Chapter 7

Designing and Organizing the

Sales Force

SALES MANAGEMENT:
SHARPING FUTURE SALES LEADERS
Tanner, Honeycutt, and Erffmeyer,
2e Wesser 2014.

Copyright © 2014 Wesser Publiser

Objectives

The factors that affect on the

structure of sales force.
Methods to compute sales
forces size
Explain the advantages and
disadvantages of different
sales force organizations
structures.
Factors determines how sales organizations
are structured

Customers

Marketing
Competitors
channel
How sales
organizations
are structured

company
Product
Product
Product company
company size
size
size

7-3
Calculate the Sales Force Size

Breakdown method

Workload method

Incremental method
The Size of the Sales Force

 Breakdown method
• Divide forecasted sales revenue by average sales dollars per
salesperson

7-5
The Size of the Sales Force
Workload Method

.
7-6
The Size of the Sales Force
Incremental method
1.Its compares the marginal profits and marginal costs associated
with each incremental salesperson
2.is difficult to develop, and it cannot be used for new sales forces
where historical data and accurate judgments are not possible.

# of Salespeople Marginal Contribution Marginal Cost

100 $85,000 $75,000

101 $80,000 $75,000
102 $75,000 $75,000
103 $70,000 $75,000
Sales Organization Structures

Geographical
Sales Structure

Product
n be
e ca Sales Structure
f o rc ased s
ales ed b w ay
S
a n iz r ent Market
org r diffe Sales Structure
e
oth
Functional
Sales Structure

Combinational
Sales Structure 7-8
Geographic-Based Structure

 Depends on physical boundaries to organize sales force

with customer accounts.
 Each salesman serves all customers in specific areas.
7-9
Geographical Sales Structure

PROs CONs

 Relatively easy to design  Work best when product line

is simple.
 Minimizes duplication of
activities between salespeople.
 Sales calls more efficiently
scheduled, save traveling cost.
 Territory can be divided or
combined to respond to market
conditions

7-10
Product-Based Structure

 Sales activities organized around related product lines or

manufacturing divisions
7-11
 Product-Based Structure
PROs
 Specialization in each product
line.
 Sales service is better
 Be useful in case of different
complex products in the firm
CONs
 Little knowledge of others
 some customers confused
 Lack of communication b/w
divisions within the sales firm
 Costs higher than geographic-
based structure
7-12
Market -Based Structure

 Reps assigned to customers based on segments or

how product is sold
7-13
 Market -Based Structure

PROs CONs

 Allows sales efforts to specific  Similar to product structure

industries/ channels/ customers
 Allow satisfying customer
demands in specialization.
 Be an effective strategy when
entering new markets.

7-14
Functional Sales Structure

Sales Manager

Sales division Technicians Customer care

 Selling process divided into two or more steps

performed by varied specialists
Functional Sales Structures

PROs CONs

 Specialist in each step of  Coordinating multiple

selling process. specialists
 Salespeople can learn more  Ensuring smooth transition
about customers’ specific from account establishment to
business needs, and offer management
customized solution.

7-16
Combination Sales Structures
P re sid e n t

F u n c tio n al V ice P re sid en t V ice P re sid en t V ice P re sid en t

P ro d u ctio n M ar ke tin g E n gin e erin g

G eo g rap h ic U .S. I n te r n atio n al

M ar ke tin g M ar ke tin g
M an ag er M an ag er

C u sto m er C o n su m er I n d u s trial I n te r n atio n al

G oods G oods Sales
M an ag er s M an ag er s M an ag er

P ro d u ct So ap P ro d u cts P ap er P ro d u cts F o o d P ro d u cts L atin A sian an d

E u ro p ean
D iv is io n al D iv is io n al D iv is io n al A m erican A fr ic an
D iv is io n
M an ag er M an ag er M an ag er D iv is io n D iv is io n

E aste r n C en tr al W est er n
Sales Sales Sales
D iv is io n D iv is io n D iv is io n
Combination Sales Structures

PROs CONs

 Sales force organized based  Complicated in management.

on mix of product, market, and
geographical factors  Can result in duplicate sales
efforts
 Work best when market is
large, product mix complex,
and customers require different
applications

7-18
 Comparison of sales Structures
Structure Advantages Disadvantages
• Low Cost • Limited specialization
• No geographic duplication • Lack of management
Geographic • No customer duplication control over product or
• Fewer management levels customer emphasis
• Salespeople become experts • High cost
in product attr. & applications • Geographic duplication
Product
• Management control over • Customer duplication
selling effort
• Understand of customer needs
Market • Management control over • High cost
selling allocated to different • Geographic duplication
markets
• Geographic duplication
• Efficiency in performing • Customer duplication
Functional
selling activities • Need for coordination
Key Accounts/ VIP account

7-20
Sales Organizational Additions

7-21
Strategic Account Management
 Sales force structure is simplified
Use Existing Force  All accounts are managed under a
single organizational structure

 Assigning sales and marketing

executives to manage key accounts
Assign Execs makes sense for smaller firms that
cannot afford separate sales effort

 Create separate sales structures to

serve most important customers
Create Separate  Integrates marketing and sales for
key accounts under one
organizational structure
7-22
Telemarketing and E-commerce.
Telemarketing
Computerized
Generated
Incoming: firm
via employs
Internet and
advertising
telephoneand promo messages
to end-users to “pull” or create buyer demand to call an 800
number
Internet sales process varies greatly
and consult with in-house rep
 Telemarketing is legal, but unwanted and intrusive
Outgoing: pushing a firm’s product line by calling current or
telemarketing calls are likely to negatively impact an
potential customers to try to uncover needs and close the
existing or potential business relationship
sale

7-23
Telemarketing and E-commerce.

7-24
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