2. 4.1 Nature of Sales Organizations
4.2 Sales Force Organization and Strategic
Planning
4.3 Characteristics of a Good Organization
4.4 Basic Types of Organizations
4.5 Specialization within a Sales
Department
4.6 Additional Strategic Organizational
4.7 Organizing for International Sales
3. In the management process, you must decide where
you want to go before you can figure out how to get
there. In more formal terms, management should
first establish its objectives and then plan the
appropriate strategies and tactics to reach those
goals.
To implement this planning, the activities and
people must be properly arranged and effectively
coordinated. This is where the concept of
organization comes in.
4. An organization is simply an arrangement—a
working structure—of activities involving a
group of people.
The goal is to arrange these activities so that
the people involved can act better together than
they can individually.
5. In recent years, many firms have restructured
their sales organizations to make them more
responsive to the changing needs and, in some
cases, demands of their customers. Companies
are doing this by organizing around their
customers.
A trend in sales force restructuring is to move
toward a flatter organization, in which
coordination across activities is more important
than top down control.
6.
7. 4.1 Nature of Sales Organizations
4.2 Sales Force Organization and
Strategic
Planning
4.3 Characteristics of a Good Organization
4.4 Basic Types of Organizations
4.5 Specialization within a Sales
Department
4.6 Additional Strategic Organizational
8. A close relationship exists between a coy’s
sales force organizational structure and its
strategic marketing and sales force planning.
The key here is to design an organizational
structure that will help those who work within
it to successfully implement the strategic
marketing and sales force planning.
9. Therefore, as a control mechanism, the
organizational structure guides the company—or in
some cases, the sales force—in carrying out the
strategic planning to pursue marketing and sales
force goals.
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.
10. 4.1 Nature of Sales Organizations
4.2 Sales Force Organization and Strategic
Planning
4.3 Characteristics of a Good
Organization
4.4 Basic Types of Organizations
4.5 Specialization within a Sales
Department
4.6 Additional Strategic Organizational
11. Some management generalizations that
characterize a good organization are explained
below.
These features apply to organizations in any
field—not just sales management—and they are
useful in the designing of a new organization or
the revising of an existing one.
12. 1. Organizational structure should reflect a
marketing orientation.
When designing a sales organization,
management should focus first on the market and
the customer. Executives should consider the
selling and marketing tasks necessary to
capitalize on the market demand and to serve the
firm’s customers.
From this base, an organizational structure can be
built.
13. 2. Organization should be built around activities,
not around people
This goal is sometimes difficult to achieve because
it may be almost impossible to avoid some
organizing around people—that is, making
“people adaptations” in the structure.
14. 3. Responsibility and authority should be related
properly.
When you give someone a job to do, also give
the person the tools to do it. Responsibility for
each activity should be clearly spelled out and
assigned to some individual.
Then the necessary authority should be
delegated to that person
15. 4. Span of executive control should be reasonable.
By span of executive control, we mean the
number of subordinates who report directly to
one executive.
16. Most firms need an additional element to make
the formal structure work well. That key
element is an informal organization.
A formal organization’s well-being is
maintained by the system known as the
informal organization structure.
This structure represents how things actually
get done in a company, not how they are
supposed to be done according to a formal
organization chart.
17. 4.1 Nature of Sales Organizations
4.2 Sales Force Organization and Strategic
Planning
4.3 Characteristics of a Good Organization
4.4 Basic Types of Organizations
4.5 Specialization within a Sales
Department
4.6 Additional Strategic Organizational
4.7 Organizing for International Sales
18. Most sales organizations can be classified mainly
into one of four basic categories:
1. A line organization.
2. A line-and-staff organization.
3. A functional organization.
4. A horizontal organization.
19. 1. A line organization.
Simplest form of organization. Authority flows
from chief executive to first subordinate, then to
second subordinate, and so on down.
20.
21. 2. A line-and-staff organization.
Take a line organization and add staff assistants
who are specialists in various areas—advertising
or marketing research, for example.
The staff executive is responsible for all planning
connected with the specialized activity, but has
only an advisory relationship with sales managers
and sales reps.
The same staff executive—an advertising manager,
for example—has line authority over people in the
advertising department, but is in a staff-authority
(advisory) relationship with the sales force.
22.
23.
24.
25.
26. 3. A functional organization.
A step beyond line-and-staff structure in that each
activity specialist—advertising or sales promotion,
for example—has line authority over the activity in
relations with the sales force.
Suppose a credit manager wants the salespeople to
make collections on delinquent accounts. A staff
executive can only recommend to the general
manager that the reps do this job.
