Module 2 Princy

8/4/2019 Module 2 Princy

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Amity School of BusinessBBA V Semester

Sales and Distribution Management

Module-2

Sales Organization

Dharmendra PandeyAmity School of Business

marketingology.blogspot.com


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OBJECTIVEMODULE-2

Sales Organization

Purpose and Importance of Sales Organization

Various Types of Sales Organizations

Coordination amongst other departments

Sale forecasting and its techniques



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CONCEPTS OF SALES ORGANISATION

A sales organisation assists the sales managerto carry out needed tasks efficiently and

effectively to achieve results The basic concepts of the sales organisation

are: Degree of centralisation

Degree of specialisation Line or staff positions Market orientation Effective co-ordination



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NATURE OF

SALES ORGANIZATION

An organization is simply an arrangement ofactivities involving a group of people. The goal is toarrange these activities so that the people involvedcan act better together than they can individually.

Trend is towards a flatter organization in whichcoordination across activities is more importantthan top down control.

Salespeople are more often a part of the crossfunctional team design to serve specific customers.



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PURPOSE OF

SALES ORGANIZATION

To permit the development of specialists

To ensure that all necessary activities are performed

To achieve coordination

To define authority

To economize on executive time



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FUNCTIONS OF SALES ORGANIZATION

Planning Function Sales Forecasting

Sales Budgeting

Selling Policy

Administrative Function Selecting Salesmen

Training Salesmen

Control of Salesmen

Executive Function Sales Promotion

Selling Routine : Execution of customers orders



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CHARACTERISTICS OF A

GOOD ORGANIZATION

Organization structure should reflect a marketingorientation

Organization should be built around activities and

not around people Responsibility and authority should be related

properly

Span of executive control should be reasonable Organization should be stable but flexible

Activities should be balanced and coordinated.



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PRINCIPLES OF

SALES ORGANIZATION

Degree of centralization

Degree of specialization

Line and Staff positionsMarketing orientation

Effective coordination

Span of control



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SETTING UP A

SALES ORGANIZATION

Defining the objectives

Delineating the necessary activities

Grouping the activities into Jobs andPositions

Assigning Personnel to positions

Providing for coordination and control



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BASIC TYPES OF SALES ORGANISATIONS

Sales organisations are generally classified intofour basic types:

Line Organisation

Line and staff organisation Functional organisation

Horizontal organisation

We shall discuss main characteristics, advantages,and disadvantages of each type of salesorganisation



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LINE ORGANISATION

Characteristics: All managers have line authority to direct and controlsubordinates. Used in small firms / departments

Advantages: Simple organisation, clear authority, quick decisions, lowcost

Disadvantages: No support to line managers from subordinates whohave specialised knowledge / skills. Less time for planning / analysis

HeadMarketing

SalesManager

Area SalesManager1

Area SalesManager3

Area SalesManager2

Area SalesManager4

salespeople salespeople salespeople salespeople



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LINE AND STAFF ORGANISATION

Characteristics: Specialist staff managers are available for senior

marketing / sales managers. Staff managers role is to assist / advise line

managers. Used in medium and large size organisations

Advantages: Better marketing decisions, superior sales performance

Disadvantages: High cost and coordination, slower decision making,

conflict may arise if staff managers role is not clear

Head-Marketing

Marketing ResearchManager

Sales Manager PromotionalManager

Customer ServiceManager

Area SalesManager-1

Area SalesManager-2

Area SalesManager-3

Salespeople Salespeople Salespeople



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FUNCTIONAL ORGANISATION

Characteristics: Each functional specialist has line responsibility over

salespeople. Used by a large firm with many products / market

segments, minimising line authority to functional managers

Advantages: Qualified specialists guide salesforce, simple to administer

Disadvantage: confusion due to more managers giving orders to

salesforce

Head-Marketing


PromotionalManager


Sales Manager

Area Sales Manager #4

Salespeople



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HORIZONTAL ORGANISATION

Characteristics: Removes management levels & departmentalboundaries. Except planning team, all others are members of cross-functional teams. Used by firms having partnering relationships withcustomers.

Advantages: Reduction in supervision, unnecessary tasks, & cost;Improved efficiency and customer responses.

