SDM Module II

Sales and Distribution Management for Lawyers Amity Law School
BBALLB – SEM IV 2021--22

2021 MKTG206
Module - II
1
Sales Organisation
 A sales organization is a organization of individual either
working together for the marketing of products and
services manufactured by an enterprise or for product that
are procured by the firm for the purpose of reselling.
 Sale organization structural body through which the
function of sale management are carried out.
2
Principles of Sales Organisation
 Span of control
 Centralization & Decentralization
 Integration & coordination of function
3
Elements of Sales Organisations
4
Factor Influencing Sales Organisation
 Product & service related factor
 Organization related factor
 Marketing mix related factor
 External factor
5
Sales Organization Design

 It refers to the formal in co-ordination task of assign
territories & establishing flows of communication &
responsibilities of sales group & individual to serve
customer effectively.
 It helps in-
 Enhancing productivity
 Reducing conflict
 Improve an individual quality of work
6
Line Organization
 Oldest & simplest structure
 Widely used in smaller firms or firms with small
numbers of selling personnels, limited geographical
area or narrow product line
 Chain of command run from top to down
 All executives exercise line authority & each sales
person is responsible to next in the hierarchy
 No cross communication between persons at same
level
 Greatest use in companies where all sales persons
report directly to the chief sales executives
7
Line Organization
Advantages :
 Problems of discipline & control are small
 Authority & responsibility are clear
 Saves time in making policy changes
 Development of close relationship between superior
& subordinate
 Administrative expenses are low
8
Line Organization
Disadvantages:
 Too much dependence on department head
 Insufficient time for policy making & planning
 Inappropriate for rapidly growing firms
 Offers little opportunity to subordinates to acquire
management skills
9
Line Organization
10
Line and Staff Sales Organization
11
Line vs. Staff Positions
12
Spam of Control vs. Management Level
13
Spam of Control vs. Management Level
14
Types of Sales Organization Structure
15
Sales Organization Structure

Accounts and opportunities can be divided by:
• Geography/territory eg. Automoble Companies
• Product/service line eg. Nestle- Category selling
• Customer/account size eg. IBM-large / Medium / SME
• Industry/vertical segment eg.Thermax – Industry Verticals
• Functional Sales Organization eg. Banking/ Insurance/
Mobile Networks
16
Geography/Territory Org Structure

Organizing sales team by geography or territory allows each
salesperson to develop familiarity with a specific geographic
location. They can build rapport with local businesses, get to
know regional competitors, and track target accounts.
Easier to evaluate your reps by taking into account the
performance and market potential of a specific geographic
location.
Drawback is sales reps working in silos, inhibiting their ability
to develop cross-functional expertise.
17
Geographic Sales Organization
18
Product/Service Line Org Structure
If company sells several different products or services, it can

help to align salespeople to those products and services. It
allows reps to become the expert on a specific product to
sell, thereby better able
to communicate its value and use case for individual clients.
A potential downside of implementing this structure is that
reps may focus more on the features of the products they
are selling, and not the best solution for the customer.
19
Product Sales Organization
20
21
Advantages
 Consistent with market driven strategy
 Salespeople become customer experts
Disadvantages
 More expensive
22
Product Organization Design
23
Product Organization Design
 Advantages
 Allows focusing of sales effort
 Expertise developed in limited number of
products
 Disadvantages
 More expensive to operate
 May result in duplication of sales calls to clients
24
Nestle’s new divisions –

 channel and category sales development and national key accounts
management organisation – to focus on modern formats in retail
trade.
Category-specific business units, to cater to individual product
categories such as culinary (Maggi noodles and ketchups), chocolates
and confectionery (KitKat, Munch, Polo), coffee and beverages
(Nescafe, iced tea, Milo) and dairy and nutrition (dahi, UHT milk,
Cerelac, Nan).
Nestle has identified complex supply chain configurations among its
weaknesses, while recognizing potential for expansion in smaller
towns.
25
Customer/Account Size Org Structure

