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?
 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.

(Figure 4-2)
LINE-AND-STAFF SALES ORGANIZATION
Chief Marketing Executive
Advertising
Manager
Marketing
Research
Manager
General
Sales
Manager
Sales
Promotion
Manager
Sales
Analysis
Manager
Salespeople
Line authority
Staff advisory authority
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.
(Figure 4-3)
FUNCTIONAL SALES ORGANIZATION
Chief Marketing Executive
Advertising
Manager
Marketing
Research
Manager
General
Sales
Manager
Credit
Manager
Sales
Promotion
Manager
Salespeople
Line authority
Staff advisory authority
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.
(Figure 4-4)
THE HORIZONTAL CORPORATION
Manufacturing
Team
Product Design
and Development
Team
Systems Engineering
Production
Quality Control
Customer Research
Customer Analysis
Design Engineering
Strategic
Planning Team
VP Strategic Planning
VP Finance & Information
Chief Operating Officer
Human Resources
Administration
Customer
Support Team
Information
Training
Service
Research
Customer
Fulfillment
Team
Pricing and Promotion
Sales
Distribution
THE HORIZONTAL CORPORATION
A small group of senor exec. at the top oversee the
support functions. Everyone else is a member of crossfunctional 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.

(Figure 4-5)
GEOGRAPHICAL SALES ORGANIZATION
Chief Marketing Executive
Advertising
Manager
Marketing
Research
Manager
General
Sales
Manager
Sales
Promotion
Manager
Western Regional
Sales Manager
Eastern Regional
Sales Manager
4 District
Sales Managers
4 District
Sales Managers
Salespeople each
with own territory
Salespeople each
with own territory
Sales
Analyst
(Figure 4-6)
SALES ORGANIZATION WITH PRODUCTSPECIALIZED SALES FORCE
Chief Marketing Executive
Advertising
Manager
Marketing
Research
Manager
General
Sales
Manager
Sales
Promotion
Manager
Sales Manager
Product A
Sales Manager
Product B
Sales Manager
Product C
Salespeople
Product A
Salespeople
Product B
Salespeople
Product C
Customer
Relations
Manager
(Figure 4-7)
SALES ORGANIZATION WITH PRODUCT MANAGERS
AS STAFF SPECIALISTS
Chief Marketing Executive
Advertising
Manager
Marketing
Research
Manager
General
Sales
Manager
Assistant
Sales
Manager
Salespeople
Manager
Manager
Manager
Product
Product
Product
A
B
C
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.
(Figure 4-8)
SALES ORGANIZATION SPECIALIZED BY TYPE OF
CUSTOMER
Chief Marketing Executive
Advertising
Manager
Marketing
Research
Manager
General
Sales
Manager
Sales
Promotion
Manager
Customer
Relations
Manager
Sales Manager
Transportation
Industry
Sales Manager
Steel Industry
Sales Manager
Petroleum Industry
Salespeople
Salespeople
Salespeople
(Figure 4-9)
ORGANIZATIONAL OPTIONS FOR THE
2000S
Strategic account
management
Independent
reps
Organizational
Options for the
2000s
Team selling
E-commerce and
telemarketing
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 CENTER
Organizational
selling center
Marketing
Sales
Manufacturing
Salesperson
Exchange
Process
Purchasing
Agent
Information
Organizational
buying center
Purchasing
Problem Solving
Negotiation
Manufacturing
R&D
Friendship, Trust
R&D
Engineering
Product/Services
Payment
Engineering
Physical
Distribution
Reciprocity
Marketing
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 ECOMMERCE







Identify prospective customers
Screening, qualifying leads
Sales solicitation: small customers,
re-orders
Order processing
Product service support
Account management and reporting
Customer relations