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Introduction and Functions of Sales Organization
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.
1. Planning functionsa) Sales forecastingb) Sales budgetingc) Selling policy
2. Administrative functionsa) Selecting salesmenb) Training salesmenc) Control of salesmend) Remuneration of salesmen
3. Executive functionsa) Sales promotionb) 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
Break up or Division1. Quarter, month and weak2. Product line and range3. Region and sales area4. Type of customer
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
Role of Sales OrganizationSales 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• 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:
1. Formal and informal organizations
2. Horizontal and vertical organizations
3. The line and staff components of organizations
4. The size of the company.
Formal and Informal Organizations
Marketing Vice President
Assistant to Marketing Vice President
Other functional or administrative organizations
Director of Marketing Research
General Sales Manager
Manager of Sales Planning
Director of Advertising
Director of Public Relations
District Sales Manager
Manager of Distribution
Sales personsManager of Accounts Receivable
Key Informal Organization
Figure 2 – The informal Communication System in a Marketing Organization
Formal and Informal Organizations
Salesperson District Sales Manager
General SalesManager
Marketing Vice President
Director of Marketing Research
Figure 3 – A Lengthy Formal Communications Channel
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 EnglandDistrict Sales
Manager
Southern District Sales
Manager
SouthwestDistrict Sales
Manager
Foreign SalesManager
Middle Atlantic
District SalesManager
Midwest District 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 forSales
General SalesManager
Regional SalesManager
A
Regional Sales Manager
B
Regional SalesManager
C
Figure 6 – A Line Marketing Organization
Centralized and Decentralized OrganizationVice President for
Marketing
Assistant to theVice President for
Marketing
Marketing Research Advertising
General SalesManager
Distributor Relations
SalesPlanning
SalesAnalysis
SalesTraining
Regional Sales Manager A
Regional Sales Manager B
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 PersonnelSales andMarketing
Figure 8 – Functional Company Organization
Company Size and Organization
Chief Marketing Executive
AdvertisingManager
SalesManager
CustomerRelationsManager
Market ResearchManager
SalesSupervisors
Salespeople
Figure 9 – Functional Company Organization
Field Sales Organization• 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:
1. Geographic sales specialization organization2. Product-based sales specialization organization3. Customer-based specialization organization4. Hybrid sales organization5. Team-based organization
Geographic Sales Organization
FMCG Sales
WEST DIVISION CENTRAL DIVISION EAST DEVISION
Area Sales Manager
-Mumbai
- Surat
Area Sales Manager
-Delhi
- Jaipur
- Chandigarh
Area Sales Manager
-Kolkata
- Patna
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 10 – Geographical Sales Organization
Figure 11 – Product-based Sales Organization
Medical Division of `K’ Pharma Ltd.
Pharmaceuticals Equipment Supplies
EastWest
Central
EastWest
Central
EastWest
Central
Figure 12 – Customer-based sales Organization
Sales Manager for India
Regional Manager
Branch Sales Manager
Assistant Sales Manager-Agricultural Products
Assistant Sales ManagerHealth 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
Vice PresidentProduction
Vice PresidentMarketing
Vice PresidentFinance
Sales ManagerFor India
InternationalMarketing Manager
Consumer GoodsManagers
Industrial GoodsManager
Functional
Geographic
Customer
Team-based Sales Organization
Customer
Sales Marketing Technical Support Manufacturing
Figure 14 – Supplier Selling Team