Amity School of Business

BBA V Semester Sales and Distribution Management

Module-2 Sales Organization

Concepts of Sales Organization

A sales organization is a structural body through which the functions of Sales management are carried out. This assists the sales manager to carry out needed tasks efficiently and effectively to achieve results

Nature of Sales Organization

An organization is simply an arrangement of activities involving a group of people. The goal is to arrange these activities so that the people involved can act better together than they can individually. Trend is towards a flatter organization in which coordination across activities is more important than top down control. Salespeople are more often a part of the cross functional team design to serve specific customers.

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

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

Principles of Sales Organization

Degree of centralization Degree of specialization Line and Staff positions Marketing orientation Effective coordination Span of control

Setting up a Sales Organization

Defining the objectives Delineating the necessary activities Grouping the activities into Jobs and Positions Assigning Personnel to positions Providing for coordination and control

Basic Types of Sales Organizations

Sales organizations are generally classified into four basic types: Line Organization Line and Staff Organization Functional Organization Horizontal Organization

Line Organization
Head Marketing

Sales Manager

Area Sales Manager1

Area Sales Manager2

Area Sales Manager3

Area Sales Manager4

salespeople

salespeople

salespeople

salespeople

Line and Staff Organization

Head-Marketing

Marketing Research Manager

Sales Manager

Promotional Manager

Customer Service Manager

Area Sales Manager-1

Area Sales Manager-1

Area Sales Manager-1

Salespeople

Salespeople

Salespeople

Functional Organization
Head-Marketing

Marketing Research Manager

Sales Manager

Promotional Manager

Customer Service Manager

Area Sales Manager #4

Salespeople

Horizontal Organization
Research & Design Team:

Customer
Research Product / Service Design

Operations Team: Production / Operations Quality Assurance Systems Engineering

Planning Team: Strategic Planning Accounts, Finance HR, Administration Chief Operation Officer

Customer Support Team: Information Service Training

Customer Satisfaction Team: Sales & Marketing Pricing,

Promotion
Channels, Logistics

Specialization within Sales Organization

Needed to increase effectiveness of sales force Done by expanding basic sales organization Basis of specialization Geography Type of product Market Combination of above Criteria for selection (1) nature of product, (2) sales force abilities, (3) demands of selling job, (4) customer and market facts

Geographic Specialization
Head-Marketing

Marketing Research Manager

General Sales Manager

Promotion Manager

Customer Service Manager

Branch Sales Manager-1

Branch Sales Manager-2

Branch Sales Manager-3

Branch Sales Manager-4

Salespeople

Salespeople

Salespeople

Salespeople

Product Specialization
Used when the company has many products and / or brands Two types of product specialization
(x). Sales organization with product specialized sales force (y). Sales organization with product managers as staff specialists

Head-Marketing

Marketing Research Manager

General Sales Manager

Promotion Manager

Sales Training Manager

Area Sales Managers Product Group A

Area Sales Managers Product Group B

Salespeople Product Gr. A

Salespeople Product Gr. B

Fig. X Sales Organization with Product Specialized Sales force

Head-Marketing

Marketing Research Manager

Promotion Manager

General Sales Manager

Product Manager Product Gr. A

Product Manager Product Gr. B

Area Sales Managers

Salespeople

Fig. y Sales Organization with Product Managers as Staff Specialists

Market Specialization
General Sales Manager

Sales ManagerInternationalMarkets

Sales ManagerCommercial

Sales ManagerGovernment

Sales ManagerConsumer Markets

Area Sales Mgrs International

Area Sales Manager- Area Sales Manager- Area Sales MgrsCommercial Consumer Markets Government

Sales Executives Salespeople

Salespeople

Salespeople

Combination Sales Organization

Director Sales & Marketing

General Manager Sales - North

General Manager Sales - East

General Manager Sales - West

General Manager Sales - South

Regional Sales Mgr. Govt.

Regional Sales Mgr. - Commercial

Regional Sales Mgr. - Dealers

Salespeople

Salespeople

Salespeople

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 sales force policy is flexible Shared Sales Force Divides the sales force 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 and monitor customers, competitors, product features, other departments people

 Sales and Advertising Work towards same objective of profit maximization Activities of sales force are planned and directed along lines that increase advertising effectiveness Advertising is geared up as and when required so as to assist the salespeople

Coordination of Personal Selling with other Marketing Activities

Sales and Marketing Information Marketing information system assist the sales department by gathering data needed for analyzing sales problems, assisting in determining sales potential, measuring the effectiveness of the sales effort Sales department provides the information system with many of the raw statistics and other information needed for sales and market analysis and forecasting.

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

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 of uncontrollable and competitive forces -Cundiff and Still

Importance of Sales Forecasting

Helps manufacturing department for setting up production capacity and planning production Finance department for raising cash for investment and operations as well as for profit planning Purchase function purchases for planning their

HR function to help manpower planning

them

plan

for

Factors Influencing the Sales Forecast

Marketing Plans
Changes in price structure, channels of distribution, promotional plans, products may influence the future sales.

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 Forecast

Product Level
All Sales Industry Sales Company Sales Product Line Sales Product Variant Sales Product Item Sales

Time Period

Geographic Area
World Nation Region Territory Customer

Long Term Medium Term Short Term

Terms Used in Forecasting

Market Potential
Maximum possible sales opportunities present in a particular market segment and open to all sellers during a stated future period.

Market Forecast
Expected industry sales for a given product or service at one specific level of industry marketing expenditure, in a given market, for a specific period of time.

Company Sales Potential

Best possible estimated sales of a given product or service for a company in a given geographic area for a specific period of time.

 Company Sales Forecast

Sales Budget

Estimated company sales of a given product or service, under a proposed marketing plan, in a given market, for a specific period of time.

Sales Quota

It is a detailed schedule showing the expected sales for the budget period; typically, it is expressed in both revenues and units of production. Sales budget is used for making purchasing, production, manpower and cash flow decisions.
Individual sales target figure assigned to each sales unit such a sales person, dealer, distributor, region, or territory, as a required minimum for a specified period (month, quarter, year). Sales quotas may be expressed either in currency figures (monetary terms) or in number of goods or services sold (volume terms).

Sales Forecasting Methods

Qualitative Methods Executive opinion Delphi method Quantitative Methods Moving averages Exponential smoothing

Sales force composite

Survey of buyers intentions Test marketing

Decomposition
Naive / Ratio method Regression analysis Econometric analysis