Research & Design Team:Customer ResearchProduct / Service Design

Planning Team:Strategic PlanningAccounts, FinanceHR, AdministrationChief Operation Officer

Operations Team:Production / OperationsQuality AssuranceSystems Engineering

Customer Support Team:InformationServiceTraining

Customer SatisfactionTeam:Sales & MarketingPricing, PromotionChannels, Logistics



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SPECIALISATION WITHIN SALES ORGANISATION Needed to increase effectiveness of salesforce

Done by expanding basic sales organisation

Basis of specialisation

Geography

Type of product

Market

Combination of above

Criteria for selection (1) nature of product, (2)salesforce abilities, (3) demands of selling job,(4) customer and market facts



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GEOGRAPHIC SPECIALISATION

Characteristics: salespeople, assigned geographic areas, are responsible

for all selling activities to all customers within assigned areas. Branch sales

managers adjust marketing plan to local needs

Advantages: Better market coverage and customer service, more control

over salesforce, quick response to local conditions & competition

Disadvantages: Limited specialisation of marketing tasks. Hence, it is

combined with product / market sales organisation

Head-Marketing


General SalesManager Promotion

Manager


Branch SalesManager-1




Salespeople Salespeople Salespeople Salespeople



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PRODUCT SPECIALISATION Used when the company has many products and / or brands

Two types of product specialisation

(x). Sales organisation with product specialised salesforce

(y). Sales organisation with product managers as staff specialists

Head-Marketing


GeneralSales Manager

Sales TrainingManager

PromotionManager

Area Sales ManagersProduct Group A

Area Sales ManagersProduct Group B

SalespeopleProduct Gr. A

SalespeopleProduct Gr. B

Fig. x Sales Organisation with product specialised salesforce



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FIG. Y SALES ORGANISATION WITH PRODUCT MANAGERS AS STAFF SPECIALISTS

In fig. x: Characteristics: Salespeople in each product group sell only the productsin that group

Advantage: Each product gets specialised attention from the salesforce

Disadvantage: Sometimes, more salespeople contact the same customer, resulting

in customer dissatisfaction and higher costIn fig. y: Characteristics: Each product manager plans and implements marketingplan, for a product group

Advantage: Corrects the problem of duplication calls on a customer by salespeople

Disadvantage: Lack of product specialisation by salespeople

Head-Marketing

Marketing Research

Manager

Promotion

Manager

Product Manager

Product Gr. B

Product Manager

Product Gr. A

General

Sales Manager

Area SalesManagers

Salespeople

Product Specialisation (Continued)



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MARKET SPECIALISATION

Characteristics: Desirable when customers are classified by type, user

industry, or channel. Salespeople carry out all activities for all products only

for specific customer groups

Advantages: Meets needs of specific customer groups, implements

customer-centred philosophy of the company

Disadvantages: Geographic duplication, high cost

General SalesManager

Sales Manager-International-

Markets

Sales Manager-Commercial

Sales Manager-Consumer Markets

Sales Manager-Government

Area Sales MgrsInternational

Sales Executives

Area Sales Manager-Commercial

Salespeople

Area Sales Manager-Government

Salespeople

Area Sales Mgrs-Consumer Markets

Salespeople



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COMBINATION SALES ORGANISATION

Characteristics: Many firms use some combination of specialisation

organisations, called hybrid or combination sales organisation, with

a view to minimise disadvantages and maximise advantages of

specialisation organisations

Figure above shows combination of geographic and market

specialisations

Director Sales& Marketing

General ManagerSales - North

General ManagerSales - East

General ManagerSales - South

General ManagerSales - West

Regional SalesMgr. Govt.

Regional SalesMgr. - Dealers

Regional SalesMgr. - Commercial

Salespeople Salespeople Salespeople


EMERGING ORGANIZATIONAL DESIGN


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EMERGING ORGANIZATIONAL DESIGN

Agency and Distribution Selling

Independent private businesses Contractual agreement with the selling organization

Payment is based on commission Salespeople have less specialized knowledge about the product

and company Companys salesforce policy is flexible

Shared Sales Force Divides the salesforce among the number of divisions or product

lines of an organization to reduce Operating cost Increased efficiency

Achieve synergy Achieve economies of scope

Puts additional pressure on the salesperson to coordinate andmonitor customers, competitors, product features, otherdepartments people


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COORDINATION OF PERSONAL SELLINGWITH OTHER MARKETING ACTIVITIES Sales and Advertising

Work towards same objective of profit maximization

Activities of sales force are planned and directed along lines thatincrease advertising effectiveness

Advertising is geared up as and when required so as to assist

the salespeople

Sales and Marketing Information

Marketing information system assist the sales department bygathering data needed for analyzing sales problems, assisting in

determining sales potential, measuring the effectiveness of thesales effort

Sales department provides the information system with many ofthe raw statistics and other information needed for sales andmarket analysis and forecasting.


