Deck 5: The Strategic Role of Information in Sales Management

Question 1

Scenario planning involves asking a series of "what if" questions.

Answer 1

True

Question 2

A company that manufactures coupon savings books for people over 65 should develop territory-by-territory estimates of demand for its coupon books.

Answer 2

True

Question 3

The terms sales potential and sales forecast are correctly used as synonyms of each other.

Answer 3

False

Question 4

Activity quotas are used to recognize the investment nature of a salesperson's efforts.

Question 5

When Jeffrey stated that the number of pounds of sugar to be used by food service providers in the Houston metropolitan area in 2001 was 1,000,000 pounds,he was referring to market potential.

Question 6

When Robin stated that her company can reasonably expect to sell 5,000 blades to Pacific Northwest lumber mills that have a market potential of 22,000 blades for the next three years,she was setting a sales quota for her company's marketing department.

Question 7

Sales volume quotas are the most popular type of sales quotas used.

Question 8

The sales forecast is one of the most important pieces of data used by management and lies at the heart of most companies' planning efforts.

Question 9

In terms of sales forecasting,exponential smoothing is a type of moving average.

Question 10

Firms that sell to industrial consumers are more apt to use aggregate market conditions in each territory than firms that sell consumer goods.

Question 11

Scenario planning involves asking those preparing a forecast a series of "what-if" questions.

Question 12

Statistical demand analysis attempts to determine the relationship between sales and time as the basis of the forecast for the future.

Question 13

For a quota to be effective,it must be challenging,quantitative and easy to understand.

Question 14

SIC codes replaced NAICS.

Question 15

Many firms consider test marketing to be the ultimate measure of market potential for their products.

Question 16

The decomposition method of sales forecasting would be more likely used by a manufacturer of bricks than a manufacturer of wood burning stoves.

Question 17

The jury of executive opinion method of developing sales forecasts may be done either formally or informally.

Question 18

Point quota systems allow sales managers to design quota systems that promote certain desired goals and at the same time point quotas can be easily understood by salespeople.

Question 19

The Delphi technique for sales forecasting eliminates the influence of group dynamics on the final decision.

Question 20

NAICS codes are more likely to be used in evaluating industrial market segments.

Question 21

The first step of the breakdown approach to determining the size of the field sales labor force is to categorize the company's customers on the basis of their level purchasing.

Question 22

PRIZM NE is an example of a product involving cluster analysis of census-produced data to produce homogeneous groups that describe the American population.

Question 23

A major benefit of even the most elementary sales analysis is in highlighting those products,customers,orders or territories in which the firm's sales are concentrated.

Question 24

Sales force deployment involves sales force size,number of territories design of territories and allocation of selling effort decisions.

Question 25

The work load method of determining the size of the field sales labor force assumes that all workers will work with the same degree of efficiency.

Question 26

A zip code area is relatively homogeneous with respect to basic economic data.

Question 27

Of all the methods for establishing sales quotas,net profit quotas are the easiest to administer.

Question 28

Counties are the most widely used basic control unit for establishing sales territories.

Question 29

Sales analysis comparing sales with a quota is among the least used methods.

Question 30

The acronym MSA stands for Marketing Statistical Area.

Question 31

The incremental method of sales force determination suggests adding sales reps if the incremental costs exceeds the extra profit.

Question 32

Ideally,firms like to form sales territories that are equal in both potential and work load.

Question 33

The work load method of determining the size of the field sales labor force is the most difficult to implement.

Question 34

Software that links processes such as bid estimates,order entry,shipping,billing systems and other work processes are called entrepreneurial restructuring planning.

Question 35

The 80:20 rule is also called the concentration ratio.

Question 36

An estimate of sales potential for each customer and prospect in a territory is often called an account analysis.

Question 37

A trading area is an economic unit that ignores political and other non-economic boundaries.

Question 38

If the average salesperson for Hayes Industries has 500 hours available for selling each year and it will take 15,000 hours to cover Hayes's entire market,Hayes needs to hire 30 salespeople.

Question 39

Geodemographers combine census data with their own survey data to produce customized products for their clients.

Question 40

Conceptually,the breakdown method is one of the simplest methods for determining the size of the field sales labor force.

Question 41

As a sales forecasting technique,market tests:

A)Are more reliable for industrial products than for consumer products
B)Are inexpensive to administer
C)Always provide realistic pictures of potential sales
D)Are often used with a new product or with an improved version of an established one
E)Can be conducted quickly if the manufacturer needs to get the product to market quickly to beat its competitors

Question 42

A complete statement of an industry's market potential must include which of the following elements?

