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Topic: Sales Management
Paper Type: Dissertation
Word Count: 15500 words
Pages: 62 pages
Referencing Style: Harvard Referencing
Educational Level: Masters
Sales Management
The impact of sales channels, and sales teams
Case study: Starbucks
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Acknowledgements
I would like to thank my professor -------, at -------University, who has been essential in
supporting my through this research, encouraging me through the problems I faced throughout
the paper and aggravated me to work hard.
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Dedication
I dedicate this research to my family, especially to my Parents. Their time, energy, and assistance
were essential to the completion of my study. I wish to thanks all of my class fellows who
supported me in completing this paper. I learned about the enthusiasm, energy, and inspiration
that one can acquire from achievement of someone else. I hope to perform this research with me
long after current study has expanded our understanding of incidental education. Particular
thanks to my educational professor, [Dr____Name_____], for his/her support and dedication
throughout the study.
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Declaration
I [], make sure that this paper and its complete material has been personal, unsupported attempt
and has not been submitted or published earlier. Moreover, it defines my perception and take on
the issue and is does not give the perception of the University.
Signature: _________________
Dated: ___________________
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Contents
Acknowledgements ................................................................................................................................... 2
Dedication ..................................................................................................................................................... 3
Declaration .................................................................................................................................................... 4
Chapter 1 Introduction .................................................................................................................................. 8
1.1 Background ......................................................................................................................................... 8
1.2 Purpose of the Study ........................................................................................................................... 9
1.3 Significance of the Study .................................................................................................................... 9
1.4 Nature of the Study ........................................................................................................................... 10
1.5 Theoretical Framework ..................................................................................................................... 11
1.6 Limitations ........................................................................................................................................ 11
1.7 Objectives ......................................................................................................................................... 11
1.8 Research Questions ........................................................................................................................... 12
1.9 Research methodology ...................................................................................................................... 12
1.10 Starbucks ......................................................................................................................................... 12
1.11 Research Structure .......................................................................................................................... 15
1.12 Summary ......................................................................................................................................... 15
Chapter 2 Literature Review ....................................................................................................................... 16
2.1 Perceived Value ................................................................................................................................ 17
2.2 Sales Behaviours ............................................................................................................................... 17
2.3 Management Control ........................................................................................................................ 18
2.4 Theories of Sales Management Control ............................................................................................ 20
2.5 Systems of Sales Management Control ............................................................................................ 22
2.6 Research about Control Systems for Sales Management .................................................................. 23
2.7 Sales Management Control Research in the Coffee Industry ........................................................... 26
2.8 Sales Force Performance ................................................................................................................... 27
2.9 Sales Channel Effectiveness ............................................................................................................. 29
2.10 Theoretical aspects: Structure of Sales Management ...................................................................... 29
2.10.1 Goal Setting Sales .................................................................................................................... 29
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2.10.2 Structure of the Sales Organization ......................................................................................... 30
2.10.3 Main Functions of the Sales Force ........................................................................................... 31
2.10.4 Sizing of Sales Force ................................................................................................................ 32
2.10.5 Monitoring and Evaluation of Sales Force ............................................................................... 32
2.11 Sale Channel ................................................................................................................................... 34
2.11.1 Integration of Sale Channels .................................................................................................... 36
2.11.2 Selection Criteria for Sale Channel .......................................................................................... 37
2.11. 3 Importance of Sale Channels .................................................................................................. 39
2.11.4 Channel Structure ..................................................................................................................... 41
2.11.5 Channels for Consumer Products ............................................................................................. 42
2.11.6 Decisions on the Channel Strategy .......................................................................................... 43
2.11.6 Global Marketing Channels ..................................................................................................... 45
2.12 Summary ......................................................................................................................................... 53
Chapter 3: Methodology ............................................................................................................................. 55
3.1 Introduction ....................................................................................................................................... 55
3.2 Research Design ................................................................................................................................ 55
3.3 Appropriateness of Design ................................................................................................................ 56
3.4 Population ......................................................................................................................................... 57
3.5 Sampling Frame ................................................................................................................................ 57
3.6 Sample Size ....................................................................................................................................... 58
3.7 Confidentiality .................................................................................................................................. 59
3.8 Data Collection ................................................................................................................................. 59
3.9 Data Analysis .................................................................................................................................... 60
3.10 Summary ......................................................................................................................................... 61
Chapter 4: Results and Discussion .............................................................................................................. 62
4.1 Introduction ....................................................................................................................................... 62
4.2 Data Analysis Process ....................................................................................................................... 62
4.3 Pre-Analysis Data Examination and Data Preparation ..................................................................... 63
4.3.1 Population and Sample Selection ............................................................................................... 63
4.3.2 Descriptive Statistics for the Individual Items ........................................................................... 63
4.3.3 Missing Values ........................................................................................................................... 64
4.3.4 Missing Value Analysis ............................................................................................................. 64
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4.4 Validation of the Measures ............................................................................................................... 65
4.5 Assessing Reliability and Validity of Constructs and Indicators ...................................................... 66
4.6 Summary ........................................................................................................................................... 66
Chapter 5: Conclusions and Recommendations .......................................................................................... 68
5.1 Validation of the Measures ............................................................................................................... 69
5.2 Implications of the Findings ............................................................................................................. 69
5.3 Recommendations for Future Research ............................................................................................ 70
5.4 Summary ........................................................................................................................................... 72
References ................................................................................................................................................... 73
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The impact of sales channels, and sales team’s Case study: Starbucks
Chapter 1 Introduction
1.1 Background Sales management falls under marketing and it entails the attempt to accomplish company’s
sales objective through realistic application of sales techniques and the management of a firm’s
sales operations. It involves formulation of sales strategy through certain criteria like
development of account management policies, sales force, compensation policies, sales revenue
forces and sales plan. Secondly there is also implementation of sales strategy (Russell, 2009).
