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Sales Management: Shaping Future Sales Leaders

Organization of the Sales Force

Organization of The Sales Force

Basic Management Function of Arranging The Firms Sales Activities

Tasks of The Sales Organization


1.Maintenance of order in achieving sales force goals/objectives 2.Assignment of specific tasks and responsibilities 3.Integration and coordination with other elements of the firm

How a Firms Goals Affect the Design of Its Sales Force


Organization of sales force is driven by strategic goals Organizational sales structures serve a number of purposes that include

1.Serving buyers effectively in ways they want to be served 2.Operating efficiently and effectively as measured by cost and customer satisfaction

The Size of the Sales Force


Breakdown Method
- Divide

forecasted sales revenue by average sales dollars per salesperson

The Size of the Sales Force


Workload Method
1.Compute total sales call workload 2.Determine amount of work performed by each rep 3.Factor in additional work responsibilities

Workload Method

Developing A Sales Organization

Developing A Sales Organization

1.Formal & informal organization 2.Horizontal & vertical 3.Centralized & decentralized 4.The line and staff components of the organization 5.The size of the company

Developing A Sales Organization


Formal and informal organizations - every firm has a formal & an informal organization. The formal organization is a creation of management Informal organization is developed from the social relationships existing with in the formal organization structure.
CEO NSM RSM ASM Salesperson

Developing A Sales Organization


Informal organization Communication pattern formed from the social relationship existing with in the formal organization
Salesperson ASM RSM NSM CEO

Manager Marketing

distribution Manager

NSM

Manager Accounts

Developing A Sales Organization


Vertical Sales Organization Several level of management, all reporting upward to the next level CEO NS RSM ASM FS SR

Developing A Sales Organization


Horizontal Sales Organization Number of management level is small and number of manager at particular level is large Chief Sales Executive
District Sales Manager District Sales Manager Karachi Multan District Sales Manager District Sales Manager Lahore Islamabad

Developing A Sales Organization


Centralized Responsibility and authority are concentrated at higher level of management Decentralized -Delegated to lower levels of management - Structure is ineffective unless the assignment of decision making to lower levels of sales management is accompanied by a complete authority to carry out the decision.
Result?
Failure to achieve the objective Destroy/depress the moral of personnel involved

A classic mistake?

Developing A Sales Organization


Line and Staff Marketing Organization
Line function is a primary organizational activity Staff function is a supporting organizational activity. In a marketing organization selling function is the line component. Advertising, marketing research, sales training, and distributor relations are considered as staff roles

Developing A Sales Organization


Line Marketing Organization
Vice President for sales

General Sales Manager

Regional Sales Manager S

Regional Sales Manager C

Regional Sales Manager N

Developing A Sales Organization


Line and Staff Marketing Organization
Vice President for Marketing ------------------------------------------------------------------------------Marketing Advertising Research General Sales Manager ----------------------------------------------------------------------------------------------Distribution Sales Planning Sales Analyst Sales Training Manager

Regional Sales Manager S

Regional Sales Manager C

Regional Sales Manager N

Basic Types of Sales Organization


Best way to design a sales structure is to
Determine sales activities that must be performed to reach goals Create sales structure that affords highest levels of service to buyers at lowest overall cost Select, train and manage reps and managers to become experts in their assigned duties

Basic Types of Sales Organization


Sales Structures
GEOGRAPHIC SPECILIZATION CUSTOMER SPCIALIZATION PRODUCT SPECIALIZATION

Basic Types of Sales Organization


Geographic Specialization
Sales organization in which selling personnel are given the responsibility for direct selling activities in a given geographical area Territories are treated as separate profit center for purpose of analysis and evaluation Is the most commonly used method Simplicity explains its popularity among sales executives Offers the advantages of adaptability and improved coverage

Geographic-Based Structure

Basic Types of Sales Organization

Customer and product specialization approaches are more complex and should only be used if their specific features are critical for firms sales efforts

Basic Types of Sales Organization


Customer Specialization
Sales organization in which selling personnel are organized by particular customer or industry The companys customer may require specialized knowledge of their industry Sales force is to focus on customers need and build the best possible relationship Office equipment manufacturers have sales specialist who deal only with educational institution Pharmaceutical companies have sales specialists for specific customers

Basic Types of Sales Organization


Customer Specialization By type of Industry
General Sales Manager

Sales Manager Computer Mkt

Sales Manager Military Mkt

Sales Manager Electronics Mkt

Basic Types of Sales Organization


Customer Specialization By Distribution Channel
General Sales Manager

Domestic Sales Manager

Sales Manager Exports

Basic Types of Sales Organization


Customer Specialization By General type of Customers
General Sales Manager

Sales Manager Major Accounts

Sales Manager Small Business

Sales Manager Institutions

Basic Types of Sales Organization


Customer Specialization - Disadvantages
Territories typically overlap. May be two, three or more sales representatives of the company covering the same geographical area, but serving different clients, which results in often higher selling costs. Lack of flexibility as specialists can not be redeployed in times of industry downturn To avoid unwanted costs, customer specialization should be used only if is required by the specialized buyer need

Basic Types of Sales Organization


Product Specialization
Sales organization in which selling personnel concentrate their efforts on particular product lines, brands or individual items The entire field force is divided by product groupings (Pharmaceutical companies) Product sales specialists are used when products complexity limits other options High tech companies must have product specialists who understand the specialized needs of the customer and can use their detailed product knowledge to identify and develop specific applications