A)The names of all potential customers
B)An estimate of the maximum possible sales of a commodity or service
C)An assessment of potential competitors
D)The historical trends used to develop the statement
E)Territorial assignments

Question 43

The _____ method of sales forecasting is typically applied to monthly or quarterly data where a seasonal pattern is evident and the manager wishes to forecast sales not only for the year but also for each period of the year.

A)Delphi technique
B)Users' expectations
C)Decomposition
D)Time series
E)Statistical demand analysis

Question 44

The breakdown of a sales analysis into a series of reports is called hierarchical sales analysis.

Question 45

Johnson Plumbing Supply supplies everything a plumber needs to install bathrooms,kitchens and outside faucets for a home.The owner of the plumbing supply house sees a relationship between its sale of PVC (plastic)pipe and both housing starts and the average age of houses in its region of the country.Given this relationship,what sales forecasting technique will Johnson Plumbing be most likely to use?

A)The Delphi technique
B)Sales force composite
C)Buyers' intentions
D)Time series analysis
E)Statistical demand analysis

Question 46

The examination,in detail,of significant discrepancies in sales reports is called isolate and explode.
Multiple Choice Questions

Question 47

The users' expectations method of forecasting sales:

A)Does not provide detailed product usage information
B)Uses observational research
C)Is an objective method for determining customers' expected consumption
D)Is a relatively inexpensive forecasting method
E)Is also called buyers' intention methods

Question 48

The sales force composite method of forecasting sales:

A)Involves the people who will be responsible for the results in setting the forecast
B)Is an objective combined estimate of individual salespeople,product by product and customer by customer
C)Is extremely accurate
D)Will not produce biased results
E)Is accurately described by all of the above

Question 49

Which of the following statements BEST defines the relationship between sales forecasts and sales potentials?

A)The term sales forecast is synonymous with the term sales potential
B)The sales forecast reflects what the company could sell in a territory if conditions were ideal;the sales potential estimate is an estimate of potential sales that are calculated under the assumption that market conditions are never ideal
C)Sales potential estimates are always determined for a particular product;sales forecasts are always determined for particular territories
D)Sales potential is the portion of the market potential a specific firm can reasonably expect to achieve;sales forecasts are estimates of the dollar or unit sales for a specified future period under a proposed marketing plan
E)Sales forecasts are typically higher than sales potential estimates

Question 50

Bell-Mark Sales sells a single-color flexographic printer to plastic manufacturers that need to print company logos,product descriptions,warning logos and bar codes on plastic film to be used in making packaging.The ________ for Bell-Mark in 2002 for the European plastics manufacturer market is $14 million or a 50 percent market share.

A)Sales potential
B)Market forecast
C)Total sales quota
D)Sales forecast
E)Market potential

Question 51

For which of the following products would time series analysis be an inappropriate sales forecasting tool?

A)A new $200 printer/software package that processes your camera film and produces portrait quality pictures at home
B)Wood-burning stoves
C)Tangerines
D)A new computer game based on the movie The Wild Wild West
E)Laundry detergent with a bleach additive

Question 52

Top management use sales forecasts to:

A)Determine production quantities and schedules
B)Control inventories of input and output materials
C)Schedule the arrival of raw materials and component parts
D)Allocate funds to their companies' functional areas
E)Plan marketing programs

Question 53

Which of the following statements about methods used to forecast sales is true?

A)Initial estimates from the sales force composite method of forecasting are adjusted by various managerial levels of the sales department
B)The use of group interaction is an important element in successful sales forecasting using the Delphi technique
C)One disadvantage of the sales force composite method is the inaccuracies attributable to the number of participants
D)The sales force composite method of sales forecasting is equal to the cumulative quotas assigned to individual salespeople
E)The users' expectations method of forecasting works best for consumer products

Question 54

The iceberg principle suggests that small,visible problems are often symptoms of larger problems seen only by sales managers.

Question 55

Which of the following methods for calculating sales forecasts is a subjective method?

A)Market test
B)Decomposition
C)Jury of executive opinion
D)Statistical demand analysis
E)Exponential smoothing

Question 56

Which of the following statements about methods used to forecast sales is true?

