Sales Management ch.4

Purposes of Sales Organization

A. Divide and arrange activities so the firm can benefit from specialization of labor

B.Provide for coordination of activities assigned to sales force and to departments in the firm

C. Provide for stability and continuity in firm’s selling efforts

Importance of Sales Organization Decisions Making

Sales force Managers/Leaders become major parts of strategic sales planning

Managers/Leaders become more proactive in restructuring the organization/sales department

Strong corporate vision and effective strategic market planning play a critical role in how an organization will be structured and interacts with its customers

Increase productivity

Specialists can become proficient at assigned tasks

Divide required selling activities

Gain maximum benefits within the sales force

Line organization

Vertical

Chain of command runs from chief sales executive down through levels of subordinates

Each subordinate responsible to one person

Vice-President of Sales

Director of US Sales

Regional Manager for NE – US

District Manager of Massachusetts

Line and staff organization

Vertical (most common)

Several sales management activities assigned to separate specialists

Stability and Continuity of Organizational Performance

Organize activities without regard to talents of current employees

People can be trained to fill positions

Same activities will be carried out even if designated individuals receive promotions or leave

Coordination and Integration

As an organization divides tasks among specialists makes it difficult to integrate

Sales force activities with customer needs

Selling activities coordination with other departments

Tasks must therefore be integrated among specialized units

Horizontal Organizational Structure

Divides selling activities among sales force

Vertical Organizational Structure

Assigns authority for specific sales management activities

Economic criteria

How economically is outsourcing (profitability, sales, revenues, etc.)

Control

Directing and other influences

Transactions costs

Cost associated with all transactions/activities involved, support (equipment, training, etc.)

Strategic flexibility

Why and for what reason you need to outsource, role played (support your product, one specific activity assigned so that the company can operate efficiently for instance, etc.)

The Six Cs of Finding the Right Rep/Agent

1. Carry Compatible Product lines

2. Operate in Compatible territories

3. Have Compatible customers

4. Have Good Credibility

5. Have Capabilities

6. Have Good Credits

Geographic Sales Organization

Most widely used system where sales force is grouped and assigned on the basis of physical territories/geographic locations

Each salesperson is assigned to a separate geographical area in which to sell

Better coverage of the entire market

Better control of the salesforce and sales operations

Lowest costs

Travel time and expenses minimized

Sales administration and overhead costs kept low

Does not provide benefits associated with specialization of salesperson/labor

Product Organization

Separate sales force and assign salespeople to each product category or product line

Likely used when the company has a variety of complex products, thousands of products, dissimilar and unrelated products

Product Organization Pros

Salespeople master effective selling methods for single or related products

Salespeople give attention to each product line

Closer alignment of sales and production

Sales management controls allocation of selling effort across the line

Product Organization Cons

Duplication of effort, Sometimes more than one salesperson calls on the same customers who might be frustrated

Market Specialization

Companies divide the line authority in their Sales Department based on the type of customers who are classified by industry, by channel of distribution or by customer size.

Organization by Customer Type Pros

Better understanding of customer needs

Increased familiarity with certain businesses

Increased control over allocation of selling effort

Organization by Customer Type Cons

Possible higher selling and administrative costs

Duplication of effort

Organization by Selling Function

Salespeople specialize in performing different selling functions. For instance, prospecting new customers and developing new accounts versus maintaining and servicing existing customers, presenting the message, etc.

Organization by Selling Function Pros

Skills matched to sales function

Developmental salespeople often a successful alternative

Organization by Selling Function Cons

Customer objections to switch to maintenance salesperson

Feelings of rivalry in the sales force and among salespeople

KEY ACCOUNT MANAGEMENT (KAM)

Some firms use the term National or Major Account Management

Large Customers range from firms with only local or regional to multinational corporations and differentiated by their complexity, order size and value

They are Separate corporate division and sales force

Deliver high-level customer service to attract and maintain large and important customers

TEAM SELLING

Integrates functional specialists with customer relationship specialists

It is a group of people representing the Sales Department and other functionalareas in the firm such as finance, production, and Research and Development (R& D)

Team Selling Benefits

Customer questions answered faster

Customers can speak directly with desired specialists

Other Kinds of Team Selling Structures

Selling center brings together individuals from around the organization to help salesperson

Matrix organization employs direct-reporting salespeople who support

internal consultants with specialized expertise

Multi level selling – sales team consists of personnel from various managerial levels who call on their counterparts in the buying organization

TELEMARKETING

Telemarketing is a form of organization by selling function

It helps qualifying potential new accounts

It helps with Servicing existing accounts quickly

It seeks repeat purchases from existing accounts that cannot be covered efficiently in person

It helps with Providing quick communication of new developments

Organizing For International Sales

Turning over the export of its products to home-country intermediaries

- Partner with foreign-product intermediaries

- Establish its own company sales force in the foreign country

Home country Intermediaries

Provide international Marketing Services from a domestic

base

Export merchants, trading companies, export management companies. Agents, and distributors all offer international sales and distribution services for those companies that do not wish to become immediately involved in the complexities of international sales or want to sale abroad

Foreign Country Intermediaries

Small and midsize companies establish a sales organization in a foreign country because they cannot afford their own sales force

Companies set up a network of manufacturers’ agents, distributors or wholesalers, or dealers/retailers in foreign markets

In many cases, independent organizations are already selling other products and services in target countries

Is some countries, market are geographically large so that companies use independent representatives to cover outlying areas

Cultural diversity also affects this decision. Some multilingual, culturally heterogeneous markets require several reps to deal with customers of varied cultural groups

Company Sales Force Operating Abroad or International Divisions/Subsidiaries

Established due to volume of sales, profit potentials and to avoid a lot of government regulations

Sell directly to final customers or may sell through local distributors or dealers

Using its own salesforce abroad enables to promote products more aggressively and control its sales effort more completely

VERTICAL ORGANIZATIONAL STRUCTURE OF THE SALES FORCE

In a Vertical Organizational Structure the company assigns authority to salespeople,In sales, the Span of Control is defined as the average number of salespeople for each manager/leader

SPAN OF CONTROL

The Span of control is dictated by managers and levels of management; the more of these there are, the lower the span of control, and vice versa.

Larger Span of Control Pros

Greater control/ responsiveness due to fewer management layers

Lower administrative costs

Larger Span of Control Cons

Reduced one-to-one communication due to larger # of subordinates

Managements may be less effective, negating cost savings