Sales org by account size is another popular structure.
The skills a rep needs to sell to an SME are different than
those of selling to an enterprise account.
These businesses have different goals, will ask different
questions, and have very different budgets. By allowing
reps to become familiar with the intricacies of these
accounts one can better meet the needs of the customer.
With this org structure, teams should be aware that it may
be more difficult to manage resources. To be successful,
this structure requires constant communication with team
members to ensure all clients receive the same quality of
service.
26
Maruti Suzuki has introduced two Channels to

enhance the customer experience
The Maruti Suzuki Arena showrooms are said to have a warm, friendly and
comfortable environment. The main differentiator here is that they have
tried to leverage the power of digital technology. Customers can book their
cars or even personalize their cars using the company's website.
Some key highlights of Maruti Suzuki Arena are
- their user-friendly website providing do it yourself features.
-a new corporate identity with a dynamic and vibrant facade.
-Seamless integration of online and offline registration
- exploring cars using interactive screens
-experiment with accessories with the help of a stylist
- a dedicated space for smart conversations.
27
Maruti Suzuki has introduced two Channels to

enhance the customer experience
Nexa is a channel for selling premium Maruti Suzuki cars.
This channel was Companyrealized that its conventional
showrooms were not equipped to deal with the more
sophisticated and premium segment of customers as their
expectations were higher
- Ignis
- XL6
- S-Cross
- Ciaz
- Baleno
There are two more Sales Channels for Maruti Suzuki:
- True Value
- Commercial
28
Industry/Vertical Org Structure

Different industries will use your product/service in different
ways. In this structure Sales reps are well-versed in how to
position their offering to these various verticals by
organizing the sales team accordingly.
This can be one of the most expensive ways to structure a
sales team.
29
Market Sales Organization
30
Functional Sales Organization
31
 Each individual in an organization should have few

distinctive duties as possible
 Principle of specialization is utilized to its fullest extent
 Sales people receive instructions from several executive
but at different aspects of their work
32

 Advantages
 Improved performance
 Disadvantages
 Not feasible for small & medium sized firms
 Suitable for large firms with stable operations &
with opportunity for
33
Comparison of Sales Organization Structures
34
Comparison of Sales Organization Structures
35
Hybrid Sales Organization Structures
36
Coordination with Distribution Network
 Create middlemen (dealers)

 Persuade them to stock
 Create market pull for them to stock
 Co ordinate between company and dealer for
 Promotional work
 Establish dealer identity among end users
 Protect the interest of the company and the dealer
 Share promotional Cost and Risk with dealer
37
Sales Territories
• A sales territory consists of existing and potential

customers, assigned to a salesperson
• Most companies allot salespeople to geographic
territories, consisting of current & prospective customers
38
Major Reasons / Benefits of Sales Territories
• Increase market / customer coverage

• Control selling expenses and time
• Enable better evaluation of sales force performance
• Improve customer relationships
• Increase sales force effectiveness
• Improve sales and profit performance
39
Procedure for Designing Sales

Territories
• Select a control unit*
• Find location and potential of present and prospective
customers within control units**
• Decide basic territories by using
• Build-up method,
Or
• Break-down method
*A control unit is a geographical territorial base
**Unnecessary & expensive for consumer products
40
Procedure for Designing Sales Territories
Procedure in Build-up Method

• Decide customer call frequencies
• Calculate total customer calls in each control unit
• Estimate workload capacity of a salesperson
• Make tentative territories
• Develop final territories
Objective is to equalise the workload of sales people.
41
Procedure for Designing Sales Territories
Procedure in Breakdown Method

• Estimate company sales potential for total market
• Forecast sales potential for each control unit
• Estimate sales volume expected from each salesperson
• Make tentative territories
• Develop final territories
Objective is to equalise sales potential of territories
42
Designing Sales Territories
43
Procedure for setting up sales territories

1. Selecting a basic geographical control unit.
Commonly used units are postal code numbers, areas, towns
or cities. Sales territories are put together as consolidations of
basic geographical control units.
2. Determining the sales potential present in each unit.
Sales potential : Maximum possible sales opportunities open
to a specific company selling a good or service during a stated
future period to particular market segment. Identify the
present and prospective buyers precisely in a unit and
ascertain the unit’s total market potential that the company
has an opportunity to obtain i.e. Sales Potential.
44
Procedure for setting up sales territories
3. Combining control units into tentative territories.

