sales organizations (unit - 2)

8/2/2019 Sales Organizations (Unit - 2)

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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


Division2

Salespeople


Division3

Salespeople


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


DivisionalManager(North)

RegionalSales

Manager

DistrictSales

Manager



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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!

sales organizations (unit - 2)

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