Market Research – Market potential and sales results

Market potential and sales representative effectiveness are but two of the basic determinants of sales results in a territory. To measure sales representative performance, it is necessary to take into account some of the other factors which influence sales results. One study of a national sales organization found that six factors explained 72 per cent of the variation in sales among territories. These factors and the methods of measuring them are as follows:

–Market potential
–Territory workload
–Experience of sales representative
–Motivation and effort of sales representative
–Company experience
–Company effort

Method of Measurement:

–Industry sales (units) in territory
–Weighted index based on annual purchases and concentration of accounts.
–Length of time employed by company (months)
–Aggregate ratings by field sales manager on eight dimension of performance
–Weighted average of market share past four years
–Advertising expenditure in territory.

While sales potential is a key factor in establishing sales quotas, and other measurable factors such as those listed above also play a significant role, it should be remembered that the setting of quotas also involves a interpersonal relationship between the sales manager and the salesman. The best quota is the one that is the best effort by the salesman. Since salesmen vary in personal reaction to the challenge and risk, a successful manager is one who can adopt and allocate sales target to each individual salesman accordingly.

Two major methods are available for estimating the market potential. One of these involves the use of direct data that is, data on the actual product for which one wishes to estimate potentials. The other method involves the use of secondary data – data related to, but different from, the product at hand. Secondary data methods can use single or multiple factors, and the latter can be combined in a variety of ways.
Direct Data Method: Total industry sales of a particular type of product can be used as the basis for estimating market potentials for one brand of that product.

Comparison of potential sales with actual sales indicates that the company is weak. It might be concluded that the management should exert itself in the weak areas where the firm has not been able to obtain its proper sales. Such a conclusion, however, does not take into account the cost of exploiting these deficit areas. Therefore, it cannot be stated that it will be profitable to attempt to reach potentials in such territories. Local competition may be unusually stiff in some areas. There is disagreement as to whether a company should concentrate on its sales effort in its weak or strong territories. An analysis such as the above, however, will highlight those areas that need to be investigated to determine why the company is not obtaining its share of the market. This is the first step in deciding what action, if any, should be taken.

Total industry sales data may be obtained in some cases as a result of licensing or the imposition of taxes. For example, all states impose tax on liquor and gasoline, and these receipts can be used to estimate the total gasoline and liquor consumption by the states. Trade associations frequently compile total industry data by having their members report shipments.

The main advantage of using total industry sales is to measure the market potential that actual results (sales) are being used. The method is straightforward and does not require as much clerical work as do some of the other methods.

There are working and non-working groups of women, it should be recognized that there are variations even within each group. In other words, segmentation of both markets reveals some important differences in orientations among the sub segments. Moreover it may be that breaking women into employed versus non-employed group obscures potentially meaningful time style and lifestyle differences which may have potentially important results.

–the working woman who thinks her work is a career;
–the working woman who says it’s just a job;
–the home maker who plans to work; and
–the stay at home homemaker

Additional research on women’s segments has been extended globally where it has been found that the four groups hold across countries and cultures.

The plan to work segment appears to be the most active and sophisticated in terms of shopping behavior; they are more actively involved in shopping and devote more skill and attention to it than other groups. The career segment is most concerned with shopping for clothes and is not oriented toward budgeting or shopping for specials. The stay at home group appears to be the most economy minded of the segments. The least sophisticated and involved in shopping behavior is the just a job group.

Additionally, career women shop at specialty stores more than do either women who view their work as just job or homemakers. Career and working women tend to shop more in the evenings and on weekends than do homemakers. These three groups also seem to use substantially different criteria for selecting retail stores in which to shop.

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