Revenue and Sales Maximization
Revenue and sales maximization
Revenue maximization
Maximizing sales revenue is an alternative to profit maximization and occurs when the marginal revenue, MR, from selling an extra unit is zero.
The notion that business firms (especially those operating in the real world) are primarily motivated by the desire to achieve the greatest possible level of sales, rather than profit maximization. On a day-to-day basis, most real world firms probably do try to maximize sales rather than profit. For firms operating in relatively competitive markets, facing relative fixed prices, and relatively constant average cost, then increasing sales is bound to increase profits, too. Moreover, according to the notion of natural selection, even firms that seek to maximize sales, those that also maximize profit will remain in business.
The primary responsibility of a marketing or sales manager is to achieve sales targets over a given time period. In addition to achieving sales targets, a sales manager is expected to maximize sales to provide growth and increase profits. Sales maximization is an activity that concentrates on revenue transactions and can be accomplished by employing various sales strategies and programs. The thought that maximizing sales will help maximize profits is not always true. An increase in sales is associated with an increase in cost of goods sold and other expenses. . Sales maximization programs can be implemented for many reasons and at various times, but they are not done continuously. The start of a business, during lean seasons and at times when there is excess inventory are examples of those times. Sales managers may refrain from maximizing sales without the consent of general managers to avoid a possible shortage of business resources such as inventory and manpower.
Maximizing profit and sales are two major concerns of business owners, but many business managers fail to realize that sales maximization does not always mean profit maximization.
Revenue maximization
Maximizing sales revenue is an alternative to profit maximization and occurs when the marginal revenue, MR, from selling an extra unit is zero.
The notion that business firms (especially those operating in the real world) are primarily motivated by the desire to achieve the greatest possible level of sales, rather than profit maximization. On a day-to-day basis, most real world firms probably do try to maximize sales rather than profit. For firms operating in relatively competitive markets, facing relative fixed prices, and relatively constant average cost, then increasing sales is bound to increase profits, too. Moreover, according to the notion of natural selection, even firms that seek to maximize sales, those that also maximize profit will remain in business.
The primary responsibility of a marketing or sales manager is to achieve sales targets over a given time period. In addition to achieving sales targets, a sales manager is expected to maximize sales to provide growth and increase profits. Sales maximization is an activity that concentrates on revenue transactions and can be accomplished by employing various sales strategies and programs. The thought that maximizing sales will help maximize profits is not always true. An increase in sales is associated with an increase in cost of goods sold and other expenses. . Sales maximization programs can be implemented for many reasons and at various times, but they are not done continuously. The start of a business, during lean seasons and at times when there is excess inventory are examples of those times. Sales managers may refrain from maximizing sales without the consent of general managers to avoid a possible shortage of business resources such as inventory and manpower.
Maximizing profit and sales are two major concerns of business owners, but many business managers fail to realize that sales maximization does not always mean profit maximization.