The thesis will concentrate on understanding how performance of a firm can be improved
through making the right choice in relation to the channel of sale and the location. Channels of
sale are most essential in sales management since they are the ones that enhance the products
reach to the consumers. Through this research, ways to increment the sales volume, and expand
the brand recognition can be developed.
Trends in coffee sales generation show the influence of competition, pricing, and cost pressures
on company revenue growth. Four main resistors to coffee sales growth have resulted in pressure
on the sales force to deliver improved performance:
1. Cost containment in major markets
2. Competition from companies and parallel importers
3. High research and development costs and falling productivity
4. Merger and acquisition investments.
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Rising cost containment measures have resulted from the increased demands on national
providers brought about by an aging population. A range of cost containment policies is used
across different national markets, including pricing regulations, strict reimbursement formularies,
and a growth in both substitution and parallel importing. These measures lead to increased
pressure on coffee companies to reduce their prices and, consequently, either increase unit sales
or reduce costs to maintain profit margins. Maximizing return on investment from sales and
promotional activities is a key factor for both increasing unit sales and limiting the cost base.
1.2 Purpose of the Study The purpose of the present study is to use an explanatory correlation research design to examine
the relationships between sales management control, sales territory design, sales force
performance, and sales channels effectiveness in sales management within the coffee industry.
The objective is to explain the magnitude of the relationships between the independent and
dependent variables.
1.3 Significance of the Study The results may offer insights about the predictors of improved sales force performance to sales
management in sales organizations within the coffee industry. Determining what leads to
superior sales force performance is an important aspect of every sales manager’s job and may be
critical to the survival and success of a firm. Considering that in 1996 sales and marketing
accounted for close to 14.5 million jobs in the UK and sales and marketing jobs are predicted to
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increase by 15.5% to 16.8 million jobs by the year 2006, examining variables to improve sales
force performance may benefit sales organizations within the coffee industry.
Leaders of coffee sales organizations may benefit from the present study in so much as the result
may lead to an understanding of the relationships among certain dimensions of sales
management and sales organization and the effect that those relationships have on sales
performance. As a result, leaders of coffee sales organizations can proactively develop
appropriate systems of sales management control to improve sales force performance. According
to Grant and Cravens (1996), despite operating in a changing and competitive business
environment, organizations are under pressure to increase shareholder value and returns.
Consequently, the need to increase shareholder value and returns requires sales leaders to
recognize the factors that improve sales performance within their organizations. In the coffee
industry, where the selling environment has become increasingly competitive and regulatory
pressures have had a negative influence on sales revenues, employing the appropriate systems of
sales management control to improve sales force performance is essential.
1.4 Nature of the Study The present study is an attempt to extend previous research about sales management control.
Consistent with previous research about sales management control, an explanatory correlation
research design was employed. Various authors refer to explanatory correlation research as
“relational” research or “explanatory” research. The objective of correlation research is to
explain the association between or among variables.
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1.5 Theoretical Framework The theoretical framework is based on a sales management control system. According to
Anderson and Oliver (1987), a control system is an organization’s set of procedures for manager
supervision, guidance, assessment, and compensation of its employees. Anderson and Oliver
conceptualized two different philosophies of sales management control: behaviour-based control
and outcome-based control. A behaviour based control system emphasizes the use of sales
managers, coupled with an emphasis on fixed-salary compensation to direct and control the
behaviours of salespeople. An outcome-based control system, in contrast, replaces behaviour
control of sales managers and fixed compensation with a focus on controlling sales force
outcomes using incentive compensation (Wilmot, 2010).
1.6 Limitations The scope of the present study was limited to managers in a sales organization within the coffee
industry. The influence of sales management control, sales territory design, sales force
performance, and sales channels effectiveness in a sales organization within the coffee industry
was examined. The data collection activities associated with the present study was limited to
starbucks Coffee. The study was limited to managers within Starbucks Coffee and to the number
of managers surveyed and the amount of time and resources available to conduct the study. In
addition, the reliability of the results was constrained by the reliability of the administered
questionnaire.
1.7 Objectives The thesis analyzed the objectives namely;
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• The ways in which sales can be increased using multiple sales channels and
locations
• What role do consumers play in determining the location of sales channels?
• How can a company’s sales force be used efficiently to generate increased sales
volume?
The major objective of thesis is to explore ways in which sales can be increased.
1.8 Research Questions 1- How to manage multiple sales channels, location and team remotely?
2- How the right decisions in selecting, adding, removing and switching between sales channels
and locations can change the firm's position?
1.9 Research methodology To gain understanding of the sales management related concepts required for research, books,
academic sources and journals will be used. The thesis will make use of both case study analysis
and primary data analysis through survey. Starbucks sales management will be analyzed using
secondary resources, and to gain insights into the customer perception of sales management of
Starbucks survey questionnaire will be used.
1.10 Starbucks Starbucks was opened in 1971 in Seattle. Starbucks started its business by selling roasted coffee
beans, and various accessories for brewing and roasting the coffee. In 1971, the company was
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owned by Jerry Baldwin, Zev Siegel, and Gordon Bowker. However, in 1982, an entrepreneur
Howard Shultz joined the firm. Inspired by the Italian coffee culture, Shultz decided to replicate
the culture in the United States (Creswell, 2002).
Starbucks Coffee Company is now among the coffee retailer giants. The company has as many
as 10,000 coffee shops in more than thirty countries. Starbucks aims to become the most
recognized brand of coffee. In order to achieve long term growth, Starbucks is utilizing effective
marketing strategies (Achrol, 1991). Currently, the company is relying on retail expansion along
with the product and service innovation to achieve growth and success. In order to implement
these strategies, Starbucks has opened new stores in both existing and new markets. With the
rapid expansion, Starbucks targeted customers of every age group. Starbucks expanded the target
market to include customers of every age. The target market of Starbucks expanded to include
rural communities, ethnic neighbourhoods, rest stops, and others (Creswell, 2002).