COORDINATION OF PERSONAL SELLINGk ti l bl t


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COORDINATION OF PERSONAL SELLING

WITH OTHER DEPARTMENTS

Sales and Production

Sales and R&D

Sales and HR Sales and Finance

Sales and Accounting

Sales and Purchasing

Sales and Public Relations Sales and Legal


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SALES FORECASTING

What is Sales Forecasting?

It is an estimate of sales during a specified future period which is tied

to a proposed marketing plan and which assumes a particular set ofuncontrollable and competitive forces

-Cundiff and Still


IMPORTANCE OF SALES FORECASTINGmarketingology blogspot com


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IMPORTANCE OF SALES FORECASTING

Helps manufacturing department for setting up productioncapacity and planning production

Finance department for raising cash for investment andoperations as well as for profit planning

Purchase function for planning their purchases

HR function to help them plan for manpower planning


FACTORS INFLUENCING THE SALES FORECASTmarketingology blogspot com


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FACTORS INFLUENCING THE SALES FORECAST

Marketing Plans Changes in price structure, channels of distribution,

promotional plans, products may influence the futuresales.

Conditions within the industry Competitor policies and new entrants into the market

needs to be taken into consideration.

Market Conditions Awareness about the changes in the primary demand

for the industrys output. General Business Conditions

General state of the economy


TYPES OF SALES FORECASTmarketingology blogspot com


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TYPES OF SALES FORECAST

Product Level

All Sales Industry Sales Company Sales

Product Line Sales Product Variant Sales

Product Item Sales Time Period

Long Term

Medium Term Short Term

Geographic Area World Nation Region Territory

Customer


TERMS USED IN FORECASTINGmarketingology blogspot com


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TERMS USED IN FORECASTING

Market Potential

Maximum possible sales opportunities present in aparticular market segment and open to all sellersduring a stated future period.

Market Forecast Expected industry sales for a given product or service

at one specific level of industry marketingexpenditure, in a given market, for a specific period oftime.

Company Sales Potential Best possible estimated sales of a given product or

service for a company in a given geographic area fora specific period of time.


marketingology blogspot com


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Company Sales Forecast Estimated company sales of a given product or

service, under a proposed marketing plan, in a givenmarket, for a specific period of time.

Sales Budget Estimated expected sales volume in units or revenues

from the companys product and services the sellingexpenses. Sales budget is used for makingpurchasing, production, manpower and cash flow

decisions.

Sales Quota Sales goal set for a marketing unit for a specific

period of time. Marketing unit can be salesperson,

distributors etc.



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SALES FORECASTING METHODSQualitative Methods Quantitative Methods

Executive opinion Moving averages

Delphi method Exponential smoothing

Salesforce composite Decomposition

Survey of buyersintentions

Nave / Ratio method

Test marketing Regression analysis

Econometric analysis




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Executive opinion method Most widely used

Procedure includes discussions and / or average of all

executives individual opinion Advantages: quick forecast, less expensive

Disadvantages: subjective, no breakdown into subunits

Accuracy: fair; time required: short to medium (1 4

weeks)Delphi method Process includes a coordinator getting forecasts

separately from experts, summarizing the forecasts,giving the summary report to experts, who are asked tomake another prediction; the process is repeated tillsome consensus is reached

Experts are company managers, consultants,intermediaries, and trade associations




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DELPHI METHOD (CONTINUED) Advantages: objective, good accuracy

Disadvantages: getting experts, no breakdown intosubunits, time required: medium (3/4 weeks) to long (2/3months)

Salesforce composite method An example of bottom-up or grass-roots approach

Procedure consists of each salesperson estimatingsales. Company sales forecast is made up of allsalespersons sales estimates

Advantages: Salespeople are involved, breakdown into

subunits possible Disadvantages: Optimistic or pessimistic forecasts,

medium to long time required

Accuracy: fair to good (if trained)




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Survey of Buyers Intentions Method

Process includes asking customers about their intentionsto buy the companys products and services

Questionnaire may contain other relevant questions

Advantages: gives more market information, canforecast new and existing products, good accuracy

Disadvantages: some buyers unwilling to respond, timerequired is long (3-6 months), medium to high cost

Test Marketing Method

Methods used for consumer market testing: full blown,

controlled, and simulated test marketing Methods used for business market testing: alpha and

beta testing




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Test Marketing Method (Continued) Advantages: used for new or modified products, good

accuracy, minimizes risk of national launch

Disadvantages: Competitors may disturb if some methodsare used, medium to high cost, medium to long timerequired


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