Introduction and Functions of Sales Organization

Organization means the systematic coordination of the functions essential to achieving organizational objectives. The objective of a sales organization, therefore, is the performance of various activities necessary to promote sales. The functions of sales organization can be classified as follows.

1. Planning functionsa) Sales forecastingb) Sales budgetingc) Selling policy

2. Administrative functionsa) Selecting salesmenb) Training salesmenc) Control of salesmend) Remuneration of salesmen

3. Executive functionsa) Sales promotionb) Selling routine – execution of customer’s orders.

Role of Sales Organization

• Once the sales plan has been formulated, the next logical step is to organize a sales force to achieve the organizational objective. The qualified as sales objectives, which can be further divided, are shown in figure 1 given below.

Major Qualified Sales Objectives

Break up or Division1. Quarter, month and weak2. Product line and range3. Region and sales area4. Type of customer

Overall objectives 1. Total volume of products 2. Total annual value of products 3. Total annual selling costs 4. Total annual profit contribution

Figure 1

Role of Sales OrganizationSales organization has the following basic purposes:

1. Define the line of authority

2. Ensure that all necessary activities are assigned and performed

3. Establish lines of communication

4. Provide for coordination and balance

5. Provide insights into avenues of advancement

6. Economics of executive time.

Sales organization also depends on the type of sales force which is used, for example, field sales force, national account management, team selling, telemarketing, part-time sales forces, direct selling, etc.

Developing a Sales Organization• Sales organization development refers to the formal, coordinating

process of communication, authority and responsibility for sales groups and individuals. An effectively designed sales organization has a framework that enables the organization to serve its customers. Once the sales people know what their responsibilities are and who they report to, they can concentrate on doing their expected jobs to the best of their ability.

Thus, a sales manager must recognize and deal with some basic problems faced by organizations, when developing his own sales organization. The five major issues are:

1. Formal and informal organizations

2. Horizontal and vertical organizations

3. The line and staff components of organizations

4. The size of the company.

Formal and Informal Organizations

Marketing Vice President

Assistant to Marketing Vice President

Other functional or administrative organizations

Director of Marketing Research

General Sales Manager

Manager of Sales Planning

Director of Advertising

Director of Public Relations

District Sales Manager

Manager of Distribution

Sales personsManager of Accounts Receivable

Key Informal Organization

Figure 2 – The informal Communication System in a Marketing Organization

Formal and Informal Organizations

Salesperson District Sales Manager

General SalesManager

Marketing Vice President

Director of Marketing Research

Figure 3 – A Lengthy Formal Communications Channel

Horizontal and Vertical Organizations

Top Sales Executive

Regional or Zonal Sales Manager

District Sales Manager

Sales Supervisor

Salesperson

Figure 4 – Vertical Sales Organization

Horizontal and Vertical Organizations

Top Sales Executive

New EnglandDistrict Sales

Manager

Southern District Sales

Manager

SouthwestDistrict Sales

Manager

Foreign SalesManager

Middle Atlantic

District SalesManager

Midwest District Sales

Manager

Pacific District Sales

Manager

Figure 5 – Horizontal Sales Organization

Centralized and Decentralized Organization

Line and Staff Components

• Marketing organizations also feature line and staff components.

• A line function is a primary activity and a staff function is a supporting activity.

• In a marketing organization, the selling function is the line component whereas advertising, marketing research, marketing planning, sales training and distributor relations are usually considered staff roles.

Centralized and Decentralized Organization

Vice President forSales

General SalesManager

Regional SalesManager

A

Regional Sales Manager

B

Regional SalesManager

C

Figure 6 – A Line Marketing Organization

Centralized and Decentralized OrganizationVice President for

Marketing

Assistant to theVice President for

Marketing

Marketing Research Advertising

General SalesManager

Distributor Relations

SalesPlanning

SalesAnalysis

SalesTraining

Regional Sales Manager A

Regional Sales Manager B

Regional Sales Manager C

Key --- --- --- Staff Organization______________Line Organization

Figure 7 – Line and Staff Marketing Organization

Company Size and Organization

• A simple functional company organization is shown in Figure 8 . This structure is appropriate for most small and medium sized companies. These companies have relatively few products or services and use a limited number of distribution channels. As each functional area grows larger, the functional organization will be extended. A functional marketing organization is shown in Figure 9.

Company Size and Organization

President

Finance and Accounting

Production PersonnelSales andMarketing

Figure 8 – Functional Company Organization

Company Size and Organization

Chief Marketing Executive

AdvertisingManager

SalesManager

CustomerRelationsManager

Market ResearchManager

SalesSupervisors

Salespeople

Figure 9 – Functional Company Organization

Field Sales Organization• Field sales force consists of salespersons who work

primarily with customers in person, although they may also use the telephone or assistance from computer links to expedite orders and provide customer service. The structure of a field sales force is usually based on some means of specialization, such as geography, market, product, or activity/function, or a hybrid of these types. The following are the important field sales:

1. Geographic sales specialization organization2. Product-based sales specialization organization3. Customer-based specialization organization4. Hybrid sales organization5. Team-based organization

Geographic Sales Organization

FMCG Sales

WEST DIVISION CENTRAL DIVISION EAST DEVISION

Area Sales Manager

-Mumbai

- Surat

Area Sales Manager

-Delhi

- Jaipur

- Chandigarh

Area Sales Manager

-Kolkata

- Patna

Some advantages of geographic organizations are (a) Proper coverage of territory (b) Defining the responsibility (c) Familiarity with local economic and competitive conditions, making them better able to serve local customers.

Figure 10 – Geographical Sales Organization

Figure 11 – Product-based Sales Organization

Medical Division of `K’ Pharma Ltd.

Pharmaceuticals Equipment Supplies

EastWest

Central

EastWest

Central

EastWest

Central

Figure 12 – Customer-based sales Organization

Sales Manager for India

Regional Manager

Branch Sales Manager

Assistant Sales Manager-Agricultural Products

Assistant Sales ManagerHealth Care Products

Activity/Function-based Organization

Activity Sales Method

* Prospecting Telemarketing/cold calls

* Presentation Face-to-face field sales

* Service Personal visits

Figure 13 – Hybrid Sales Organization

President

Vice PresidentProduction

Vice PresidentMarketing

Vice PresidentFinance

Sales ManagerFor India

InternationalMarketing Manager

Consumer GoodsManagers

Industrial GoodsManager

Functional

Geographic

Customer

Team-based Sales Organization

Customer

Sales Marketing Technical Support Manufacturing

Figure 14 – Supplier Selling Team