Scope, Importance and Evolution
Sales refers to the exchange of goods/ commodities against money or service. It is the only revenue generating function in an organization. It has formed an important part in business throughout history. Even prior to the introduction of money, people used to exchange goods in order to fulfill the needs, which is known as the barter system.
Example of Barter System
A has 100 kg of rice and B has 50 kg of wheat. Here, A needs wheat and B needs rice. They agree to exchange 50 kg of rice and 25 kg of wheat upon mutual understanding.
Conditions of Sales
- There are two parties involved in the transaction, the seller and the buyer.
- The seller is the provider of goods or services and the buyer is the purchaser in exchange of money.
The seller of goods has to transfer the title of ownership of the item to the buyer upon an agreed price. A person who sells goods or services on behalf of the seller is known as the salesman/woman.
Importance of Sales Management
Sales management is very crucial for any organization to achieve its targets. In order to increase customer demand for a particular product, we need management of sales.
The following points need to be considered for sales management in an organization −
- The first and foremost importance of sales management is that it facilitates the sale of a product at a price, which realizes profits and helps in generating revenue to the company.
- It helps to achieve organizational goals and objectives by focusing on the aim and planning a strategy regarding achievement of the goal within a timeframe.
- Sales team monitors the customer preference, government policy, competitor situation, etc., to make the required changes accordingly and manage sales.
- By monitoring the customer preference, the salesperson develops a positive relationship with the customer, which helps to retain the customer for a long period of time.
- Both the buyers and sellers have the same type of relationship, which is based on exchange of goods, services and money. This helps in attaining customer satisfaction.
Sales Management may differ from one organization to the other, but overall, we can conclude that sales management is very important for an organization for achieving its short- and long-term goals.
Objective of Sales Management
Every organization has an objective before initializing functions. We need to understand the goal of managing sales. Here we are discussing Sales Management in terms of its objectives.
It is the capacity or the number of items sold or services sold in the normal operations of a company in a specified period. The foremost objective of sales management is to increase sales volume to generate revenue.
Contribution to Profit
The sales of the organization should contribute to profit, as it is the only revenue generating department. It can be calculated as the percentage or ratio of gain in total turnover.
One of the main objectives of Sales Management is to retain consumers to continue growth of the organization. There should be regular expansion of sales and demand for an item in the market with new advanced formulation.