telling customers about the quality and service.
(iv) Lower costs can be achieved by way of increasing the turnover due to advertising.
(B) To Customers:
(i) Facility in purchasing a product is felt by the consumer because he can decide that what he should purchase,
(ii) Better quality is available to the customer.
(iii) Because of the direct contact between manufacturer and the customer, middlemen cannot charge more profit.
(C) To Society:
(i) Advertisements help the newspapers in keeping their rates low, so that the newspapers are well within the reach of common men.
(ii) These, by way of increasing the production, raise standards of living.
(iii) Provides employment, encourage artists etc.
(iv) To remain in the market and to advertise specialties of the product, manufacturer has to pay attention on research so as to get new improved and better products.
Economic Implications of Advertising:
Advertising has following main economic implications:
(i) Informing Consumers:
An advertisement informs the consumer about the market condition, namely, the goods available in the market, their characteristics, the model best suited to the needs of the consumer and so on.
(ii) Broadening the Market:
Advertising broadens the market by familiarizing the consumer with new products, increasing the number of dealers. All this tends to increase the production and hence lower the cost due to mass production. Advertising reduces the scope for earning local monopoly profits.
(iii) Lowering Selling Costs:
Its main advantage is to lower the cost per contact e.g. one newspaper advertisement places the product before the eyes of many more prospective buyers that the equivalent expenditure on salesmen. Thus efforts for retail sales are reduced, which reduces per unit expenditure on sales.
(iv) Encouraging Competition:
With the help of advertising new firms can introduce their products, more rapidly than would be possible without advertising.
(v) Criticism:
Advertisement has been criticized for (a) misinforming the consumers and (b) concentrating the market in the hands of few, who can invest heavily on the advertisements, this creates problems in establishing new business with limited resources, even if the product is good.
Function # 3. Sales:
All the activities of the Sales department are for selling to earn maximum profit. For this purpose continuous search is made for profitable markets. Various agencies are opened throughout the country and if possible in foreign markets also.
Sales Promotion:
Sales promotion is a direct and immediate inducement that adds an extra value to the product so that it prompts the dealers, distributors or ultimate consumers to buy the product. Sales promotion activities are complementary to advertising and personal selling efforts.
Objectives of Sales Promotions:
Sales promotion objectives are:
(i) For introducing new products
(ii) For unloading accumulated inventory.
(iii) For overcoming a competitive situation.
(iv) For overcoming seasonal slumps/decline,
(v) As a support to the advertising effort.
Function # 4. Sales Correspondence:
Any incoming letter must be replied in a short time. The letter should be tactful, simple in language, helpful and every customer must feel that his enquiries are being considered.
Quotations for the supply of products should be sent to large number of customers and try to capture large markets.
If the promises cannot be kept with regard to delivery date or other matters, the customers should be informed immediately and whenever practicable reasons for the delay should be given.
Function # 5. Service:
Industry is rapidly adopting the principle that service is an essential part of the sales itself. Manufacturers often find it essential to see that their products are properly installed. This is not only a service to the customers but also a protection against complaints and general dissatisfaction of the customers.
The manufacturers, therefore, maintain a staff of skilled engineers and mechanics, who carry out tests at the customer works, give technical help and advice and see that everything is functioning properly.
Function # 6. Packing:
Packing to be used for products depends upon the type of product to be packed.
Following are the few types of packing of industrial products:
1. Paper wrapper
2. Tin container.
3. Cloth packing
4. Card Board Packets
5. Plywood Boxes
6. Plastic packing’s and
7. Wooden packing’s.
Packing also has an important role in the sale of product. With the help of good packing, the products can reach to the customer in same form and quality as they were before despatch. Good packing also helps in advertising and attracts more number of customers.
Function # 7. Warehouse:
These are the go-downs, for storing finished products after they are packed in a systematic manner. These are built in such a way that materials can be kept in them for a period till they are sold. For easy transportation, these are generally situated near the factory main gate.