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Chapter 6 Design and Size of Sales Territories MULTIPLE CHOICE QUESTIONS D 6-1 120 A sales territory comprises: A.

all of the customers who do business with a certain company B. the salespeople who fall under the jurisdiction of a particular sales manager C. the actual sales made by individual salespeople, not the sales potential D. the group of customers assigned to a salesperson E. all of the geographic areas in which an international company sells its product 120-121 Which of the following statements about sales territories is true? A. The establishment of sales territories typically duplicates sales efforts to increase the probability of a sale. B. Sales territories must have geographic boundaries. C. Sales territories are intended to insure thorough coverage of the market. D. A sales territory typically contains no potential customers. E. A sales territory is assigned to a sales manager. 120-121 According to the text, one of the reasons for establishing sales territories is to: A. increase company costs and lower company profits B. improve customer relations C. match the wants of the salesperson with the needs of the customers served D. facilitate utilization of the undifferentiated selling approach E. increase the salesperson's flexibility in managing territorial coverage 120-121 Which of the following is NOT a typical reason for establishing sales territories? A. to better match salespeople to customers B. to increase the usefulness of the canned sales presentation C. to improve customer relations D. to evaluate performance E. to obtain thorough coverage of the market

C 6-2

B 6-3

B 6-4

more likely to be successful selling in New York City than in rural Alabama D. to facilitate the implementation of SBO D. The company may be too large to be concerned with segmenting the market into sales areas C. to evaluate performance E. more likely sales revenue will not support sales expense C.C 6-5 120-121 Which of the following is NOT given by the text as an important reason for establishing sales territories? A. he is: A. to aid in reaching the firm's objectives D. more likely to make an initial sales call over the telephone E. Personal friendships can lower the average number of sales calls E. the: A. less likely to make long sales calls B. to establish each salesperson's responsibilities B. None of the above is a disadvantage. more likely to be successful selling in rural South Carolina than his more rural peers C. the higher the similarity between the customer and the salesperson. Salespeople may be more motivated if they are not restricted to a certain territory B. to facilitate utilization of the undifferentiated selling approach B. less likely to have developed good time management skills 122 Which of the following does the text give as one reason why having established sales territories could be viewed as a disadvantage? A. less likely the salesperson will have a long sales call B. to better establish a salesperson's responsibilities C. to reduce sales expense 120-121 Which of the following is NOT listed in the text as a reason to establish sales territories? A. to provide company salespeople the opportunity to meet their personal needs E. to provide the company's CEO with an easy method to check on individual sales effort 121 According to the text. Customer goodwill is created when customers receive regular sales calls D. more likely the sales effort will be successful E. to obtain thorough coverage of the market C. sales territories are always a good idea A 6-6 D 6-7 C 6-8 A 6-9 . less likely it is that the sales manager will be concerned about time management 121 Because Louis Arkahian was raised on Long Island. more likely an initial sale can be made over the telephone D.

13 E 6-14 .E 6-10 122 According to the text. major accounts C. C. metropolitan statistical areas 123 The nucleus around which sales territories are formed is: A. trading areas B. The company may be too small to be concerned about segmenting the market into sales areas. sales objective D. salesperson's ability D. ZIP code areas C. which of the following statements describes a reason why a company might NOT want to establish sales territories? A. B. cities and ZIP code areas E. 122 "To increase the number of weekly sales calls by ten percent. the interstate highway system E. D. The salespeople may be more motivated if they are not restricted by territorial boundaries. Personal friendship may be the basis for attracting customers. trading areas B. future product allocation E. metropolitan statistical area D. any of the above 123 Territorial boundaries are NOT based on: A. E. customers and prospects C 6-11 E 6-12 D 6. states D. derived demand E. metropolitan statistical areas B. product mandate 123 Territorial boundaries can be based on: A. product mandate B. product demand C." is an example of a: A. derived allocation C. All of the above are reasons for not establishing territories. Management may not want to take the time.

Tiffany jewelry C. Wrigley's chewing gum B. discriminating E. magazine for American Legion members 123 A firm that sells its product through only a limited number of intermediaries in a given market is using _____ distribution. exclusive B. intensity of market coverage B. intensive D. products sold D. penetrating E. whether the salesperson is expected to perform any missionary selling 123 A firm using _____ distribution sells its product in every outlet where final customers might reasonably look for it.D 6-15 123 Which of the following is NOT identified by the text as one of the main influences on a salesperson's work load? A. A. passive C. Butterfinger candy bar D. intensive D. amount of compensation E. decorative thermometers C. exclusive B. selective 123 For which of the following products would a sales manager be most likely to use selective distribution? A. A. selective 123 For which of the following products would a sales manager be most likely to use intensive distribution? A. Betty Crocker brownie mix E. nature of the job C. Elmer's rubber cement D. Bose automotive music system B. People magazine E. positive C. La-Z-Boy reclining chair C 6-16 C 6-17 E 6-18 E 6-19 .

20 For which of the following products would a sales manager be most likely to use exclusive distribution? A. aggressive E. Rolls-Royce automobiles B. breakdown B. aggressive F. determine the number of accounts for each territory B.A 124 6. passive C. Kraft macaroni and cheese C. forecast sales and determine sales potentials E. intensive D. Marks-A-Lot permanent markers E. target market D. select type of marketing research to use C 6-22 A 6-23 D 6-24 . Wrigley's chewing gum A 6-21 124 A firm that sells its product through only one intermediary in a given market is using _____ distribution. exclusive B. selective 124 Which distribution strategy would be expected to require the greatest number of sales territories? A. a sales manager can use the _____ approach and divide forecasted sales by the average number of sales per salesperson. penetrating E. car insurance D. A. exclusive B. buildup C. bottom-up 124 The first step to consider when determining a firm's basic territories is: A. determine the sales volume needed for each territory C. determine the total number of territories the firm will have D. A. intensive G. top-down E. selective 124 To calculate the needed sales force size.

27 Another name for a company's extra-large accounts is: A.C 6-25 125 There are six steps to consider when determining a firm's basic territories. refers to the idea that a small portion of a firm's customers account for a large portion of its profitable sales . determine if there are any key accounts B. increase the profitability of a territory B. house accounts B. determine the sales volume needed for each territory D. key accounts D. indicates that no matter how hard a salesperson tries. Once a sales manager has forecasted sales and determined sales potential. ethically-lead marketing system B. medium. economically leading market segments C. 80 percent of customers' potential business ends up going to competitors E. determine the ideal number of sales territories E. extra large. regular. insure equal time is spent with all of the firm's customers D. eliminate all unprofitable accounts C. calculate time required for each sales call 125 The purpose of grouping accounts into categories such as key. is a territory management concept that favors a salesperson putting 20 percent of her time on planning and 80 percent on action D. standardize the selling approaches used by members of the sales force C. and small E. refers to the fact that eighty salespeople require twenty sales managers to keep the appropriate 4-to-1 ratio of supervisors to employees C. every labor makes sales D. minimize draw accounts A 6-26 C 125 6. and unprofitable is to: A. undifferentiated accounts E. breakeven accounts D 125 6. insure equal treatment of the firm's prospects E.28 The letters in the acronym ELMS stand for: A. ethics learned equals more sales E 6-29 125 The 80-20 principle: A. revenue accounts C. is a territory management concept that favors a salesperson putting 80 percent of his time on planning and 20 percent on action B. he or she should: A.

total cost E. this sales manager would advocate the _____ method of revising her firm's number of territories. average cost D. In other words. ELMS C. all selling costs 128 There are six steps to consider when determining a firm's basic territories. In fact. Obviously. how and when follow-up-service must be offered B. sales manager calculates the sales forecast for each territory E. complexity of the products sold decreases B. In the final step.33 A 6-34 . key account analysis D. sales manager gets approval from top management C. future sales potential increases D. salesperson visits each customer in the assigned sales territory 129 To help the salespeople he supervises improve their effectiveness. the average purchase size of each customer D. number of product lines sold decreases E.C 6-30 126 Usually the frequency of sales calls will increase as the: A. she thinks it should keep adding territories until the last one added just covers the cost of adding it. incremental 127 To use the incremental approach to determine basic territories. territorial boundary lines are drawn D. a sales manager must know: A. the point at which the product will become obsolete E. break-even travel plan C. number of orders placed diminishes C. intensive B. size of the territory increases 126 Maeve O'Reilly believes her company should increase the number of sales territories it has. Tyler helps them develop their: A. A. incremental territory analysis E 6-31 E 6-32 C 6. routing reports E. customer contact plan B. the likes and dislikes of the company's key accounts A. the: A. salesperson draws a routing schedule B. Tyler Parks works with them as they schedule their sales calls and determine the best routes to use moving about their territories.

sales coverage summary D 6-36 A 6-37 B 6-38 . states where the salesperson will be working in the future B. time management form B. states where the salesperson worked on the day for which it was submitted C. scheduling C. is required by most companies especially when overnight travel is not necessary to cover the territory E. customer time allocation D. Territory sale planning D. Scheduling 129 A routing report: A. Aprille was working on her: A. market coverage D. routing 129 _____ is the establishment of a travel pattern to be used by the salesperson in working his or her assigned territory. and Tullahoma on Friday. account grouping B. A. Elliot Rose plans to visit a customer's place of business on a certain day and time.B 6-35 129 As part of his territory management activities. territory sales planning E. scheduling portfolio E. Account grouping B. Murfreesboro on Wednesday. routing report C. This activity is called: A. includes only travel time 129 Last night Aprille was preparing a statement to send to her sales manager that showed she planned to be in Nashville on Monday and Tuesday. should be filled out at the conclusion of each week D. Shelbyville on Thursday. Routing E. Account time allocation C.

those that contribute more than 5 percent of business. D. criss-cross B. Telephones are the best way to monitor a salesperson's activities. Complaints should always be handled in person. C. prevent the salesperson from having to spend several nights a week on the road E. Assign large accounts. cloverleaf C. establish communications between management and the sales force concerning location and activities of individual salespeople C. do all of the above 131 (See Figure 6. Larger accounts can be more easily maintained through telephone contact than by individual sales calls. D 6-40 E 6-41 D 6-42 . B. It is appropriate to use the telephone to deal with key accounts C. spherical C. D. the telephone should be used to replace some personal visits to geographically distant accounts 131 The telephone can be used by salespeople to save time and money. a company gives its salespeople strict formal route plans to enable the company to: A. primarily to telephone selling. Telephones should not be used as sources of leads. set aside time for cold calls D. E.B 6-39 129-130 In theory.2) Which of the following is an example of a basic routing plan? A. E. B. Smaller accounts cannot be easily serviced over the telephone because sales to them need to be increased. Which of the following statements about its correct usage is true? A. The telephone should never be used for handling complaints. Telephone usage can facilitate order processing. deter competitive salespeople from calling on customers B. all of the above 131 Which of the following statements about using the telephone for territory coverage is true? A. If possible. rectangular D.

Incubation time E.47 120 A sales territory comprises a group of products or a geographical area assigned to a salesperson.45 E 6. Orphaned selling B. Non-key areas 133 _____ refers to the lost sales due to both the vacancy and the time required for a new salesperson to produce at average. . Territorial control E. A. Undifferentiated markets D. Market trickle D. Account orphans C. A. Then when the company finally hired someone to fill the position. Sales leakage 133 The sales manager for Minerva Publishing Company was concerned that there was no salesperson in the company's Midwestern territory. Unassigned areas C. Quota aggregation 133 _____ are those left vacant until new salespeople are assigned to them. account orphans C. market trickle D. The sales manager was actually worried about: A. sales leakage A 6-44 E 6. Vacant territories E. Territorial assignment] D. incubation time E. A.46 TRUE FALSE QUESTIONS T 6. Open sales territories B.D 6-43 132 _____ is the establishment of standards of performance for the individual territory in the form of qualitative and quantitative goals. orphaned selling B. it took another seven months before the territory was producing the same revenue as the other territories in the firm. Incremental implementation B. Workload control C.

up approach. 126 Another name for the incremental method of determining sales territories is the bottom. 123 The design of a firm's sales territories has little influence on its success in the marketplace. 123 Workload is the quantity of work expected from sales personnel. 124 The incremental approach to determine the number of sales territories needed by a firm divides the total number of sales force calls by number of calls a typical salesperson can be expected to make. 128 When assigning salespeople to particular sales territories. 122 Even small companies that do not segment their market into sales areas typically find the establishment of sales territories necessary. 123-124 A salesperson for a convenience product would probably be able to cover a geographically larger territory than would a salesperson for a specialty product.T 6-48 F 6-49 121 Fewer overnight trips and contacting the most productive customers regularly can reduce sales expenses and improve a firm's sales-cost ratio. 121 Generally. F 6-50 F 6-51 T 6-52 F 6-53 F 6-54 F 6-55 T 6-56 F 6-57 T 6-58 F 6-59 . 129 Scheduling refers to the travel pattern a salesperson uses in working his or her territory. it is a good idea to maximize the difference between the salesperson and the customers he or she serves because the differences help the salesperson control the sales interview. it is appropriate to consider the personal desires of the salespeople themselves. 126 No territory should ever have more than one key account. 125 The ELMS system refers to a method of designing the most profitable routing plans.

F 6-60 T 6-61 F 6-62 T 6-63 F 6-64 T 6-65 T 6-66 129 A routing report is usually filed twice each month. 130 The first step for a salesperson who is attempting to do route planning is to plot the location of his or her customers on a map. 133 Sales leakage refers to the lost sales due to both the territory vacancy and the time required for the new salesperson to produce at average. 132 Territorial control is the establishment of standards of performance for an individual territory in the form of qualitative and quantitative quotas or goals. and candy bars? Ans: intensive Page: 123 6. and the type of product sold Page: 123 6. nail clippers.70 What is the formula used in the breakdown approach to designing sales territories? Ans: sales force size = forecasted sales divided by average sales per salesperson Page: 124 . 133-134 A prime benefit of computerized territory design is the increased speed with which options can be evaluated.68 What intensity of market coverage would be used for light bulbs. 130 The critical factor in route planning is to minimize the number of miles traveled.67 List the three influences that determine workload? Ans: the nature of the job. territory boundaries can be left unchanged from one decennial U. census to the next. 133 If set correctly the first time.S. the intensity of market coverage.69 What is the first step in the process for designing sales territories? Ans: forecast sales and determine sales potential Page: 124 6. chewing gum. SHORT ANSWER QUESTIONS 6.

72 What is the primary reason why many sales managers find the incremental approach to designing sales territories difficult to use? Ans: the difficulty associated with calculating marginal costs Page: 127 6.6. and cloverleaf Page: 131 6.71 What is the formula used in the incremental approach to designing sales territories? Ans: total sales force customer calls divided by individual customer calls equals the number of sales territories Page: 126 6. major-city.74 What causes sales leakage? Ans: open sales territories and the time required to get a new salesperson to produce at average Page: 133 .73 What the three basic routing patterns used by salespeople? Ans: straight-line.

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