CHAPTER 4Sales Force Organization

LEARNING OBJECTIVES Sales force organization and planning Characteristics of a good organization Basic Types of organization Organizational options in the 2000s

INTRODUCTIONNature of sales organizationWhat business are we in? Objectives –strategies - tactics An organization – an arrangement of a

working structure of activities involving a group of people.

Organizational structures changes, why? Constantly evaluating business and making

adjustments.

PRINCIPLES OF ORGANIZATION DESIGN Organizational structure should reflect a marketing

orientation – focus on market and customer. Organization should be built around activities, not

around people – skills and knowledge Responsibility and authority should be related

properly –clear responsibility and authority delegated.

Span of executive control should be reasonable – recent trend broader spans of control.

Organization should be stable but not flexible – firm but flexible enough.

Activities should be balanced and coordinated – sales & advertising : sales reps can inform about effective advertisements to retailers.

BASIC TYPES OF ORGANIZATION A line organization- simplest form. Used in

very small firms or within a small department A line-and-staff organization – a line

organization and staff assistants A functional organization – a step beyond;

each activity specialist has line authority over the activity in relations with sales force

A horizontal organization – eliminates both management levels and dept. boundaries. A small group of senior exec. oversee the support functions.

LINE-AND-STAFF SALES ORGANIZATION

Chief Marketing Executive

Salespeople

Advertising Manager

MarketingResearchManager

GeneralSales

Manager

SalesPromotionManager

SalesAnalysisManager

Staff advisory authorityLine authority

(Figure 4-2)

LINE-AND-STAFF SALES ORGANIZATIONThe most widely used basic form or

organization in sales departments. Appropriate when:

Sales force is large Market is regional or national Line of products is varied. Number of customers is large.Benefits and disadvantages: Division of labor and exec. specialization. Total cost of organization can be high,

especially when staff assistants have their own depts.

FUNCTIONAL SALES ORGANIZATION

Chief Marketing Executive

Salespeople

Advertising Manager

MarketingResearchManager

GeneralSales

Manager

CreditManager

SalesPromotionManager

Staff advisory authorityLine authority

(Figure 4-3)

FUNCTIONAL SALES ORGANIZATION Used in large company with variety of product

line and/or markets. A functional exec. has line authority to order

the assistant sales manager and the sales people to do the job.

Benefits and disadvantages. The more giving orders, the more trouble. Specialization of labor and assurances that

functional exec. plans and programs will be carried out.

THE HORIZONTAL CORPORATION

Strategic Planning TeamVP Strategic PlanningVP Finance & InformationChief Operating OfficerHuman ResourcesAdministration

Manufacturing TeamSystems Engineering ProductionQuality Control

Customer Fulfillment TeamPricing and PromotionSalesDistribution

Product Design and Development TeamCustomer ResearchCustomer AnalysisDesign Engineering

Customer Support TeamInformationTrainingServiceResearch

(Figure 4-4)

THE HORIZONTAL CORPORATION A small group of senor exec. at the top oversee the

support functions. Everyone else is a member of cross-functional teams that perform core processes.

These teams are self-managed. Used by large and small companies seeking greater

efficiencies and customer responsiveness.Benefits and disadvantages Various cross-functional teams work with customers’

teams to solve problems and create opportunities for greater productivity and growth.

Reduces supervision and eliminates activities that are not necessary for the process.

Costs reduces and customer responsiveness is enhanced.

GEOGRAPHICAL SALES ORGANIZATION

Chief Marketing Executive

Western RegionalSales Manager

Advertising Manager

MarketingResearchManager

GeneralSales

Manager

SalesPromotionManager

SalesAnalyst

4 DistrictSales Managers

Salespeople eachwith own territory

Eastern RegionalSales Manager

4 DistrictSales Managers

Salespeople eachwith own territory

(Figure 4-5)

SALES ORGANIZATION WITH PRODUCT-SPECIALIZED SALES FORCEChief Marketing Executive

Sales ManagerProduct A

Advertising Manager

MarketingResearchManager

GeneralSales

Manager

SalesPromotionManager

CustomerRelationsManager

SalespeopleProduct A

Sales ManagerProduct C

SalespeopleProduct C

(Figure 4-6)

Sales ManagerProduct B

SalespeopleProduct B

SALES ORGANIZATION WITH PRODUCT MANAGERS AS STAFF SPECIALISTSChief Marketing Executive

Advertising Manager

MarketingResearchManager

GeneralSales

ManagerManager

Product

A

(Figure 4-7)

Assistant Sales

Manager

Salespeople

Manager

Product

B

Manager

Product

C

PRODUCT SPECIALIZATIONUsed when: A variety of complex, technical products Very dissimilar, unrelated products – a rubber

company may use three sales force to sell; a track and tires, rubber footwear, industrial rubber products.

SALES ORGANIZATION SPECIALIZED BY TYPE OF CUSTOMERChief Marketing Executive

Sales ManagerTransportation

Industry

Advertising Manager

MarketingResearchManager

GeneralSales

Manager

SalesPromotionManager

CustomerRelationsManager

Salespeople

Sales ManagerPetroleum Industry

Salespeople

(Figure 4-8)

Sales ManagerSteel Industry

Salespeople

ORGANIZATIONAL OPTIONS FOR THE 2000S

(Figure 4-9)

Organizational Options for the

2000s

Strategic account management

Team selling

E-commerce and telemarketing

Independentreps

STRATEGIC ACCOUNT MANAGEMENT (SAM) Also known as global account management

(GAM). Companies developed separate structure to

deal with major accounts. Three commonly used approaches are: Creating a separate sales force Using executives Creating a separate division

TEAM SELLING A selling team is a group of people

representing the sales department and other functional areas such as finance, production, and research and development (R&D).

THE RELATIONSHIP BETWEEN A SALES TEAM AND A BUYING CENTEROrganizational selling center

Marketing

Sales

Manufacturing

R&D

Engineering

Physical Distribution

Organizational buying center

Purchasing

Manufacturing

R&D

Engineering

Marketing

Exchange Process

Purchasing Agent

Sales-person

InformationProblem Solving

NegotiationFriendship, TrustProduct/Services

PaymentReciprocity

INDEPENDENT SALES ORGANIZATIONS Manufacturer’s representative or manufacturer’s

agent. Most of used in the following situations: When a manufacturer does not have a sales force. When a producer wants to introduce a new

product but does not want to use existing sales force.

When a company wants to enter a new market that is not sufficiently developed for the seller to use its own sales force.

when it is not cost-effective for a company to use its own reps because the sales potential does not justify the cost.

USES OF TELEMARKETING AND E-COMMERCE

Identify prospective customers Screening, qualifying leads Sales solicitation: small customers,

re-orders Order processing Product service support Account management and reporting Customer relations