Assumption : No significant differences exist in the physical
and other characteristics of the control units. Contiguous
control units are combined into tentative territories having
approx. same sales potential. Planner decides the number
of territories.
45
Factors influencing the modifications of a territory
• Mergers
• Market consolidation
• Split in division
• Sales force turnover
• Customer relocations
• Product life cycle change
• Product line change
46
Advantages of designing a Sales

Territory
 It ensures better market coverage
 Effective utilization of the sales force
 Efficient distribution of workload among sales people
 It is convenient to evaluate the performance of sales people
 To control over the direct and indirect costs of the sales function
 Optimum utilization of sales time by sales people
47
Assigning Salespeople to Territories
Sales Manager should consider two criteria:

1. Relative ability of salespeople
• Based on key evaluation factors:
 Product knowledge
 Market knowledge
 Past sales performance
 Communication
 Selling skills
48
Assigning Salespeople to Territories
2. Salesperson’s Effectiveness in a Territory

• Decided by comparing social, cultural, and physical
characteristics of the salesperson with those of the
territory
• Objective is to match salesperson to the territory
49
Management of Territorial Coverage
• It means : How salesperson should cover the

assigned sales territory
• It includes three tasks for a sales manager:
 Planning efficient routes for salespeople
 Scheduling salespeople’s time
 Using time-management tools
50
Management of Territorial Coverage

Routing
 Routing is a travel plan used by a salesperson for making
customer calls in a territory
 Benefits of or Reasons for routing:
-Reduction in travel time and cost
-Improvement in territory coverage
 Importance of routing depends on the application:
• Nature of the product – Important for FMCG
• Type of jobs of salespeople – Important for driver-
cum-salesperson job, but creative selling job needs
a flexible route plan
51
Sales Forecasting
 A sales forecast is a projection of the expected customer
demand for products or services at a specific company, for
a specific time horizon, and with certain underlying
assumptions
 Essential tool used for business planning, marketing, and
general management decision making.
 Sales forecasting can help you achieve sales goals.
 Sales forecasting can help drive sales revenue, improve
efficiency, increase customer retention and reduce costs.
52
Benefits of Sales Forecasting
53
Factors affecting sales forecasting

-External Factors
 Relative state of the economy

 Direct and indirect competition
 Styles or fashions
 Consumer earnings
 Population changes
 Weather
54
Factors affecting sales forecasting

-Internal Factors
 Labour problems
 Inventory shortages
 Working capital shortage
 Price changes
 Change in distribution method
 Production capability shortage
 New product lines
55
Sales Forecasting Techniques
56
Sales Forecasting Techniques
57
Forecast vs. Potential
58
Deriving Potential Estimates
59
Methods of Estimating Market and Sales Potential
Analysis-Based Estimates
 Determine the potential buyers or users of the product
 Determine how many are in each potential group of
buyers defined by step 1
 Estimate the purchasing or usage rate
Area Potential
 Breaking down total sales by area
 To use a weighted index
Sales Potential
60
Measure Uses of Potential Estimates
 To Make Entry/Exit Decision

 To Make Resource Level Decisions
 To Make Location and Other Resource Allocation
Decisions
 To Set Objectives and Evaluate Performance
 As an Input to Forecast
61
Sales Budget
 Estimates of expected volume of sales and selling
expense are known as sales budget. The sales volume
of sales budget is based on sales forecast.
 Sales Budget- Slightly lower than the Sales forecast to
avoid excessive.
Sale Budget =>Product wise quantities =>Territory
wise quantities =>Customer wise & sales Person wise
sales volume.
62
Purpose of Sales Budget
1. Planning:- Profit Planning based expected sales less cost of achieving

the sales. SB includes sales goals, strategy & action plan + cost of
expected plan is based in sales quota; production; territory;
customer & selling price.
2. Co-ordination:- SB is finalized by coordination with marketing
+Finance +Product +HR. Coordination @ all angles by all
departments to achieve similar goals.
3. Control:- Tool for evaluation of pert. SB is defined term of sales
volume & selling expenses standard of pert against actual
performance.Yearly Budget. Broken----=> =>Quarterly--=>Monthly
63
Successful Budgeting
 Involvement & Support of Top Management