Starbucks coffee has positioned itself as a social gathering place. Starbucks retail outlets provide
customers with an excellent place to socialize. Starbucks has positioned itself as a ‘third’ place
for customer. The first place for the customer is home, and the second place is office. Starbucks
is a place where customers can socialize and relax while enjoying a cup of coffee. The place has
not only attracted business professionals but also young students, stewards, housewives and
moms. The positioning of Starbucks has been successful in increasing its customer base.
Initially, the target market of Starbucks included affluent and educated customers. However,
when Starbucks expanded itself in different neighbourhoods and communities, its target market
expanded to include customers who belong to middle-income group (Creswell, 2002).
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Starbucks has been endeavouring to cater to the needs of its customers. A large portion of
Starbucks’ customers comprise of students and working professionals. These two groups of the
population are always in a rush (Wilmot, 2010). These customers demand quick and efficient
solutions to their needs. The drive-thru strategy of Starbucks has been successful in retaining and
satisfying these customers. The drive-thru approach has allowed the company to eliminate long
lines outside the store. The approach has also provided customers with alternative ways of
buying.
Starbucks is in the process of creating outlets that does not only attract customers but retain the
current ones. In 2001, Starbucks initiated wireless high-speed Internet in order to augment the
experience of its customers. This effort was Starbucks was directed towards business travellers,
students and web surfers. The strategy proved to be successful for Starbucks. It allowed
customers to enjoy a mug of gourmet coffee while virtually connecting with the rest of the world
(Creswell, 2002).
Starbucks realized that it could attract more young customers through brand affiliations. The
company has continuously observed and fulfilled the needs of this segment of the population. In
2008, Starbucks introduced CD burners that helped in augmenting its image. By offering CD
burners, company has positioned itself as a brand that offers relaxation and enjoyment at the
same time. Customers can sample music while enjoying the freshness of gourmet coffee.
The first successful attempt of brand affiliation allowed the company to introduce mugs, bags,
and other products that contain a log of the company (Mallin, 2005). The credit of Starbucks’
success also goes to the fact that it is dedicated to satisfy its customers. All strategies of
Starbucks are directed towards increasing customer base, and satisfying existing customers. For
the purpose of attracting young audience, Starbucks makes use of event-sponsorship programs
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and other community activities. In addition, Starbucks also participates in youth education
programs to position itself as a brand that supports good causes.
1.11 Research Structure This research follows the common structure and relates the Harvard citation style.
Chapter one defines the topic to be observed different backdrop data and presents situations to
the research.
Chapter Two will define an assessment of the literature pertaining to the topic.
Chapter Three will define the methodology applied in this research. It shows the strategy of the
paper, performed research approach and the methods of data compilation applied.
Chapter Four will define the findings & analysis of the paper.
Chapter Five will define conclusion and recommendations.
1.12 Summary Trends in coffee sales generation have revealed the influence of competition and cost pressures
on the sustainability of double-digit growth rates. These trends highlight the importance of coffee
sales forces and their relative efficiency and productivity in increasing sales. While sales revenue
growth has been under pressure from cost-containment measures, generic competition, rising
research and development costs, and merger and acquisition investments, coffee companies’
commercial expenses have increased both in absolute terms and as a proportion of total sales.
Because of the changing dynamics of the coffee industry and the changing needs of physicians,
increasing sales force performance will become a key factor for success in the coffee industry.
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Chapter 2 Literature Review
The purpose of the present study is to examine relationships between sales management control,
sales territory design, sales force performance, and sales organization effectiveness in sale
organizations within the coffee industry. Awareness of the predictors of sales organization
effectiveness is critical to the coffee industry in the context of increasing competition, pressures
to control costs, and the rising costs of sales. Seget (2004) posited that while sales revenue
growth has been under pressure from cost-containment measures, generic competition, rising
research and development costs, and merger and acquisition investments, coffee companies’
commercial expenses have increased, both in absolute terms and as a proportion of total sales.
Seget noted that total promotional expenses of coffee companies in the U.S. increased as a
proportion of sales revenues from 9.7% in 2000 to 11.9% in 2003 (Grams, 2011).
Despite changing market dynamics, decreasing revenue growth, and rising commercial expenses,
limited empirical data are available within the coffee industry about the predictors of sales
organization performance and effectiveness. Past research about sales management focused on
understanding and improving sales organization performance and effectiveness by assessing the
characteristics of individual salesperson’s performance in other industries. These studies have
not clarified the factors that influence sales organization performance and effectiveness
(Semenik, Allen, and O'Guinn, 2011).
Sales management must include both achievement and development. These two go hand in hand
in order to let your employees know what you expect from them and how to provide assistance
to each one of them individually. Therefore, this enhances development of their skills, knowing
their strengths and offering them motivation and inspiration along the way. Everyone needs to
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work with clear ideas of the company expectations, an understanding of their individual roles in
overall company success, and a belief in the company’s conviction in investing the time and
resources into personal and professional development (Utzinger, 2010).
Marketers must plan their operations well and in advance so as to get the best results. It is good
to know the products well and their benefits for the consumers to develop trust in them. It is also
important to have an identification of the targeted market (Ford, 2003).
2.1 Perceived Value The research will provide an in-depth analysis of managing multiple sales channels, locations
and teams; it should be also be a reference to the sales directors and managers. And the research
will prove that the career of managing sales is totally different than managing sales accounts
(Grams, 2011).
