Organizing the Personal Selling Effort

1. Geographical Organization

 Advantages:
1. Most common form
2. Reduces travel distance and time between customers
3. Usually minimizes costs

 Major disadvantages:
1. Each salesperson must perform all selling tasks for all
firm’s products and for all customers in territory.
2. Salesperson may not know about all products or only
emphasize certain (high commission) products.
 Organizing the Personal Selling Effort

2. Product Oriented Sales Organizations

 Salespersons specialize in relatively narrow components of

total product line. Appropriate with huge product offerings
(e.g., General Electric).

 Prime benefit: Enables sales force to develop deeper

product knowledge level--enhances value of firm’s total
offering to customers.

 Disadvantage: Expensive and sometimes confusing for

customers.
 Organizing the Personal Selling Effort
3. Market-Centered Organizations

 Salespeople learn specific requirements of

industry or customer type (e.g., specializing in
the banking industry)

 Salespeople are better prepared to identify and

respond to buying influencials
Often a sales force fails to reach its goals because the
organizational structure hinders the effective implementation
of the strategic sales force planning.

• To illustrate, assume that a company’s sales goal is to increase its market

share to 20 percent next year and that its key sales strategy is to increase
its sales to large national accounts by 30 percent over last year.

• However, the company’s sales force is structured so that each rep’s efforts
are spread thinly over accounts of all sizes.

• No key executives are assigned to sell to national accounts.

• Under these organizational conditions, it is doubtful that this company will

successfully implement its plan.
Key Account Management
 A Key Account:

1. Purchases a significant volume as a % of sales

2. Involves several organizational members in the
purchasing decision
3. Buys for a geographically dispersed organization
4. Expects carefully coordinated response and
specialized services from suppliers such as:
1. Logistical support
2. Inventory management
3. Price discounts
4. Customized applications
Table 14.1 Traditional Selling vs. Key Account Selling
Traditional Selling Focus Key Account Selling Focus
Sales Volume Varies Large volume of purchases by the customer often across
multiple business of the seller
Nature of Product/ Core product/service Core product/service plus customized applications and
Service Offering value-added services

Time Horizon Short-Term Long-Term

Benefits to Customer Lower prices & higher quality Lower total costs; Broader set of strategic benefits

Information Sharing Limited: Narrow focus on price
and product features
Sales Force Objectives Maximize revenue
Satisfied customers
Structure of Selling Individual salesperson is
Center primary
link to customer organization
Extensive: Broader focus as firms share strategic goals
Become preferred supplier; Lower customer firm’s total
costs; Enhance learning in the relationship
Many individuals from multiple functional areas on the
selling side interact with counterparts in the customer
organization

Structure of Buying Purchasing Manager and a few Many individuals within the customer organization
Center other individuals are involved interact in making decisions and evaluating the
in buying decisions relationship

Source: Adapted with modifications from Joseph P. Cannon and Narakesari Narayandas,
“Relationship Marketing and Key Account Management,“ in Handbook of Relationship Marketing,
Jagdish N. Sheth and Atul Parvatiyar, eds. (Thousand Oaks, Ca.; Sage Publications, 2000), p. 409; and
Frank V. Cespedes, Concurrent Marketing: Integrating Products, Sales and Service (Boston: Harvard
Business School Press, 1995,) pp. 186-202
 Selecting Key Accounts
 Because key accounts…

 Possess buying power

 Demand special services
 Are more costly to serve

 …companies need to consider sales and

profit potential, as well as long-term
resource commitments.