Introduction and Functions of Sales
Organization
1.
2.
3.
Organization means the systematic coordination of the functions
essential to achieving organizational objectives. The objective of a
sales organization, therefore, is the performance of various activities
necessary to promote sales. The functions of sales organization can
be classified as follows.
Planning functions
a) Sales forecasting
b) Sales budgeting
c) Selling policy
Administrative functions
a) Selecting salesmen
b) Training salesmen
c) Control of salesmen
d) Remuneration of salesmen
Executive functions
a) Sales promotion
b) Selling routine – execution of customer’s orders.
Role of Sales Organization
• Once the sales plan has been formulated, the next logical
step is to organize a sales force to achieve the
organizational objective. The qualified as sales objectives,
which can be further divided, are shown in figure 1 given
below.
Major Qualified Sales Objectives
Overall objectives
1. Total volume of products
2. Total annual value of
products
3. Total annual selling costs
4. Total annual profit
contribution
Figure 1
Break up or Division
1. Quarter, month and weak
2. Product line and range
3. Region and sales area
4. Type of customer
Role of Sales Organization
Sales organization has the following basic purposes:
1. 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
6. Economics of executive time.
Sales organization also depends on the type of sales
force which is used, for example, field sales force,
national
account
management,
team
selling,
telemarketing, part-time sales forces, direct selling, etc.
Developing a Sales Organization
•
1.
2.
3.
4.
Sales organization development refers to the formal, coordinating
process of communication, authority and responsibility for sales
groups and individuals. An effectively designed sales organization
has a framework that enables the organization to serve its customers.
Once the sales people know what their responsibilities are and who
they report to, they can concentrate on doing their expected jobs to
the best of their ability.
Thus, a sales manager must recognize and deal with some basic
problems faced by organizations, when developing his own sales
organization. The five major issues are:
Formal and informal organizations
Horizontal and vertical organizations
The line and staff components of organizations
The size of the company.
Formal and Informal Organizations
Assistant to
Marketing Vice
President
Marketing
Vice President
Director of
Marketing
Research
General
Sales
Manager
Manager of
Sales
Planning
Other functional
or administrative
organizations
Director of
Advertising
Director of
Public
Relations
Manager of
Distribution
District Sales
Manager
Manager of
Accounts
Receivable
Sales persons
Key Informal Organization
Figure 2 – The informal Communication
System in a Marketing Organization
Formal and Informal Organizations
Salesperson
District
Sales Manager
General Sales
Manager
Marketing
Vice President
Figure 3 – A Lengthy Formal Communications Channel
Director of
Marketing
Research
Horizontal and Vertical Organizations
Top Sales Executive
Regional or Zonal Sales
Manager
District Sales Manager
Sales Supervisor
Salesperson
Figure 4 – Vertical Sales Organization
Horizontal and Vertical Organizations
Top Sales Executive
New England
District Sales
Manager
Southern
District Sales
Manager
Middle
Atlantic
District Sales
Manager
Southwest
District Sales
Manager
Midwest
District Sales
Manager
Foreign Sales
Manager
Pacific
District Sales
Manager
Figure 5 – Horizontal Sales Organization
Centralized and Decentralized Organization
Line and Staff Components
• Marketing organizations also feature line and staff
components.
• A line function is a primary activity and a staff function is
a supporting activity.
• In a marketing organization, the selling function is the line
component whereas advertising, marketing research,
marketing planning, sales training and distributor relations
are usually considered staff roles.
Centralized and Decentralized Organization
Vice President for
Sales
General Sales
Manager
Regional Sales
Manager
A
Regional Sales
Manager
B
Regional Sales
Manager
C
Figure 6 – A Line Marketing Organization
Centralized and Decentralized Organization
Assistant to the
Vice President for
Marketing
Vice President for
Marketing
Marketing Research
Advertising
General Sales
Manager
Distributor
Relations
Sales
Analysis
Sales
Planning
Regional Sales
Manager A
Regional Sales
Manager B
Sales
Training
Regional Sales
Manager C
Key --- --- --- Staff Organization
______________Line Organization
Figure 7 – Line and Staff Marketing Organization
Company Size and Organization
• A simple functional company organization is shown in
Figure 8 . This structure is appropriate for most small and
medium sized companies.
These companies have
relatively few products or services and use a limited
number of distribution channels. As each functional area
grows larger, the functional organization will be extended.
A functional marketing organization is shown in Figure 9.
Company Size and Organization
President
Finance and
Accounting
Production
Personnel
Figure 8 – Functional Company Organization
Sales and
Marketing
Company Size and Organization
Chief Marketing Executive
Advertising
Manager
Sales
Manager
Customer
Relations
Manager
Market
Research
Manager
Sales
Supervisors
Salespeople
Figure 9 – Functional Company Organization
Field Sales Organization
•
1.
2.
3.
4.
5.
Field sales force consists of salespersons who work
primarily with customers in person, although they may
also use the telephone or assistance from computer links
to expedite orders and provide customer service. The
structure of a field sales force is usually based on some
means of specialization, such as geography, market,
product, or activity/function, or a hybrid of these types.
The following are the important field sales:
Geographic sales specialization organization
Product-based sales specialization organization
Customer-based specialization organization
Hybrid sales organization
Team-based organization
Geographic Sales Organization
FMCG Sales
WEST DIVISION
CENTRAL DIVISION
Area Sales Manager
Area Sales Manager
Area Sales Manager
-Mumbai
-Delhi
-Kolkata
- Surat
- Jaipur
- Patna
EAST DEVISION
- Chandigarh
Figure 10 – Geographical Sales Organization
Some advantages of geographic organizations are (a) Proper coverage of territory
(b) Defining the responsibility (c) Familiarity with local economic and
competitive conditions, making them better able to serve local customers.
Figure 11 – Product-based Sales Organization
Medical Division of `K’ Pharma Ltd.
Pharmaceuticals
East
West
Central
Equipment
East
West
Central
Supplies
East
West
Central
Figure 12 – Customer-based sales Organization
Sales Manager for India
Regional Manager
Branch Sales Manager
Assistant Sales ManagerAgricultural Products
Assistant Sales Manager
Health Care Products
Activity/Function-based Organization
Activity
Sales Method
* Prospecting
Telemarketing/cold calls
* Presentation
Face-to-face field sales
* Service
Personal visits
Figure 13 – Hybrid Sales Organization
President
Functional
Geographic
Customer
Vice President
Production
Sales Manager
For India
Consumer Goods
Managers
Vice President
Marketing
Vice President
Finance
International
Marketing Manager
Industrial Goods
Manager
Team-based Sales Organization
Customer
Sales
Marketing
Technical Support
Figure 14 – Supplier Selling Team
Manufacturing