SALES Budget
&
sales QUOTA
BASIC TERMS
13-04-2015
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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.
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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
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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
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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.
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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
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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)
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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
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Sales budget
Sales budget is the estimate
of expected sales volume in
units or revenues from the
company’s products and
services, and the selling
expenses.
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Purposes of the Sales Budget
• Planning
• Coordination
• Control
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Requirement of a
successful budget
• Support, interest and involvement
of top management
• Flexible budgeting
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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.
13-04-2015
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IMPOTANCE OF
QUOTAS
• ACHIEVE ORGANIZATIONAL
TARGET
• PROVIDE PERFORMANCE
TARGET
• PROVIDE STANDARD
• PROVIDE CONTROL
• PROVIDE DIRECTION
• TOOL FOR MOTIVATION
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CHARACTERISTIC OF
GOOD SALES QUOTA
•
•
•
•
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Fair
Challenging
Flexible
Easy understandable
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Types of Quotas
• Organizations set many types of
sales quotas:
• sales volume
• units
• activity
• combination
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