2.2 Sales Behaviours Walker et al. (1979) defined sales behaviour as “What people do (the tasks they expend effort
on) in the course of working” (p. 33). Sales behaviours involve the execution of selling-related
activities by salespeople in the performance of their jobs. Examples of sales behaviours include
planning sales calls, filling out call reports, asking questions during a sales call, providing
answers to a prospect’s questions, and taking a buyer to lunch. According to Walker et al., these
sales behaviours must be completed successfully to achieve assigned sales goals. Much of the
limited research on sales behaviour has centred on identifying the behaviours associated with
different types of sales positions. For example, an early study by Lamont and Lundstrom (1974)
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examined sales behaviours in the building materials industry by factor analyzing 60 items and
identifying eight general or behavioural dimensions associated with industrial sales positions
(Curry, & Frost, 2001). The eight behavioural dimensions were assisting and working with
management, customer service, personal integrity and selling ethics, direct selling, developing
relationships with customers, keeping abreast of market conditions, meeting sales objectives, and
maintaining complete customer records (Ford, 2003).
Similarly, Behrman and Perreault (1982) developed a measure of sales performance
incorporating the notion of types of sales behaviours believed to be the major job responsibilities
of most industrial salespersons. Their analysis resulted in 31 individual behavioural items
representing five aspects of industrial sales performance. A study by Moore, Eckrich, and
Carlson (1986) examined the importance of 82 selling competencies, many of which are
analogous to selling behaviours as they relate to performance for manufacturer salespeople,
distributor salespeople, and manufacturers’ agents (Pushkala, 2006).
2.3 Management Control Control mechanisms are central to the efficient and effective functioning of organizations
(Ramaswami, 2002). Controlling is recognized as one of the major activities of managers and is
generally viewed as an integral link for connecting other essential managerial functions such as
planning, organizing, and leading. According to Barker and Jennings, the control process ensures
that actual and planned activities are congruent with each other. The control process includes
monitoring organized efforts, comparing progress with planned objectives, and making the
necessary decisions to ensure success. Potential benefits of effective control processes, in terms
of performance enhancement, are effectively designed and controls implemented (Byrne, 2001).
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According to Tannenbaum (1968), management control consists of directing the daily sales
activities of the salesperson. Several other researchers have identified planning as a key element
of management control. Reeves and Woodard (1970) argued the proper domains of management
control include direction of daily activities, evaluation of sales results, and analyzing goal versus
actual performance to identify and correct any deviations. In addition, the compensation plan is a
common method used to control and motivate salespeople. Literature about management control
makes a distinction between formal and informal management control mechanisms. Formal
controls are written, management initiated mechanisms especially aimed at influencing
salespersons’ activities in the desired direction. Informal controls, such as unwritten, worker-
initiated mechanisms, influence salespersons’ self-control behaviours, clan control, or cultural
control (Ramaswami, 2002).
Flamholtz, Das, and Tsui (1985) observed that control research has evolved mainly from three
theoretical traditions: sociological, administrative, and psychological. The sociological tradition
focuses on applying formal rules and the power of authority to govern and supervise employees.
According to Weber (1947), in modern management thought, authority is based upon rational
grounds and is presented in the form of impersonal bureaucratic systems. Flamholtz et al. (1985)
observed that management control involves structural mechanisms of rules, policies, and a chain
of command. The administrative tradition is interested in using managerial skills and techniques
to supervise actions and direct the behaviours of individuals. These management skills and
techniques are derived from the earlier management principles of Cornell (1928) and Davis
(1934). These principles include planning, preparation, scheduling, dispatching, direction,
supervision, comparison, and correction. Finally, the psychological tradition stresses human
cognitive capacities and individuals’ attitudinal reactions. Researchers in the psychological
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tradition have devoted attention to the concepts of goal setting; intrinsic and extrinsic motivation;
and the perceptions of and reactions to rewards, feedback, and interpersonal communications.
Systems of sales management control are defined in the present study as an aggregate set of
policies, procedures, and rules sales organizations use to supervise, guide, assess, and
compensate the activities of salespeople. The current definition is consistent with other
conceptualizations in the literature. For example, Jaworski (1988) suggested that formal controls
such as written, management initiated mechanisms influence the probability that employee and
group behaviour will support stated marketing objectives.
2.4 Theories of Sales Management Control Sales force governance has been analyzed with the frameworks of several economic theories,
especially agency theory and transaction cost analysis. Anderson (1985) published one of the
first empirical studies testing agency theory and addressed the exchange management must make
between home sales forces, employees, and independent agents. Most of the predictions of
transaction cost analysis were supported by empirical research that asserted that as salesperson
performance becomes more difficult to assess, an increased probability emerges that firms will
use a directly controlled sales force rather than commission-motivated sales force.
Anderson and Oliver (1987) considered the implications of transaction cost analysis as well as
other theories, such as agency theory, organization theory, and cognitive evaluation theory for
applying a specific control philosophy. Agency theory appears to provide an attractive
framework for sales force control analysis as it addresses the problem of how principals can
control agents to whom they delegate decision-making authority. Principals and agents are
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assumed to pursue different goals and frequently not to share the same information level or
asymmetry. Information asymmetry exists within sale force control because salespersons
typically have better information about their own territory sales response functions than
management does (Kline, 2005). According to agency theory, when information asymmetry
exists between principal and agent, the principal must determine the optimal approach to control
agent behaviour. Principals can control agents by observing their activities or outcomes.
According to Eisenhardt, outcome controls are associated with environmental uncertainties
(Allen, 2001). These environmental uncertainties increase the chances that proper activities may
not yield expected results. In this case, agency theory supports compensating agents for
increased risk.
According to Basu, Srinvason, and Staelin (1985), several authors have applied agency theory to
determine what compensation plan structure for sales forces will optimally control salespeople’s
activities and, consequently, outcomes. The literature is based on the assumption that
compensation is the best way to control salespeople’s activities. However, Basu et al. argued that
compensation is only one of several tools toward achieving this goal.
Whether considered through agency theory or transaction cost analysis, circumstances can be
identified under which a firm should select a behaviour-based or an outcome-based sales force
control philosophy. Anderson and Oliver (1987) proposed a control system positioned
somewhere on a continuum ranging from purely behaviour based to purely outcome-based.
