Sales Department Functions and Market Research Techniques

Posted on Jan 25, 2025 in Economy

Sales Department Functions and Market Dynamics

The sales department carries out the activities necessary to deliver consumer goods or services produced by the company to the consumer. Its primary functions include market analysis, marketing, and sales. The sales department coordinates with other departments, including:

  • Production department
  • Finance department
  • Human resources department

Understanding the Market

The market is where the buying and selling of a product occur, conducted between two economic entities: the buyer and the seller. Three crucial elements define the commercial function:

  • Product
  • Business
  • Consumer

Types of Markets

  • Perfect Competition:
    1. Homogeneity
    2. A large number of buyers and sellers
    3. Full knowledge of the market
    4. Free entry and exit from the market
  • Imperfect Competition:
    1. Monopoly
    2. Oligopoly
    3. Monopolistic Competition

Demand and Market Share

Demand represents the total purchases of a product within a specific period. It can be further defined as:

  • Total Market Demand: The sum of all sales for all companies selling the product.
  • Company Demand: The amount of purchases of a product from a specific company within a period.
  • Potential Demand: The maximum possible sales within a given time.

Market share indicates the proportion of total market sales held by a company. It is calculated as follows:

Market Share = (Company Sales / Total Market Sales) x 100

Market Research: A Comprehensive Approach

Market research involves collecting, processing, and analyzing information about the general environment, competition, and consumers. It typically follows these phases:

  1. Definition of the research objective and model.
  2. Research Design: This may include internal company data, official statistics, and external research.
  3. Data Collection: Gathering primary and secondary data.
  4. Data Classification and Structuring: Using statistical methods.
  5. Data Analysis and Interpretation: A critical stage as market intervention decisions depend on the findings.
  6. Presentation of Results: Including problem analysis, methodology, technical results, conclusions, implications, and recommendations.

Primary Data Gathering Techniques

  • Surveys: Involve asking a person or group a series of questions. Types include personal interviews, postal surveys, telephone surveys, and email surveys.
  • Observation: Observing consumer behavior and drawing conclusions. This can be done directly or through video. The observer must synthesize observations and accurately inform commercial policy.
  • Experimentation: Studying consumer reactions to specific stimuli.

Analyzing the Business Environment

  • Analysis of the General Environment: Includes the legal, technological, social, and economic environment.
  • Analysis of Competition: Identifying companies that produce or sell the same product or service in the same market. This involves locating competitors, gathering information, and comparing their position to the company’s.
  • Analysis of the Consumer: Understanding consumer behavior is crucial. Key questions include:
    • Who is buying?
    • Where are they buying?
    • Why are they buying?
    • How much are they buying?
    • When are they buying?

Consumer Classification

Consumers can be classified based on their decision-making roles:

  • Prescriber: Influences the purchase decision.
  • Buyer: Makes the actual purchase.
  • Consumer: Uses the product.

Market Segmentation

Market segmentation involves dividing the market into homogeneous groups based on customer needs. Key segmentation criteria include:

  • Demographic Criteria
  • Socio-economic Criteria
  • Psychographic Criteria