Post on 06-Apr-2018
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Sales OrganizationsUnit 2 (4.02)Subject Instructor:
Prof. (Dr.) Ashish Chandra
Professor Marketing
Asia-Pacific Institute of Management
Subject: Sales and Distribution ManagementCourses: I.B. and
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Sales Organization is a department of the organization which establish for
the purpose of directing, coordinating and controlling the sales organization.
A sales organization is an organization of individuals working together either
for the marketing of products and services manufactured by an enterprise orfor products that are procured by the firm for the purpose of reselling.
A sales organization structure evolved in such a way that sales people and
sales manager carry out their activity effectively and efficiently. It gives a
blue print that what activity is performed by which person. The basicconcepts include are following:
Sales Organization
Centralisation Specialization Staff position
Marketingorientation
Co-ordination
Control
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Sales Organizations implies:
formal relations to one another and;
the notion that individual members cooperate to attain end-results
(teamwork).
Sales organization should be adjusted to fit-ideally, to anticipate changing
situations like,
Shifts in marketing
Shifts in competition
Change in any other business factors
The ideal sales organization has a built-in adaptability allowing it to
respond appropriately in fluid and diverse marketing environments.
Sales OrganizationContinued
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Setting up a SalesOrganizationThere are five major steps in setting up a sales
organization which are as follows:
1. Defining the objective
2. Delineating the necessary activities
3. Grouping activities into jobs or positions
4. Assigning personal to positions
5. Providing for coordination and control
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Factors determiningthe structure of Sales Organization
1. Price of Product
2. Nature of Product
3. Nature of Market
4. Size of the enterprise
5. Ability of the Executives
6. Sales Policies of the Enterprise
7. Distribution System
8. Finance
9. Number of Products
10. External factors:
The speed of marketchange
Reduction in the number ofvendors per buyer
Closer to customerrelationships
Changes in regulations andinternational practices
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Sales Organizations: Basic Purposes1. Define the line of authority
2. Ensure that all necessary activities are assigned and performed
3. Establish lines of communication
4. Provide for coordination and balance
5. Provide insights into avenues of advancement
Sales organisation also depends on the type of sales force which
is used, for example, field sales force, team selling,
telemarketing, part-time sales forces, direct selling, etc.
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Role of Sales OrganizationOnce the sales plan has been formulated, the next
logical step is to organise a sales force to achieve
the organisational objectives.
Overall Objectives Break Up or Division
1. Total volume of products 1. Quarter, month and week
2. Total annual value of products 2. Product line and range
3. Total annual selling costs 3. Region and sales area
4. Total annual profit contribution 4. Type of customer
Major Qualified Sales Objectives
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Characteristics of asuccessful sales organization Functions of each department are carefully planned and
coordinated and the efforts of the individuals are supervised.
Organizes resources towards the goal of delivering products
and services in the hands of the customer for profit.
Aims at establishing relationships both within enterprises and
with the customers outside the organization.
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Continued Defines the duties, roles, rights and responsibilities
of sales-people and effective communicate them.
Execute functions beyond achieving sales.
Motivate in the flow of both the upward anddownward communication within the salesorganization which helps in taking proper sales-related decisions and appropriate forecasting.
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Functions of a SalesOrganization1. Planning Functions
1. Sales Forecasting2. Sales Budgeting3. Selling Policy
2. Administrative Functions1. Selecting Salesmen2. Training Salesmen3. Control of Salesmen4. Remuneration of Salesmen
3. Executive Functions1. Sales Promotion2. Selling routine Executing of customers orders
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1. Sales Forecasting
The process of making certain estimates of future sales is referred toas sales forecasting and figure obtained from the process is known a
a sales forecast. The steps of sales forecasting are:
a) Defining the objectives to be achieved.
b) Dividing the various groups into homogenous groups.
c) Analyzing the importance of various factors to be studied for sales
forecasting.d) Selecting the method.
e) Collecting and analyzing the related information.
f) Drawing conclusions from the analysis made.
g) Implementing the decision taken.
h) Reviewing and revising sales forecasting techniques from time to time.