Outcome-based control systems monitor the final outputs and require minimal salesperson
supervision, simple performance measures, and compensation plans. Outcome-based control is
liberal management whereby salespersons are independent entrepreneurs responsible for their
own activities and performance (Fraenkel, & Wallen, 2000). In contrast, behaviour-based
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controls monitor intermediate steps in the process. Behaviour based control requires close
salesperson supervision, supervisors’ interference with salespeople’s activities, and more
complex and subjective evaluation of salespersons’ performance.
Stathakopoulos (1996) attempted to synthesize three theories underlying sales force control. In
order to predict the effectiveness of different types of control, Stathakopoulos applied selected
constructs from organizational theories such as outcome observables, behaviour observables, and
transaction specific assets. Stathakopoulos’ theoretical framework has not been validated
empirically.
2.5 Systems of Sales Management Control Anderson and Oliver (1987) defined a systems of sales force control as the set of procedures for
supervising, guiding, assessing, and compensating the activities of salespeople. Some such
systems focus on results, known as outcome-based control systems, and others focus on inputs
and processes, known as behaviour-based control systems. According to Stanton and Buskirk
(1983), training, motivation, coaching, support, and compensation of salespeople can be
conceived of as part of overall sales force control. Stanton and Buskirk suggested sales force
controls are pervasive and related to most aspects of sales management.
An outcome-based control system guides salespeople’s behaviour by emphasizing their
outcomes rather than their sales activities and processes. In an outcome-based control system,
limited management supervision and direction of salespeople occur (Allen, 2001). According to
Anderson and Oliver, “Outcome-based control approximates a market contracting arrangement
wherein salespeople are left alone to achieve results in their own way using their own strategies”
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(p. 76). Managers exercise little control over non-sales behaviour because an outcome-based
control system relies on market mechanisms to direct salespeople (Goldsmith, & Goldsmith,
2004).
In contrast, a behaviour-based control system places greater emphasis on job inputs such as
activities, sales strategies, and personal qualities. According to Oliver and Anderson, “A
behaviour-based control system is typified by high levels of supervisor monitoring, direction,
and intervention in activities” (p. 77). In addition, a behaviour-based control system is subject to
complex methods of evaluating performance due to reliance on measuring sales inputs that
demand objective quantification. Consequently, management must provide a significant amount
of subjective managerial feedback about selling and non-selling activities within behaviour based
control systems. A behaviour-based control system is consistent with a bureaucratic mechanism
in which superiors who manage subordinates use close surveillance and extensive performance
measures. A compensation and reward policy in a behaviour-based control system is more
focused on salary than commission (Zoltners, Sinha, & Zoltners, 2001).
2.6 Research about Control Systems for Sales Management Anderson and Oliver (1987) developed seven research propositions about important relationships
between the types of control systems emphasized for sales forces and cognitions and capabilities,
affects and attitudes, motivation, behavioural strategies and performance of sales forces. The first
proposition focused on control system strategies (Fraenkel, & Wallen, 2000). According to
Anderson and Oliver, in behaviour-based control systems, salespeople are monitored more
closely, subject to considerable direction, evaluated on an input basis by subjective and more
complex measures, and rewarded with a higher proportion of fixed compensation. In outcome-
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based control systems, salespeople are monitored less frequently, offered little direction,
evaluated on outcome measures by objective and simple methods, and rewarded with a higher
proportion of incentive compensation (Goldsmith, & Goldsmith, 2004).
The second proposition theorized that the more a control system is behaviour-based rather than
outcome-based, the more product knowledge, company knowledge, and integrated sales
expertise the salesperson has, and the more professionally competent the salesperson will be. The
third proposition argued that if a control system is behaviour-based rather than outcome-based, a
salesperson will identify with and feel committed to the sales organization, be willing to accept
direction and cooperate as part of sales team, accept the authority of management, and welcome
management performance reviews.
The fourth proposition focused on salesperson motivation. According to Anderson and Oliver
(1987), where a control system is behaviour-based rather than outcome-based, the salesperson
has higher levels of intrinsic motivation, is motivated by peer recognition, and is motivated to
serve the sales agency. The fifth proposition suggested salespeople’s hierarchy of motivation
differs across outcome-based and behaviour-based systems. According to Anderson and Oliver,
in behaviour-based systems, the agency’s interest comes first because the agency shelters the
salesperson from risk and, by active monitoring, forms a strong communication bond with
salespeople. Customers and principals ranked next in the hierarchy because neither offers the
direction, authority, and risk assumption by the agency (Aggarwal, Tanner, & Castleberry,
2004).
The sixth proposition focused on salesperson behavioural strategies. Anderson and Oliver (1987)
argued that in the case of a behavioural-based rather than outcome-based control system, a
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salesperson can be expected to plan for each call, make fewer calls, operate at a lower ratio of
selling to non-selling time, and spend more time on sales support activities. The seventh
proposition analyzed salesperson performance. According to Anderson and Oliver, in control
systems that is more behavioural-based than outcome based, individual salespeople will come
closer to achieving the sales agency’s goals and to serving customer needs but will perform more
poorly on traditional output measures of individual level performance (Robbins, 2008).
Cravens et al. (1993) developed the first conceptual model depicting relationships amongst
control system for sales forces, sale force characteristics, sales force performance, and sales
organization effectiveness as a framework for testing the propositions formulated by Anderson
and Oliver (1987). Cravens et al. (1993) integrated Anderson and Oliver’s (1987) propositions
into the model by developing specific hypotheses of relationships between the type of system of
sales force control and other model constructs. Craven et al.’s (1993) methodology included a
sample of sales managers from 144 diverse sales organizations. The types of sales organizations
included companies dealing in industrial products, industrial services, consumer products, and
consumer services. Cravens et al. viewed managerial control and the control implicit in the
compensation scheme as independent control mechanisms, in contrast to Anderson and Oliver’s
(1987) view that they are interconnected (Accenture, 2003). The results from the study by
Cravens et al. (1993) provided support for the relationship between behaviour-based systems for
sales force control and specific sales force characteristics, different dimensions of sales force
performance, and sales organization effectiveness. Cravens et al.’s suggested a limited role for
incentive compensation in sales force control systems and the need for a proper blend between
sales management and compensation control (Peters, & Enders, 2002). These findings are in
accord with Anderson and Oliver’s (1987) propositions.
