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DESIGNING TERRITORY AND ALLOCATING SALES EFFORT

DEFINITON:

A sales territory is composed of a group of customers or a geographic A group of present and potential customers assigned to an individual

area assigned to a salesperson. sales person, a group of sales person, a branch, a dealer, a distributor, or a marketing organization at a given period of time.

REASONS FOR ESTABLISHING SALES TERRITORY: Increase Market Coverage:

Good territory design allows sales personnel to spend sufficient time with customer and minimizes time on the road. This permits them to become thoroughly conversant with customers problems and requirement. Control Selling Expenses:

If Sales personnel spend few time away from home than it is reduces many charges like hotel, food at the same time cutting travel miles reduces transportation expenses. These saving plus higher sales volumes increase productive selling time and reduce the ratio of selling expenses.

Better Evaluation of sales force performance:

Well designed sales territories assist management in evaluating sales personnel. When total market divided into territories it is helpful to reveals the companys strengths and weakness in different areas. Increase sales force morale: Well designed territories are convenient for sales personnel to cover the sales area. They have reasonable sized workload and they find the result of their work this increase morale of sales force. Improve co-ordination:

It is improve co-ordination of personal selling and advertising efforts. In most situation personal selling or advertisement alone can not accomplish the task. Ex. When launching of advertisement campaign sales personnel meet the dealers and outline the marketing plans, objectives, provide them display and promotional material.

PROCEDURES FOR SETTING UP SALES TERRITORY: Selecting a basic geographical control unit: The starting point the territorial planning is the selection of the basic geographical control unit. A) COUNTIES In the United States, the country is the most widely used geographical control unit. The county is small enough to prevent the obscuring of area a with high and low potentials, and statically information on more than 3000 countries in the united state is readily available. This makes it expensive to develop the market and sales potentials on county by county basis. Furthermore, the country typically is the smallest unit for which governmental sources report statically data. The country is the smaller market division than the typical sells territory, so a company, using countries as control in units can build up or revises sells territory without collecting new data on potentials. B) ZIP CODE AREAS

A basic geographical unit increasingly unit used by u.s. companies is zip code area. There are more than 33000 zip code areas in the United States, so the typical zip code area is smaller than typical country. Using zip code area as the basic geographical units has advantage. The zip code areas generally reflect economic characteristic of the areas in marked
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contrast to countries, cities and states, which represents political sub divisions. C) CITIES When a companies sales potential is located entirely, or almost entirely, in urbanized areas, the city is used as the control unit, although, in some cases, both the city and surrounding country are used as twin control units. The city rarely is fully satisfactory as a control unit, for many products suburbs adjacent to cities posses cells potentials at least as great as those in the cities themselves, and , in addition, they can often be covered by the same sales personnel at little additional cost . D) METROPOLITAN STASTICAL AREAS

Companies whose markets have expanded beyond city limits and into suburbs and satellite cities find the metropolitan statistical a good choice for basic geographical control unit. An MSA is geographic area with a large population nucleus together with adjacent communities that have a high degree of economic and social integration with that nucleus MSA in one of two ways 1) if there is a city of at least 50000 population or 2) if there is an urbanized area of at least 50000 population with a total metropolitan population of at least 100000.

Because the MSA definition is in terms of counties, the tremendous amount of statistical data available for the counties themselves may also be tapped. If the planner is willing to accept the definition and boundaries for each metropolitan statistical area, it is easy to secure data for using estimating sales potentials. In fact, because the definition is in terms of whole countries, the planner is free to add to or subtract from the official roster of MSA.

E) TRADING AREAS A logical choice for geographical control units is the trading area, since it is based upon the natural flow of trade. Formally define, a trading area consist of the geode graphical region surrounding a city that serves as the dominant retail or wholesale center or both for the region. the trading area concept recognizes that consumers, retailers, and whole sellers pay scent attention to political boundaries in deciding where to buy. F) STATES

States, as basic geographical control units, provide a rough basis for subdividing the national market. There are two situations in which the fixing of territorial boundary lines along the boarders of states is justifiable one is the company with a small sales force covering the market extensively rather then intensively; there are only few customers and prospects but they are all across the nation. the other situation is the company first seeking national distribution, which assign its sales personnel to territories consisting of one or more states as a temporary expedient. As soon as feasible a change is made to
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a smaller control unit. The main difficulty in using states as basic control units is that they are political rather than economic subdivisions.

Determining sales potentials in control units: The next step is to determine the sales potential present in each central unit.

The territorial planner needs some way to measure sales potentials, which you will recall, represent the maximum possible sales opportunities open to a specific company selling a good or service during a stated future period to particular market segments.
Combining control units into tentative territories:

The planner next combines units into tentative sales territories. This is only a tentative arrangement because as explained later, subsequent adjustment must be made for relative coverage difficulty. At this stage, the planner assumes that no significance difference is in physical or other characteristics of individual control units exists. The purpose is to obtain a first approximation of sales territories by combining contiguous control units into tentative territories, each containing approximately the same sales potential. Adjusting for differences in coverage difficulty and redistricting tentative territories: The final step is to redistrict the tentative territories through adjusting for coverage difficulty. The tentative territories each contain approximately the
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same sales potential, but almost certainly, territories with nearly equal sale potential require different selling efforts and in turn, selling expense total. Now it is time to remove the unrealistic assumption that no differences in the characteristics of the geographical control unit exist. Significant difference in physical and other characteristics make providing sales coverage more difficult for some control units than for others. The optimum territorial arrangement is reached when incremental sales per dollar of selling expenditures are equited among all territories. In working toward this ideal, both sales potential and coverage difficulties are taken into account and it is only coincidental if equal potential territories achieve the optimum. The final territorial arrangement almost certainly is one in which different territories contain different sales potential. Differences in coverage difficulty represent differences in work loads. The planner ascertains how large the maximum work load the target work load for any sales person should be. All work load needs not to be same size, since sales personnel very in ability as well as in drive and some can safely be assigned larger work loads. However, Since there is an upper limit to the desirable work loads. And also limits a territorys maximum geographical extent.

DESIDING

ASSIGNEMT

OF

SALES

PERSONNEL

TO

TERRITORIES: In assigning sales personnel to territories, management seeks the most profitable alignment to selling efforts with sales opportunities. The territories, containing varying sales potentials, represent different amounts of sales opportunity. Management should assign each sales person to the particular territory where his or her relative contribution to profit is the highest. The general guide for assigning sales personnel to territories is not universally applicable because the discretion that management has in making in these decision differs to company to company. At the opposite extreme, management in a few companies is free to assign any sales person to any territory, designing territories and closely aligning salespeoples ability levels with territorial sales opportunity levels. Management shifts sales personnel to predesigned territories where their relative profit constraint is maximized.

ROUTING AND SCHEDULING SALES PERSONNEL: Routing and scheduling plans aim to maintain the lines of communication, to optimize sales coverage and minimize wasted time. When management was formed at all times of sales persons whereabouts in the field or at least knows where they should be- it is to contact them to provide needed information or last minute instructions. Chances are good that sales personnel will be where they are supposed to be. CONCLUSION: Setting up sales territories facilitates the planning and control of sales operations. Well-designed territories assist in attempts to improve market coverage and customer service, reduce selling expense and improve the evaluation of personal performance.