Planning Functions
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2. Sales BudgetingSales Budget is the final point of a sales organization. All otherbudgets hinge on the basis of the sales budget. The sales budget is theallocated monetary sum / amount for the purpose of achieving thesalesforecast in a stipulated time. The sales budget can be preparedon the basis of division, brand, products, dealers, territory and salesforce. Factors need to be considered while preparing a sales budget.
Past Trends
Sales Force Estimates
Trade Prospects
Present Position Potential Consumers
Government Policies
Changing Business Environment
Sales Promotion Strategies
Continued
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3. Selling PolicyThe purpose and aim of a selling policy is to provideright type of goods or services, at the right time and atthe right place to the customers. The selling policy
must also focus on acquiring new customers,delighting the customers, retaining them andsustaining the relationships with them. A sellingpolicy includes:
1. Methods of Distribution / Sale.
2. Terms of Sale (Warrantees / Guarantees).
3. After-Sales Services.
Continued
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Administrative Functions1. Selection of Salesman
Recruitment of a right person for right job. The differentsources of recruitment are as follows:
1. Advertisements
2. Employment Agencies
3. Educational Institutions
4. Salesmen of non-competing companies5. Internal Transfers
6. Recommendations of present Salesmen (Referrals)
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Continued2. Training of Salesmen
The purpose of sales training is to change or reinforce behaviour thatmakes sales people achieve their sales goals more efficiently and toreinforce current successful sales practices.
1. TNA (Training Need Analysis - Employees)a. Needs of the Organizationb. Task and Needs of the Employees (Salesmen)
2. Devising Training Methods like,a. Case Studiesb. Lecturesc. Videosd. Behavioral simulations (role plays, computer simulations, etc.)e. Interactive video
f. Tele-training
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3. Control of Salesmen
Control of salesmen or selling is to determine whetherthe organization and salesmen are using the most
efficient techniques and means to reach to theircustomers and to achieve their targets. It is done todirectly calculate the comparative performance ofalternative selling methods / techniques / means.
Controlling extends to:1. Selling Methods
2. Distributors
3. Customers
4. Sales Force
Continued
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4. Remuneration of Salesmen
The different compensations plans are as follows:
1. Salary plus commission / incentives
2. Salary plus bonus
3. Salary plus commission plus bonus
These days the major emphasize is placed oncommission basis by the companies to expandtheir business.
Continued
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Sales Promotion
It is a short-term incentive / benefit given toconsumers to encourage purchase. The following
are the sales promotion techniques.1. Incentives
2. Coupons
3. Free Samples
4. Price-off / Discounts5. Contests
6. Refunds
7. Buy-one and Get-one free types
Executive Functions
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Centralization vs.Decentralization Centralization the degree to which decision making is concentrated at a
single point in the organization
top-level managers make decisions with little input fromsubordinates in a centralized organization
Decentralization
the degree to which decisions are made by lower levelemployees
distinct trend toward decentralized decision making
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Tall & Flat OrganizationStructuresFlat structures
Reduces the levels of management.
Widens span of control of management at various
levels of organization.
More decentralized with regard to decision-making
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Tall & Flat OrganizationStructuresTall structures- Have many levels of authority relative to the organizations
size.
- As levels in the hierarchy increase, communication getsdifficult.
- The extra levels result in more time being taken to implement
decisions.
- Narrow span of control
- More centralized decision making
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Span of Control vs.Management Levels
National SalesManager
DistrictSales
Manager
DistrictSales
Manager
DistrictSales
Manager
DistrictSales
Manager
DistrictSales
Manager
DistrictSales
Manager
Regional SalesManager
Regional SalesManager
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Basic Types of SalesOrganisation Structure The grouping of activities into positions and the charting of
relationships of positions causes the organization to take on
structural form.
The most common structures are line & line and staff.
Functional organizational structures are rare.