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2.7 Sales Management Control Research in the Coffee Industry Futrell, Swan, and Todd (1976) examined salespersons’ perceptions of their employer’s
management control system and job performance in the coffee industry. Futrell et al.’s research
was the only research located in the literature that examined the relationship between sales
management control and sales performance in the coffee industry (Baldauf, Cravens, & Piercy,
2000). The sales management control constructs used in the study were different from the
seminal work by Anderson and Oliver (1987) and Jaworski (1988). In Futrell et al.’s (1976)
study, management control system was defined as the formal systems for setting objectives,
measuring performance, and taking action in order to enhance performance; the management
control system constructs for the study included goal clarity, performance-rewards relationship,
influence and control impact, and job performance. The study sample included the total sales
staff and their immediate supervisors in two national coffee companies and one national hospital-
supply company (Aggarwal, Tanner, & Castleberry, 2004).
The purpose of Futrell et al.’s (1976) study was to examine goal clarity, performance-reward
relationships, and influence and control on job performance. The conceptual model hypothesized
that higher performing salespeople, as compared to lower performing salespeople, would tend to
have the following perceptions:
1. High clarity about the management control system
2. High personal influence and control over establishing job goals
3. Job rewards based on performance.
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The results of a canonical correlation analysis reported that three constructs of the control system
were significantly related to job performance, namely, goal clarity, performance-reward
relationships, and influence and control (Utzinger, 2010). However, the explanatory strengths of
these relationships between the predictor and criterion variables were weak. According to Futrell
et al., the canonical correlation analysis implied that 9% (clarity) to 17% (performance-rewards)
of the variation in performance was explained by the control system variables. Futrell et al.’s
(1976) findings showed an association between salespersons’ perceived control over their work
situation and job performance. According to Futrell et al., the most likely reason for this
association is the increase in perceived power and participative decision making, which create an
increased commitment to attain job goals within the salesperson. Based on the findings, Futrell et
al. recommended that organizations allow salespeople enough freedom to feel they have control
over their sales jobs.
2.8 Sales Force Performance The distinction between sales organization effectiveness and sales force performance has
received considerable empirical support. The support rests on the findings that variations in sales
organization effectiveness may be explained by changes in environmental factors, such as
competition, and organizational factors, such as management control systems, advertising
spending, and brand image, as well as by salesperson factors. Sales organization effectiveness
and salesperson performance are related but conceptually different constructs: Sales organization
effectiveness is a summary evaluation of overall organizational outcomes. According to Babakus
et al., these outcomes can only be partly attributed to the salesperson. Because organizational
outcomes can only be partly attributed to the salesperson, evaluations of salesperson
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performance should be restricted to factors under the control of salespeople. Assessments of
sales organization effectiveness are overall results determined by many situational factors
including salesperson performance. The performance of salespeople contributes to but does not
completely determine sales organization effectiveness. According to Challagalla and Shervani
(1996), the effects of a single variable on performance such as a control system alone may be
misleading; performance will also be affected by other variables.
In addition, several studies divided the salesperson performance construct into a behavioural
performance dimension and an outcome performance dimension. Because salespeople can more
directly control what they do, behavioural performance measures have been proposed and used
in a number of studies. However, while the behavioural aspects of performance are important,
salespeople also produce outcomes largely attributed to them, representing an outcome
performance dimension. Outcome performance is a separate component of performance, both
conceptually and empirically (Piercy, Low, & Cravens, 2004).
A significant amount of research maintained that salesperson performance comprises
components of both behaviour-based and outcome-based performance constructs. Behaviour-
based performance comprises an assessment of how well salespeople execute their required sales
activities and strategies to attract and retain customers. Managing within a behaviour-based
management structure requires sales managers to assess performance by focusing on the daily
inputs of their salespeople, such as number of sales calls and strategy implementation, rather than
on outputs, such as sales results. An example of behaviour-based performance is customer
support and planning by salespeople. Other elements of behaviour-based performance include
teamwork, delivering sales presentations, product and technical knowledge, and adaptive selling.
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2.9 Sales Channel Effectiveness An increasing amount of research has focused on the influence of sales performance on sales
organization effectiveness (Zhong, 2001). Walker et al. (1979) explained sales organization
effectiveness as a composite of organization results for which the salesperson is in some measure
responsible. Key indicators of sales organization performance include market share, sales
volume, and profitability. Each sales division contributes to the achievement of sales
organization effectiveness. These sales divisions consist of a number of smaller sales units
managed by a sales manager. The smaller units within the sales division are called, regions, or
customer segments. The salespeople employed within the smaller units are responsible for
acquiring and retaining customers. According to Babakus et al., their performance is critical to
sales organization effectiveness. Past research in personal selling hinted at a relationship between
salesperson performance and sales organization effectiveness. According to Churchill et al.
(1985), prior research that attempted to discover the factors influencing salesperson effectiveness
has been unsuccessful. However, minimal research was focused on understanding the possible
factors associated with sales unit effectiveness.
2.10 Theoretical aspects: Structure of Sales Management
2.10.1 Goal Setting Sales As with all other marketing objectives, the objectives of the force sales must be specified in
precise and measurable terms and specify one temporary period par compliance. The objectives
established for the first sales force as a whole and then split into targets for each sales person
individually. The overall objectives of the sales force are set to monetary term the total volume
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or unit, market share, or profit. The objectives for individual sellers, on the other hand, usually
expressed in monetary terms or unit.