Support Budgeting & ensure all-round participation; should not
be viewed as a pressure tactic but as an effective tool for
performance;
ii. Flexibility in Budgeting
Should be adjustable to fast changing environmental conditions
64
Methods used for deciding sales expense budget
1. % of sales method
2. Executive judgment
3. Objective and task method
65
Methods used for deciding sales expense budget
a) Affordability Method:
Management develops SB depending on ability to spend on sales
function; usually fall short of sales dept’s requirements
b) Percentage of Sales Method:
Multiply sales revenue by a given %; Sales revenue = Past revenue /
forecasted figure / weighted average of both
c) Competitive Parity:
Based on budgeted figure of competitors or industry average;
competitor comparable in size and revenue is chosen
66
Sales Budget Process
1. REVIEW SITUATION: sales management reviews past, present, and

future (budget period) past helps to actual reference, present
future helps to under changing marketing environment and
expected reference.
2. COMMUNICATION: sales management communication in writing
to all field office regarding formats, guidelines, assists and time
about all three budgets.
67
3. Subordinates budgets: first time field sales managers prepares

sales budget for their respective sales territory and submits it
to reporting manages and upwards to national sales manager
who prepares the companies proposed sales budget by
combining the received budget.
4. Approval of the sales budget: In consultation with marketing
head; National sales manager prepares 2/3 alternative proposals
of sales budget and make presentation to top management.
68
5. Other department: Final sales budget is given to other department

to prepare are their budget and Approval sales budget is broken
down into each sales territory quarterly and monthly. A/c’s
department prepares cash budget and profit budget based on sales
revenue information given by sales department and expenses
budget given by other departments.
69
How to develop a Sales Budget
1. Review and Analysis

Collection of past data and study of variances between
projected and actual
2. Identifying market opportunity and problems
3. Sales forecasting
4. Communication of Sales goals & objectives
Involvement of sales people is essential for mutual
agreement
70
How to develop a Sales Budget
5. Allocation of resources Selecting salespeople, tools

of sales, financial resources
6. Preparing the budget Balance between sales force
capability and market opportunities
7. Approval for the budget
71
Sales Quotas
• Sales quotas are sales goals or targets set by a

company for its marketing / sales units for a time
period
• Marketing / sales units are regions, branches,
territories, salespeople, and intermediaries
• Generally, company sales budget is broken down to
sales quotas for various marketing units
72
Sales Quotas
 A sales quota refers to an expected routine

assignment to sales units, such as territory, districts
and branches, etc.
 Sales quotas are also assigned to individual salespeople
over a particular time period and are used to plan,
control and evaluate the selling activities of a company.
 Sales quotas serve several purposes.
73
Objectives of Setting Sales Quotas
 Quotas provide performance targets

 Quotas provide standard
 Quotas provide control
 Quotas are motivational
74
Advantages of Sales Quotas
75
Disadvantages of Sales Quotas
76

1. Making available performance standard: It act as a tool to measure
performance of sales person, act as a goal/target setter.
Performance Std. set against which actual performance is compared
to evaluate salespersons performance.
2. Controlling performance BY setting quotas for special activities,
sales volume &selling expenses. The SM (sales manager)controls the
performance.Fore.g:-10 calls per day/5 calls of business customer’s
indirectly monitors/controls the activities of sales person by setting
quotas. Can keep an eye on wasteful expenditure on customer
(travelling, lodging, entertainment & meals) company reimburses
sales expenses only up to 0.5% of sales limit expenses? Control
over reporting & can influence sales performance.
77

3. Motivating people Sales quotas are set by motivating sales people by
money. performance is recognized by awards/rewards like trips
abroad. This financial compensation/ rewards are called incentives.
The incentives are linked with quotas which are made achievable for
sales person. So that he puts in extra effort to achieve his quota.
4. Identifying strength &weakness: Actual performance compound
respective quotas of difference territories & salespersons, The SM
can identify successful &unsuccessful performance. Analysis of causes
of poor performance may reveal training program needs
improvement, better product quality required to meet customer
needs & positioning strategy.
78
Types of Sales Quotas
Organisations set many types of sales quotas:

(1) Sales Volume
(2) Financial
(3) Activity
(4) Combination
79
Types of Sales Quotas
80
Sales Volume Quotas
• For effective control, sales volume quota should be set

for the smallest marketing units, such as salesperson,
districts / branches, product items / brands
• Sales volume quotas can be stated in (a) rupees / dollars,
(b) units, or (c) points
• Rupees / dollars sales volume quotas are appropriate
when salespeople are required to sell many products
81
Sales Volume Quotas
• Unit sales volume quotas are suitable when

