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Chapter 4. Sales Force Organization. Learning Objectives. Sales force organization and planning Characteristics of a good organization Basic Types of organization Organizational options in the 2000s. Introduction. Nature of sales organization What business are we in?

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chapter 4

Chapter 4

Sales Force Organization

learning objectives
Learning Objectives
  • Sales force organization and planning
  • Characteristics of a good organization
  • Basic Types of organization
  • Organizational options in the 2000s
introduction
Introduction

Nature of sales organization

What 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
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
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
Line-and-Staff Sales Organization

(Figure 4-2)

Chief Marketing Executive

Advertising Manager

MarketingResearchManager

GeneralSalesManager

SalesAnalysisManager

SalesPromotionManager

Salespeople

Line authority

Staff advisory authority

line and staff sales organization1
Line-and-Staff Sales Organization

The 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

(Figure 4-3)

Functional Sales Organization

Chief Marketing Executive

Advertising Manager

MarketingResearchManager

GeneralSalesManager

SalesPromotionManager

CreditManager

Salespeople

Line authority

Staff advisory authority

functional sales organization1
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

(Figure 4-4)

The Horizontal Corporation

Manufacturing TeamSystems Engineering ProductionQuality Control

Product Design and Development TeamCustomer ResearchCustomer AnalysisDesign Engineering

Strategic Planning TeamVP Strategic PlanningVP Finance & InformationChief Operating OfficerHuman ResourcesAdministration

Customer Fulfillment TeamPricing and PromotionSalesDistribution

Customer Support TeamInformationTrainingServiceResearch

the horizontal corporation1
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

(Figure 4-5)

Geographical Sales Organization

Chief Marketing Executive

Advertising Manager

MarketingResearchManager

GeneralSalesManager

SalesAnalyst

SalesPromotionManager

Western RegionalSales Manager

Eastern RegionalSales Manager

4 DistrictSales Managers

4 DistrictSales Managers

Salespeople eachwith own territory

Salespeople eachwith own territory

sales organization with product specialized sales force

(Figure 4-6)

Sales Organization with Product-Specialized Sales Force

Chief Marketing Executive

Advertising Manager

MarketingResearchManager

GeneralSalesManager

CustomerRelationsManager

SalesPromotionManager

Sales ManagerProduct A

Sales ManagerProduct B

Sales ManagerProduct C

SalespeopleProduct A

SalespeopleProduct B

SalespeopleProduct C

sales organization with product managers as staff specialists

(Figure 4-7)

Sales Organization with Product Managers as Staff Specialists

Chief Marketing Executive

Advertising Manager

MarketingResearchManager

GeneralSalesManager

ManagerProduct A

ManagerProduct C

ManagerProduct B

Assistant SalesManager

Salespeople

product specialization
Product specialization

Used 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 customer

(Figure 4-8)

Sales Organization Specialized by Type of Customer

Chief Marketing Executive

Advertising Manager

MarketingResearchManager

GeneralSalesManager

CustomerRelationsManager

SalesPromotionManager

Sales ManagerTransportation Industry

Sales ManagerSteel Industry

Sales ManagerPetroleum Industry

Salespeople

Salespeople

Salespeople

organizational options for the 2000s

(Figure 4-9)

Organizational Options for the 2000s

Strategic account management

E-commerce and telemarketing

Independentreps

Organizational Options for the 2000s

Team selling

strategic account management sam
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
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 center

Organizational selling center

Marketing

Sales

Manufacturing

R&D

Engineering

Physical Distribution

Purchasing Agent

Exchange Process

Sales-person

Organizational buying center

Purchasing

Manufacturing

R&D

Engineering

Marketing

Information

Problem Solving

Negotiation

Friendship, Trust

Product/ServicesPayment

Reciprocity

The Relationship Between A Sales Team and a Buying Center
independent sales organizations
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
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