Some companies have very specific objectives and activities for force sales. A company advises
sellers to devote 80% of their time to present customers and prospects to 20% and 85% of their
time to current products and 15% to new. As more companies are emerging to markets, its sales
force also need to focus more on markets and customers. Previously it was thought that the
sellers have to worry about sales and the company had to worry about profits. However, a more
modern states that sellers must be interested in much more than just produce sales, they must
also know how to achieve customer satisfaction and company profits.
2.10.2 Structure of the Sales Organization The way it is structured sales force affects the quality of the business communication with
customers. Different approaches are appropriate for different types of companies dealing with
different types of customers. The key is to balance the organizational structure with the type of
communication that the company needs. A sales force can be organized according to: 1) territory,
2) product, 3) task and / or 4) target market.
In territorial specialization each salesperson is assigned a territory and sells all company products
to all customers in that area. This type of specialization is common among companies that have a
small number of products nontechnical unrelated. It allows the company to assess the costs of
doing business in each territory and ensures adaptability to changing conditions in each of them.
It is also helpful for marketers to develop relationships long-term work with clients, this
increases its credibility as a source of new ideas and information to customers.
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Product specialization some vendors sell to customers a territory one or a few products, while
others may sell other company's products to the same customers. Therefore, vendors reach very
familiar with their products. Territories overlap, however, is a problem for companies whose
products are closely related. Customers may be confused when they visit various vendors from
the same company (Bergen, Dutta, & Walker, 2005). It is also expensive pair the company.
The specialization of tasks is usually in large companies. Some vendors can serve customers
located in their territories, while a smaller group that develops new accounts. The newly
established accounts transferred to the seller on whose territory is located the new account.
2.10.3 Main Functions of the Sales Force As the sales force a group of people responsible for binding to the business with the customer,
for which we give it information about the product, negotiate with him and finally closes the
deal. There are basic functions for sellers:
Constant search for customers: Should analyze who can become clients, search and engage with
them. This task is torque constant and the seller must fulfil to have information about the
characteristics of the target audience which will go (what their tastes, which have economic
capacity, etc.) At this point it is important the support of the company, but also the creativity of
representatives (Bergen, Dutta, & Walker, 2005).
Communication: - Through appropriate use of communication tools (brochures, catalogs, etc.),
the seller must inform, educate and convince the customer about the benefits of the product or
service offers. This aspect is vital the ability of the vendor and its constant training.
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Sell: - This is the key issue in football amounts to get the goal. the seller should know closer to
the customer, to appear before him (very important first words and personal appearance),
respond properly address the concerns, doubts and criticisms that it has about product that is
being offered and finally close the approach to the sale (Gia, 2009). This is known as positive
closure is the ultimate goal of all sellers.
Service: - Sellers must constantly respond to their customers and absolve their queries. They
should also ensure that the company offered to the highest customer satisfaction possible.
Information: - The seller is the link between the customer, the market and the company. As their
work involves being in touch with the interests and concerns of potential clients, part of your
task is to inform your company about market trends that occur.
2.10.4 Sizing of Sales Force The optimal size of the sales force of a company depends on the however it is structure,
productivity of the sales force and many factors. This optimal size changes as conditions market
and marketing objectives of the company change.
2.10.5 Monitoring and Evaluation of Sales Force The main job of a sales manager is to provide a supportive and provide the resources necessary
to create effective salesperson. Among these resources are additional training, personal
counselling, help determining problems and providing solutions, technical assistance, additional
support other elements of the promotional mix and emotional support. Sales managers are
continually evaluating the performance of its staff to identify and provide solutions to problems
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and thereby maintain a sales effort balanced. It evaluate aspects of sales performance both
quantitative (eg Product Sales volume and number of new accounts) and qualitatively (by
example, product knowledge and quality of survey). The purpose of the sales manager is to help
the seller to make a better sales job. Management has information on their vendors in various
ways. the most important source is the sales report.
The sales reports are divided into plans for future activities and explanations activities
completed. The best example of the former would be a work plan sellers provide one week or
one month in advance. The plan describes visits that are intended to do and routes. It also allows
management Know where to walk vendors and provides a basis to compare plans and
Performance. Vendors write the activities undertaken in the reports of visits. The visit reports
keep managers informed of sales activities of vendors, show them what's going on with the
account of each customer and provide information that may be useful for subsequent visits.
Marketers also deliver expense reports that they must repay in whole or in part. Some companies
also ask business reports new, lost business and local business and economic conditions. These
reports provide data for management bare to assess the performance of the sales force.
Sales management, using reports and other data vendors can evaluate, formally, the members of
the body of vendors. Evaluation Formal has four advantages. First, management must prepare
and communicate clear parameters for judging the performance. Second, management should
gather well-founded information on each vendor. Thirdly, vendors receive constructive feedback
that helps them to improve their future performance.
Finally, vendors have reason to pay much, since they know that, one morning, will have to meet
with your sales manager and explain your actions. One type of evaluation compares and ranks
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the performance of different vendors as for sales. However, such comparisons can be misleading.
Sellers can pay in different degrees because of the potential differences the territory, the
workload, the degree of competition, the promoter activities Company and other factors.
Moreover, as a rule, sales are not the best performance indicator. Management should be more
interested in the amount each vendor with which contributes to net income, which requires point
analyze the costs and the mix of sales for each salesperson. Another type of evaluation is to
compare the current performance of the seller with its past performance. This comparison should
point directly forward of personnel.
2.11 Sale Channel A sale channel is a structure interdependent business organization which goes from the point of
origin of the product to the consumer. Producers move through marketing channels through
physical sale (Slater, & Olson, 2000). There are three important requirements meeting the sale
channels:
Sale for Industrial Products
Industrial products have a different sale of consumer products and employ four channels are:
Producers industrial users: this is the most common channel for products for industrial use
because it is shorter and more direct-sales representatives use the factory itself. Examples: large
metal manufacturers, producers of conveyors, construction equipment manufacturers and others.