Basic Types of Sales Organization


Product Specialization
General Sales Manager

Sales Manager Product A

Sales Manager Product B

Sales Manager Product C

Basic Types of Sales Organization


Product Specialization - Disadvantages
Territories typically overlap. Two or more sales reps from the same company will call on the same customer Expensive duplication of sales efforts

Indirect Sales Channels


Independent sales representatives or agencies used by a company in place of its own field sales force - Dealers, Agents, Brokers Independent reps are an effective, low cost way to open up new markets - Established contacts in local market area - In depth territory knowledge - Long term customer relationship - Community goodwill, company cant acquire on its own

Indirect Sales Channels


Independent sales representatives or agencies used by a company in place of its own field sales force - Dealers, Agents, Brokers Mostly, IBM sold its total product range (computers to typewriters) through their own field force Minicomputers and microcomputers with smaller profit were sold through indirect sales channels Most suitable for small companies with limited resources

Relations With Other Departments


Key Concern of Sales Manager
Relation with other departments As per marketing concept, all business activities should be coordinated to satisfy customer need Sales department is the key link, so coordinating the sales effort with other departments is absolutely essential

Relations With Other Departments


Two types of departments sales MUST have good working relationship
One, connected with marketing activities, advertising, marketing research, sales promotion, product management Second, those with non marketing functions such as HR, manufacturing and finance Top management is responsible for coordinating the activity of all the departments with in a company A thorough understanding of other departments functions, and how these relates to the sales efforts, is required Coordination may be achieved through policies, written communications, meetings and similar formal management activities Successful coordination between departments often informal communications as well

Relations With Other


Relation with other marketing function
Marketing mix Combination of the various techniques used to satisfy customers needs and to stimulate sales Coordination between various elements of the marketing mix is essential Most companies try to achieve this by requiring the heads of all marketing , including sales to report to a top marketing executive Special organizational structure such as product management are also used to coordinate sales with other marketing functions

Relations With Other


Relation with other marketing function Advertising
Relation between sales and advertising are of special concern Both form of promotion have the same purpose to inform the public and persuade people to buy Sales manager must aware of the advertising departments plans and activity, so that sales activity can be complemented Advertising A good source of sales lead Salespeople can provide feedback on advertising Advertising department can assist salespeople by developing sales aid.

Relations With Other


Relation with Non marketing Departments Research and Development
Most companies have R&D department May be a separate staff department or responsibility may be assigned to production or marketing Primary responsibility or function is to perform basic research and engineering activity needed to develop new products and improve existing Sales department can assist R&D efforts in two primary ways 1. Salespeople are excellent sources of new product and product modification 2.Salespeople have valuable insight into whether or not a new product will meet customer need

Relations With Other


Relation with Non marketing Departments Research and Development
Relationship is crucial in high-tech firms Field sales managers find themselves dealing with many tasks Issues, as how headquarter staff should interact with field sales management, final customers and whether sales people should be trained on each product technology? To solve these problems, high-tech companies have developed account control concept authority and responsibility for handling each account rests with field sales management Product specialist accompany salespeople when specific product knowledge is needed

Relations With Other


Relation with production
Function is to prepare the product for sale Production departments concerns are minimizing cost through standardization, long & continuous production run, long production lead time Sales executive want many types of products, frequent product changes, customers special order & short production lead time Best way is JOINT PLANNING

Relations With Other


Relations with HR
Responsible for the people, or human resources The unique aspects of managing people who sell often lead to conflict s between sales and human resource manager HR do not understand the problems involved in managing people who are located away from the home office. Sales managers/departments themselves handle the more complex tasks of selecting , training, developing & evaluating their own personnel. However, sales manager often need to consult HR for guidance for rapidly changing issues, health and safety. A sales manager would be unwise not to take advice from expert

Relations With Other


Relation with Finance Three major areas
Budgeting - Sales department provides short and long range sales estimates as the basis of financial planning & budgeting Cost control - Accounting specialist can assist sales managers in their efforts to control costs, by providing data for selling cost analysis Credit - Credit plans are major concerns for sales as well as finance. Sales executive should have input into establishing credit policies. Sales people can also provide current credit status information

Major Trends in Sales Organizations


Changing Trend
Traditional forms of sales organization have changed their approach In search of new and better ways to serve their markets For Consumer goods & service companies, the new approaches involve product manager form of organization Industrial manufacturer are looking closely at strategies that will help them adapt to change buying behavior and develop more specialized sales force For many companies, the major challenge is change from a

Product To Customer Driven Orientation

Major Trends in Sales Organizations


Telemarketing - Use of telecommunication technology in personal selling Direct Marketing An emerging form of promotion and distribution that combines element of advertising and personal selling Approach that bypasses intermediaries to deliver goods and services directly from seller to buyer Greatest strength of direct marketing is its ability to deliver individual selling message to specific prospects or customers with affordable cost. Development/maintenance of customer data base is the key

Major Trends in Sales Organizations


Inbound Telemarketing - Potential customer contacts the selling company Outbound Telemarketing - Selling companies contact the prospect and customers Telemarketing Job Types 1. Account manager - Accounts responsibility, Post sales service, Order taking, Problem solving 2. Prospector - Prospecting 3. Backup - Field sales support 4. Customer relation specialist - information transfer, complaints, conducting research, promotion inquiries, customer service

National Account Management


A special sales force is dedicated to obtaining & maintaining major accounts ( 50 to 70% sales) A customer that involves several people in the buying process before a sales takes place A customer that purchases in significant volume, both in dollar and as a %age of suppliers total sales A customer that desires a long term cooperative working relationship with company or supplier A customer that expects specialized attention and services

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