 Salespeople are selling a few products
 Prices of the product fluctuate rapidly
 Price of each product / service is high
• Point sales volume quotas are appropriate when the
company wants salespeople to sell products that
contribute more to profits
82
Financial Quotas
• Financial quotas control (a) gross margin or net profits, and
(b) expenses of marketing units
• Gross-margin / Net-profit quotas
 Calculate gross margin by subtracting ‘cost of goods sold’
(i.e. cost of manufacturing) from sales volume. Sales
managers are not responsible for cost of manufacturing
 Net profit quotas are generally accepted by sales mangers
as it is calculated by subtracting direct selling expenses from
the gross margin
• Expense quotas
 In many companies, expense quotas are stated as a
percentage of sales
 Expense quotas to be administered with flexibility, to make
salespeople cost conscious, allowing reasonable expenses
83
Activity Quotas
 These are set when salespeople perform both selling
and non-selling activities
 Objective is to direct salespeople to carry out
important activities
 For effective implementation, activity quotas are
combined with sales volume and financial quotas
 E.G. Calling on high potential customers, payment
collection from defaulting customers
84
Types of Activity Quotas
 Number of sales presentations made

 Number of service calls made
 Number of dealers visited
 Number of calls made for recovery
 Number of new accounts opened
85
Combination Quotas
 Used when companies want to control sales force performance on key selling and
non-selling activities
 Focus on a few types of quotas, to avoid confusing salespeople. An example:
 Total point score=573/6=95.5 for a salesperson

 Typically use ‘points’ as a common measure to resolve the problem of different
measures used by various types of quotas
86
Methods for Setting Sales Quotas
• Several methods are used for establishing sales quotas

• In practice, companies use more than one of the following methods to
increase their confidence in sales quotas
• Total market estimates
• Territory potential
• Past sales experience
• Executive judgement
• Salespeople’s estimates
• Compensation plan
87
Quota Setting Procedure
 Set the parameters for developing quotas

(a) Past trends: the quantity of specific product lines that were sold
in various sales territories over time
(b) Previous year’s revenue: the total revenue generated from sales
of all products from various sales territories
(c) Industry standards: performance of the competitors in the
industry
(d) Territory analysis: the quantity that a salesperson thinks can be
sold in his or her territory based on the existing pipeline and
recent successes
88
Quota Setting Procedure

 Add the percentage of growth expected:
 Allot individual quotas to each sales personnel:
 Experience of the salesmen:
 Assigned job
 Sales skills:
 Market potential:
 Competition
 Make sure that the sales quotas are well understood by
your sales team
 Adapt quotas to market realities
89

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Sales and Distribution Management for Lawyers Amity Law School

BBALLB – SEM IV 2021--22

Principles of Sales Organisation

Elements of Sales Organisations

Factor Influencing Sales Organisation

 Product & service related factor

 Organization related factor

 Marketing mix related factor

Sales Organization Design

Line and Staff Sales Organization

Line vs. Staff Positions

Spam of Control vs. Management Level

Spam of Control vs. Management Level

Types of Sales Organization Structure

Sales Organization Structure

Geography/Territory Org Structure

Geographic Sales Organization

Product/Service Line Org Structure

If company sells several different products or services, it can

Product Sales Organization

Product Sales Organization

Product Sales Organization

Product Organization Design

Product Organization Design

 Expertise developed in limited number of

 May result in duplication of sales calls to clients

Nestle’s new divisions –

Customer/Account Size Org Structure

Maruti Suzuki has introduced two Channels to

Maruti Suzuki has introduced two Channels to

Industry/Vertical Org Structure

Market Sales Organization

Functional Sales Organization

Functional Sales Organization

 Each individual in an organization should have few

Functional Sales Organization

Comparison of Sales Organization Structures

Comparison of Sales Organization Structures

Hybrid Sales Organization Structures

Coordination with Distribution Network

 Create middlemen (dealers)

• A sales territory consists of existing and potential

Major Reasons / Benefits of Sales Territories

• Increase market / customer coverage

Procedure for Designing Sales

Procedure for Designing Sales Territories

Procedure in Build-up Method

Procedure for Designing Sales Territories

Procedure in Breakdown Method

Designing Sales Territories

Procedure for setting up sales territories

Procedure for setting up sales territories

3. Combining control units into tentative territories.

Factors influencing the modifications of a territory

Advantages of designing a Sales

 It ensures better market coverage

 Effective utilization of the sales force

 Efficient distribution of workload among sales people

 It is convenient to evaluate the performance of sales people

 Optimum utilization of sales time by sales people

Assigning Salespeople to Territories

Sales Manager should consider two criteria: