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Sales Territories

Sales Territories

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Published by: shail_pari on Apr 20, 2010
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Sales territories

Sales territory
‡ Comprises a number of present and potential customers, located within a given geographical area and assigned to a salesperson, branch, or intermediary (retailer or wholesaling intermediary).

Benefits of good territory design
‡ Enhances customer coverage ‡ Reduces travel time and selling costs ‡ Provides more equitable rewards ‡ Aids evaluation of sales force ‡ Increases sales for the sales organization ‡ Increases morale

Procedure for Designing Sales Territories

TM 13-4 (Fig. 13-1)

Select a Control Unit

Determine Location and Potential of Customers

Determine Basic Territories

Assign Salespeople to Territories

Set Up Territorial Coverage Plans

Evaluate Effectiveness of Design

Buildup Method of Territorial Design
Management must determine: Desirable call patterns: Call frequency per account per year Total calls needed in each control group Workload capacity: Total calls possible per rep per year = number of daily calls x days selling Tentatively set territorial boundary lines by combining control units until total calls needed = total calls possible Modify territories as needed

Territory Design: Build-Up Method Worksheet
Control Units Illinois
Customer class A B C Call frequency Calls Accounts per year 10 30 68 108 240 360 408 1,008 Accounts 7 17 55 79

TM 13-7

Calls per year 168 204 330 702

Calls Accounts 5 10 27 34 per year 120 120 162 402

2 per month 1 per month 1 every 2 months

Distribution of one rep¶s calls year (1,500)* Possible control combinations Alternative territories






100% Illinois

70% Iowa


100% Kentucky

100% Illinois + 100% Kentucky 100% Illinois + 70% Iowa

*6 calls/day x 5 = 30 calls/week x 50 = 1,500 calls/year

TM 13-8 Territory Size and Workload Factors Workload Factor Territory Size

Nature of Job: Lots of presale and post-sale activity Nature of product: A frequently purchased product A limited repeat-sale Market development stage: New market--fewer accounts Established market--more accounts Market coverage Selective coverage Extensive coverage Competition: Intensive Limited Decreases Decreases Increases Increases Decreases Increases Decreases Decreases ± unless market is oversaturated Increases

Breakdown Method of Territorial Design
Management must determine

TM 13-9 (Fig. 13-5)

Company sales potential

Sales potential in each control unit

Sales volume expected from each sales person Tentatively set territorial boundary lines by combining control units total sales potential = total sales volume expected Modify territories as needed

TM 13-10

Territory Design: Break-Down Method Worksheet

Company sales potential = $200,000,000 Targeted volume rep Number of reps needed

= $ 10,000,000 = Company sales potential = $200,000,000 =20
Targeted volume/rep $ 10,000,000

Territory volume as = Targeted volume/rep Company sales potential $200,000,000

= $ 10,000,000 = 5%

Each territory should comprise 5% of sales potential or $10,000,000 Combine adjacent control units until each sales potential of $10,000,000

TM 13-11

Sales Territories for Pharmaceutical Sales Reps
Divide« ‡The 28 states into 5-10 regions ‡Each region into several districts ‡Each district into 8-12 territories (typically 1 rep per territory)

TM 13-13

Routing the Sales Force
‡ Routing is the managerial activity that establishes a formal pattern for sales reps to follow as they go through their territories. ‡ Reduces travel expenses as it ensures a Area C more Area B efficient territory coverage. Area A ‡ Some reps resent it. x ‡ Best for routine sales jobs with regular call Area B: Typically the ³problem´ area. frequencies.

Revising sales territories
‡ Entrepreneurs new to business may not design territories very carefully. ‡ Overestimation and underestimation of territory¶s sales potential and the work load. ‡ Changing market conditions may outdate even well designed territory structures. ‡ Faulty management. ‡ Growth of the business. ‡ Increased sales force. ‡ Competition. ‡ Changed management philosophies.

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