A functional executive has line authority to order
the assistant sales manager or the salespeople to do
the job.
27. Eliminates both management levels and
departmental boundaries. A small group
of senior executives at the top oversee the
support functions like human resources,
finance, and long-term planning. Everyone
else is a member of cross-functional teams
that perform core processes such as
product development and sales and
fulfillment. These teams are self-managed.
28. 4. A horizontal organization.
Eliminates both management levels and
departmental boundaries. A small group of senior
executives at the top oversee the support functions
like human resources, finance, and long-term
planning.
Everyone else is a member of cross-functional
teams that perform core processes such as product
development and sales and fulfillment. These
teams are self-managed.
29.
30. 4.1 Nature of Sales Organizations
4.2 Sales Force Organization and Strategic
Planning
4.3 Characteristics of a Good Organization
4.4 Basic Types of Organizations
4.5 Specialization within a Sales
Department
4.6 Additional Strategic Organizational
4.7 Organizing for International Sales
31. As a sales force grows, the job of the executive
managing the sales force becomes more
difficult. The number and complexity of a
company’s products and/or markets also may
call for some organizational division if the sales
effort is to be effective.
The most common way to divide sales
responsibilities is to split the sales force on
some basis of sales specialization
32. Probably the most widely used system for dividing
responsibility and line authority over sales
operations is the geographic organization—the
sales force is grouped on the basis of physical
territories.
In this type of structure, each salesperson is
assigned a separate geographical area, called a
territory, in which to sell. A reasonable number of
salespeople representing contiguous territories are
placed under a territorial executive who reports to
the general sales manager.
33.
34. The type of product sold is another frequently
used basis for dividing the responsibilities and
activities within a sales department. The two
most widely used structures featuring product
specialization organization are product
operating and product staff organizations.
35.
36.
37.
38. 4.1 Nature of Sales Organizations
4.2 Sales Force Organization and Strategic
Planning
4.3 Characteristics of a Good Organization
4.4 Basic Types of Organizations
4.5 Specialization within a Sales
Department
4.6 Additional Strategic Organizational
4.7 Organizing for International Sales
39. However, there are additional selling strategies
with significant organizational implications
that do include such factors as (1) account size,
(2) team selling, (3) outside selling without in-
person sales calls, and (4) the use of
independent agents. (See Figure 4–9.)
40.
41. Many sales executives believe that the major
accounts are too important to be handled only
by the average territorial sales rep.
Consequently, they are modifying their sales
organizations to provide better treatment for
these accounts. Three commonly used
organizational approaches are:
1. Creating a separate sales force.
2. Using executives.
3. Creating a separate division.
42. The buying center may be defined as all the
individuals involved in the purchasing decision
process. Thus, a buying center usually includes
people who play any of the following roles.
Users of the product.
Influencers who set the product specifications
Deciders who make the actual purchasing
decision.
Gatekeepers who control the flow of purchasing
information.
Buyers (purchasing agents) who process the
purchase orders.
43. Team Selling
A growing number of firms are using selling
teams to call on the various individuals in the
buying center.
A selling team is a group of people
representing the sales department and other
functional areas in the firm, such as finance,
production, and research and development
(R&D).
44. Many producers, either with or without their
own sales forces, rely heavily on the sales
forces of independent agents to reach the
market. These agents are wholesaling
intermediaries that do not take ownership title
to the products they sell, and they usually do
not carry inventory stocks.
Independent agents are paid a commission on
the sales they make
45. Telephone selling is not new. What is new
today, however, is the innovative use of
communication systems to aid selling efforts
and other marketing activities.
Generally, telemarketing refers to situations in
which a customer is contacted by a sales rep
via telephone, and e-commerce refers to
situations in which communication with the
customer is carried out through the Internet
(often via e-mail).
46. Two main reasons for the growing use of e-
commerce and telemarketing as forms of sales
specialization are (1) many buyers prefer them
over personal sales calls in certain selling
situations and (2) many marketers find that
they increase selling efficiency.
47. 4.1 Nature of Sales Organizations
4.2 Sales Force Organization and Strategic
Planning
4.3 Characteristics of a Good Organization
4.4 Basic Types of Organizations
4.5 Specialization within a Sales
Department
4.6 Additional Strategic Organizational
4.7 Organizing for International Sales
48. This trend toward globalization presents
challenges in terms of how to organize the sales
force. A company has essentially three options
with regard to distributing its products
internationally:
(1) turn over the export of its product to home-
country intermediaries,
(2) partner with foreign-country intermediaries, or
(3) establish its own company sales force in the
foreign country.