A)The statistical demand analysis appeals to managers because it is simple to use and to understand
B)The market test is the ultimate test of consumer reaction to a product
C)Any biases created in a sales forecast created through a force composite can be inexpensively corrected
D)The users' expectations method of sales forecasting works best with products like baby clothes,snack food and home computer systems
E)Sales forecasting using the jury of executive opinion method should never be used with new products

Question 57

Fred Gray,president of Gray Golf Supplies dreads having to develop sales forecasts for the upcoming fiscal year.For one thing,sales of golf supplies have been somewhat volatile during the last few years.Furthermore,his sales managers and marketing manager argued for hours last year over how the sales forecast should be done without any apparent benefit to the final forecast.This year Gray would like to avoid such a confrontation by using objective forecasting techniques.His company,however,has no one with the required technical skill.What should he do?

A)Go ahead and use the moving average approach because it requires little technical skill
B)Continue to use the same technique used before and counsel his managers about the importance of compromise
C)Try the Delphi technique even though it may be somewhat more expensive than the method currently used
D)Hold off doing forecasts until the company can hire a statistical expert
E)Discontinue forecasting altogether

Question 58

Which of the following statements is the BEST example of market potential for a manufacturer of metal detection systems?

A)The market potential for metal detection systems for use in public schools in New York City is 12,000 units
B)The market potential for metal detection systems for the transportation industry in the year 2002 is $92,000,000
C)The market potential for metal detection systems for the use in airports in Southwestern U.S.in the year 2003 is 125 units
D)The market potential for metal detection systems for all industrial uses is $1.3 billion for the U.S.market during the upcoming twelve months
E)The market potential for metal detection systems that fit on the conveyor belts used by food processing companies is more than $16 million

Question 59

Plastic manufacturers inject plastic into molds to form everything from toy trucks to lawn furniture to plastic dishes.One of the problems often experienced on the assembly line is that the two halves of the mold may shift and get out of alignment.Enerpac has developed a quick-clamping mold that is guaranteed not to shift during production.This is a new innovative product.Enerpac wants to get the product in its salespeople's hands quickly.What kind of a sales forecast would you recommend Enerpac use?

A)The Delphi technique
B)Jury of executive opinion
C)Market test
D)Sales force composite
E)Statistical demand analysis

Question 60

The sales force composite method of forecasting sales is so named because:

A)The initial input is the opinion of each member of the marketing department
B)The initial input is the opinion of each member of the field sales staff
C)The initial input is the opinion of sales management
D)All of the above
E)None of the above

Question 61

Which of the following statements about the breakdown method of determining sales force size is true?

A)In order to determine the size of the sales force using the breakdown method,divide the sales likely to be produced by each salesperson by the total sales forecast for the company
B)The breakdown method involves classification of customers into categories representing the amount of effort required to service the accounts
C)One problem with the breakdown method is that it focuses too much on profit generation
D)There is no way to smooth out person-to-person differences in productivity when using the breakeven method
E)One problem with the breakdown method is that it assumes sales force size is a function of the sales forecast

Question 62

Using the work load method,determine the sales force size.

A)12
B)15
C)24
D)35
E)39

Question 63

For a sales quota to be effective,the quota must be:

A)Flexible,motivational and different from those used by competitors
B)Attainable,easy to understand and complete
C)Statistically designed,motivational and competitive
D)Competitive and flexible and have a short-time horizon
E)Different from those used by competitors,challenging and financially rewarding

Question 64

Janice is sales manager for a new,national book company.She is making decisions regarding sales territories,sales force size and allocation of the sales team.Janice is engaged in:

A)Work load methodology
B)Iceberg prevention analogy
C)Sales force deployment
D)Sales auditing
E)Cost and profitability analysis

Question 65

Which of the following statements about sales forecast accuracy is true?

A)Combining sales forecasts that were developed using different techniques actually creates a less accurate forecast
B)The subjective methods of forecasting are most accurate for sales forecast with a short time horizon
C)Researchers have concluded that the method of sales forecasting used made little difference with respect to forecast accuracy
D)The objective methods of forecasting are most accurate when the database is skimpy and forecast errors are likely to cause large losses
E)Sales managers cannot overemphasize the need for sales forecasts to be accurate

Question 66

Which of the following statements about activity quotas is true?

A)In order to be fair,each salesperson should have the same level for each activity measured
B)Top management should set activity quota levels based on corporate objectives
C)Territorial differences should play a major part in setting activity quota levels
D)The major source of information used for setting activity quota levels is to examine the competition and match or better their levels
E)None of the above statements about activity quotas is true

Question 67

The most popular type of sales quotas is ______ quotas.

A)Market share
B)Contribution margin
C)Expense
D)Sales dollar
E)Activity

Question 68

The breakdown method of determining sales force size:

A)Determines the number of sales personnel needed by dividing the estimated productivity of one salesperson by the forecasted sales volume
B)Is actually more useful for assigning salespeople to territories than determining the size of the sales force needed
C)Determines the number of sales personnel needed by dividing the forecasted sales volume by the estimated productivity of one salesperson
D)Is conceptually one of the most difficult ways to calculate sales force size
E)Is a simplified version of the incremental approach

Question 69

Using the breakdown method,determine the sales force size.

A)11
B)33
C)39
D)54
E)65

Question 70

What is the first step the sales manager must perform when setting sales quotas?

A)Decide on the type of quotas the firms will use
B)Review the upcoming year's sales
C)Determine the number of sales territory
D)Determine the activities in which the sales force is lacking motivation
E)Gather sales force input

Question 71

Sales force deployment refers to decisions regarding:

A)Sales force size and number of territories
B)Design of individual territories
C)Allocation of the total selling effort
D)Simultaneous decision making regarding all of the above
E)Independent internal integration of all of the above

Question 72

The buying power index (BPI)would be most useful in predicting sales for which of the following products?

A)Mercedes-Benz automobiles
B)Machines used for processing pork into sausage
C)Chocolate cake mixes
D)Shower enclosures for new homes
E)Industrial strength pressure washers for cleaning mold and mildew off of large structures

Question 73

Which method does Saginaw Refrigeration use for classifying its customers?

A)The ABC Rule of Account Classification
B)The 80/20 principle
C)The buildup approach
D)The bundling approach
E)The incremental approach

Question 74

Which of the following is NOT a factor affecting sales forecast accuracy?

A)Data stability
B)The deseasonalization of the data
C)The degree to which computers were used
D)The time horizon
E)Territory delineation

Question 75

Activity quotas:

A)Attempt to recognize the investment nature of a salesperson's efforts
B)Are directly related to factors that a salesperson can control
C)Act as a counterbalance to sales volume quotas
D)Can be difficult to measure unless the salesperson prepares a sales activity report
E)Are accurately described by all of the above

Question 76

Territory demand estimates affect all of the following EXCEPT:

A)Departmental performance analyses
B)The procedure used to identify potential customers
C)The design of sales territories
D)Compensation levels and the mix of components in the firm's sales compensation scheme
E)Sales quotas

Question 77

Which of the following is NOT one of the steps in the work load approach to determining sales force size?

A)Estimate the revenue generated by one salesperson
B)Classify the firm's customers into categories
C)Determine the time available per salesperson
D)Determine frequency and length of calls for accounts
E)Apportion salesperson's time by task performed
Saginaw Refrigeration Company manufactures and sells refrigerator and freezer units for retailers of perishables.The company's sales manager is preparing to determine how big its sales force should bE.Its 2001 forecast includes 100,000 refrigerator units and 55,000 freezer units for a total of $38,750,000.It estimates that a typical member of its sales force could be expected to bring in $1,000,000 in sales in 2001.Its sales force expects to spend 3 hours per day (or 33 percent of their 9-hour day)in face-to-face selling.The remaining six hours will be spent servicing (20 percent),doing paperwork (20 percent)and traveling (27 percent).
Each sales rep gets two weeks' vacation and two week of in-home training and meetings per year.
Saginaw Refrigeration figures that its 100 best customers should be called on every week (52 times per year)for one-half hour.Its 450 medium-sized customers should be called on twice a month for one half-hour.Its smallest customers (120)need a monthly call of 15 minutes.

Question 78

Sales volume quotas based on historical data:

A)Create a quota plan that is difficult to administer
B)Give equal weight to both current and past conditions
C)Require extensive statistical analysis to set appropriate quotas
D)Are basically derived from the market potential in each individual territory
E)Can demoralize salespeople and cause undesirable behavior

Question 79

Which of the following statements about sales quotas is true?

A)They emphasize sales or some aspect of sales volume
B)They focus on the activities in which sales representatives are supposed to engage
C)They examine financial criteria such as gross margin or contribution to overhead
D)All of the above
E)None of the above

Question 80

The method of determining the sales force size which most effectively addresses the unique needs of different accounts is:

A)The breakdown method
B)The work load method
C)The incremental method
D)None of the above