Most sales department have hybrid organizational structures,
with variations to adjust for personalities and to fit specific
operating conditions.
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Line Sales Organization
Lines of authority and instructions are vertical,
i.e. they flow from the top to the bottom.
The unity of command is maintained in a
straight and unbroken line. It implies that each
subordinate receives instructions from his
immediate superior alone and is responsible to
him only.
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Line Sales DepartmentOrganisationGeneralManager
Sales manager
AssistantSales manager
Division1
Salespeople
AssistantSales manager
Division2
Salespeople
AssistantSales manager
Division3
Salespeople
AssistantSales manager
Division4
Salespeople
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Refers to a pattern in which staff specialists advisemanagers to perform their duties.
Staff managers provide advice to the line managerwho are generally specialists in the field.
Staff positions are purely advisory in nature. Theyhave a right to recommend but have no authority to
enforce their preference on other dept.
The line executives are the DOERS orcommanders, where as, the specialists are theTHINKERS or advisors.
Line & Staff SalesOrganiZation
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Line & Staff Sales OrganisationPresident
Vice president inCharge of marketing
Advertising Manager General Manager
Director ofSales
Training
SalesPersonnelDirector
AssistantGeneral
sales Man
Direct Sales
manager
Branch Salesmanager
SalesPersonnel
SalesPromotionManager
Director ofdealer andDistributorrelations
Manager of
MarketingResearch
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Functional SalesOrganization Functional structure is created by grouping
the activities on the basis of functions
required for the achievement of
organizational objectives.
Authority relationships in functional
structure may be in the form of line, staff &
functional.
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Functional SalesOrganizationNational Sales
Manager
Fields Sales
manager
Regional SalesManager (4)
District SalesManager (16)
Salespeople
(160)
Telemarketing
Sales manager
District SalesManager (2)
Salespeople(40)
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Schemes for Dividing Line Authority Inthe Sales Organization
Tasks of line administration are subdivided amongthese new assistants in one of the 3 ways:-
By Products :divisions created according to the typeof product or service.
By Geographic area: divisions based on the area of acountry or world served.
By Market: divisions based on the types ofcustomers served.
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Customer and Product Determinantsof Sales Force Specialization
Market-Driven
Specialization
Product/Market-Driven
Specialization
Geography-Driven
Specialization
Product-DrivenSpecialization
ComplexRange ofProducts
Customer Needs Similar
SimpleProductOffering
Customer Needs Different
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Product Sales Organization
VPMarketing
ProductManager
(A)
Manager(Sales)
Manager(Promotion)
Manager(Training)
ProductManager
(B)
Manager(Sales)
Manager(Promotion)
Manager(Training)
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Geographic Sales OrganizationVP
Marketing
NationalSales
Manager
DivisionalManager
(East)
RegionalSales
Manager
DistrictSales
Manager
Sales Staff(City wise)
DivisionalManager(West)
RegionalSales
Manager
DistrictSales
Manager
Sales Staff(City wise)
DivisionalManager(North)
RegionalSales
Manager
DistrictSales
Manager
Sales Staff(City wise)
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Market Sales Organization
President,
Marketing
ProductManager (A)
Manager(Sales)
Manager(Training)
Manager(Promotion)
ProductManager (B)
Manager(Sales)
Manager(Training)
Manager(Promotion)
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Hybrid SalesOrganization Structure Many large organizations have divisional structures
where each manager can select the best structure for
that particular division.
One division may use a functional structure, onegeographic, and so on.
This ability to break a large organization into manysmaller ones makes it much easier to manage.
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Hybrid SalesOrganization StructureNational
SalesManager
CommercialAccounts
Sales
Manager
MajorAccounts
SalesManager
RegularAccounts
SalesManager
Field SalesManager
WesternSales
Manager
EasternSales
Manager
Telemarketing SalesManager
GovernmentAccounts
Sales
Manager
OfficeEquipment
SalesManager
OfficeSupplies
SalesManager
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Thank You, All!