Sales and Distribution

Management 2e

Tapan K. Panda
Sunil Sahadev

Oxford University Press 2012. All rights reserved.

 Chapter 6

Sales Organization

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 Learning Objectives
Understand the nature of the sales organization
Discuss the factors affecting the changes and its design
Recognize the principles of a sales organization
Understand the different types of organizational design
Analyze the factors leading to the emergence of a modern
organizational design
Explain the concept of total quality management
Calculate the sales force required for a sales organization

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 Sales organization
An organization of individuals either working together for the
marketing of products and services manufactured by an enterprise
or for products that are procured by the firm for the purpose of
reselling.
A sales organization defines duties, roles, rights, and responsibilities
of sales people engaged in selling activities meant for the effective
execution of the sales function.
A structural body through which the functions of sales
management are carried out.
sales organization always makes efforts to increase sales, thereby
achieving the principle of profit maximization, which contributes to
the overall growth of enterprise.

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 Factors influencing structure
product and service related factors
organization related factors
marketing mix related factors
external factors:
o the speed of market change
o reduction in the number of vendors per buyer
o closer to customer relationships
o changes in regulations and international practices

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Structural Change in a Sales Organization
From top down command and control-
driven
Information processing
Compartmentalized knowledge
Functions retain power
Functions own skills
Dominant function leads
Narrow result focus (sub-optimization)
Rewards are within chimneys (functions)
Slow/bureaucratic
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To horizontal and customer-driven
Knowledge creation
Shared knowledge
Core process team has the power
Core competencies supply skills
Leader represents team
Broad process focus (optimization)
Rewards are based on the overall performance of
the organization
Quick/empowered
 Organizational principles
span of control

unity of command
hierarchy of authority
stability and continuity
coordination and integration
homogeneity
objectivity
specialization

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 Organizational design
formal and coordinated task
assigning territories
establishing flows of communication and responsibilities of sales
groups and individuals to customers effectively

Mr. Ratnakar Shetty

Line organization President / Owner

Mr. Chandrakant
VP (Sales)

Five sales people

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Typical structure of a line organization

Consumer
market Institutional
market Corporate
market

National Direct-to- Direct

Distributors home marketing Distributors Bundling Gifting

Regional
Distributors Consumer

Retailers

Consumers

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Design by territory

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Design by management function
Mr. Dara Singh,
VP
(Marketing)

Staff Function Line Function

Mrs. Chitra Mohanty, Mr. Chandra De,

Mr. Dibya Behera,
Advt / Sales Promotion Manager,
Sales Manager
Mgr Marketing Research

20 Salespeople

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 Design by product
President
(Marketing)

Product Manager (A)

Manager Manager Manager

(Sales) (Training) (Promotion)

Product Manager (B)

Manager Manager Manager

(Sales) (Training) (Promotion)

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 Design by customer
President
(Marketing)

Vice President
(Marketing)

Sales Manager Sales Manager

Sales Manager
Wholesalers Retail Sales
Industrial Relations

Sales People Sales People

Sales People

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 Sales Organization
Key account sales
focus on CRM
customer profitability and value analysis
the few accounts give incremental returns
national accounts

Sales process automation

EDI Electronic Data Exchange

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 Emerging organizational design
agency and distribution selling
shared sales force
telemarketing
TQM and team-based selling

Customer

Technical
Sales Marketing Manufacturing
Support

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 Number of sales people
determined by:
territories vary in their demand structure for prospecting
product mix demands
levels and types of prospecting
nature of the customer segments

Affordability method (based on sales budget)

Incremental method
Workload method (Number of (Number of (Ideal (Length
existing X Potential X frequency of X
Number of sales people = customers) customers) calls)
of a call)

Ideal selling time available for a salesperson

Oxford University Press 2012. All rights reserved.