Producers industrial distributors: in this case industrial distributors perform the same functions of
wholesalers and sometimes play the roles of wholesalers and sometimes play the roles of sales
force manufacturers.
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Producers industrial distributors agents industrial users: in this channel agent function is to
facilitate the sales of the products and the role of the distributor is to store the goods until they
are required for the industrial user.
Production industrial user’s agents: in this case industrial distributors are not needed and,
therefore, are eliminated. Example: agricultural products.
Sale 2: Consumer Products
Channels for consumer products are divided into five types that are considered the most
common:
Producers Consumers: this is the shortest and fastest route used in these products. The most
commonly used form is selling door to door, mail order, telemarketing and telesales.
Intermediaries are outside this system (Slater, & Olson, 2000).
Producers retail consumers: this is the most visible channel for end consumers and large number
of purchases made by the general public is through this system. Examples of this sale channel are
dealers, gas stations and clothing stores. In these cases the producer generally has a sales force
that would be responsible for making contact with retailers who sell the products to the public
and make orders after which they sell to the final consumer.
Producers retail wholesalers or retailers: This type of channel is used to distribute products such
as medicine, hardware and food. Used with high-demand products because manufacturers do not
have the ability to get their products to the consumer market.
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Producer’s wholesale intermediary’s consumers: this is the longest canal, is used to distribute the
products and provides an extensive network of contacts, for that reason, manufacturers use to
brokers or agents. This is very common in perishable foods. The mention that these channels in
the manner which has not been the only mean sometimes becomes a combination thereof (Slater,
& Olson, 2000).
2.11.1 Integration of Sale Channels Producers and intermediaries work together for mutual benefit. Sometimes the channels are
organized by agreement; there are others who are organized and controlled by a single initiative
director who can be an agent, a manufacturer, a wholesaler or a retailer. The director may
establish policies for the same and coordinate the creation of the marketing mix. The links of a
channel can be combined horizontally and vertically under the administration of a channel
leader. The combination may stabilize supplies, reduce costs and increase coordination of
channel members.
Vertical integration channels: Combine do or more stages under an address channel. This
results in the purchase of the operations of a link channel or conducting these link operations to
perform the functions. For example, a large mass merchant sales, and discount stores, can store
and transport the products you purchase the manufacturer, thus eliminating the need for the
wholesaler. This integration includes control of all functions from manufacturing to the end
consumer.
Horizontal Integration Channels: It's combining institutions at the same level of operations
under a single administration (Slater, & Olson, 2000). An example will be the department stores.
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This integration provides significant savings in advertising specialists, marketing research,
purchasing, etc. And can carry out an organization to merge with other organizations or
increasing the number of units.
Horizontal integration is not the best approach to improve management and sale among its
limitations include:
· Difficulty coordinating more units.
· Less flexibility
• Increased planning and research to tackle larger scale operations.
· More heterogeneous market.
2.11.2 Selection Criteria for Sale Channel The allocation decisions should be taken based on the objectives and overall marketing strategies
of the company. Most of these decisions are made goods producers, who are guided by three
management criteria:
The Market Coverage: The channel selection is important to consider the size and potential
market value which provision. As mentioned intermediaries reduce the amount of transactions
you need to do to get in touch with a certain size market, but it is necessary to take into account
the consequences of this fact, for example, if a producer can make four contacts with final
consumers, but makes contact with four retailers who look to their end users do with the total
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number of contacts in the market will have grown to sixteen, as indicating increased market
coverage with the use of intermediaries (Swanson, 2003).
Control: Used to select the appropriate sale channel, ie is the product control. When the product
leaves the hands of the producer, lose control because it became the property of the buyer and it
can do what it wants with the product. This means that people can leave the product in a
warehouse or supplied differently on their shelves. Therefore it is more convenient to use a short
channel of sale because it provides more control (Slater, & Olson, 2000).
Costs: Most consumers think that when shorter canal, the lower the cost of sale and therefore
lower the price to be paid. However, it has been shown that intermediaries are specialists that
perform this function more effectively than would a producer, so sale costs are generally lower
when using intermediaries in the sale channel.
From the above it can be deduced that use a shortest sale channel generally gives a result, a very
limited market coverage, control and higher products higher costs, on the contrary, gives a longer
channel by result broader coverage, lower product control and low cost.
The more economic seems a sale channel, the less there is conflict and rigidity. In making the
assessment of the alternatives must start by considering its impact on sales, costs and profits. The
two known alternative sale channels are the sales force of the company and the producer's sales
agency. As people know the best system is the one that produces the best relationship between
sales and costs. Analysis begins with an estimate of the sales made in each system, as some costs
depend on the level of the same (Swanson, 2003).
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2.11. 3 Importance of Sale Channels The decisions on the sale channels products give rise benefits and time benefits to the consumer.
The beneficial thing was the fact of taking a product close to the consumer so that this does not
have to travel far to get it and to satisfy a need. The benefit of place can be viewed from two
perspectives: the first considers the products whose purchase is favored when they are very close
to the consumer, who is not willing to make a big effort to get them.
The second view considers the exclusive products, which are found only in certain places to keep
its exclusive character, in this case, the consumer is willing to make some effort, to varying
degrees, to obtain the product as concerned.
The benefit is a result of the previous time and that without the benefit of all, this cannot be. It
consists of taking a product to the consumer in the most appropriate time. There are products that
should be available to the consumer at a time after which the purchase is not made; others must
be sought for some time towards higher consumer satisfaction.
Provide specialization and division of labour: the breakdown of a complex task into smaller, easy
to assign to specialists, creates greater efficiency and reduces average production costs.
Marketing channels also achieve economies of scale through specialization and division of
labour to help producers who lack motivation, funding or expertise to sell directly to end users or
consumers.
How to Overcome the Discrepancies:
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Discrepancy of quantity: the difference between the amount of product produced and the amount
that the end user wants to buy. Storing and distributing the product in the right quantities solve
sales channels quantity discrepancies, because they get the products available in the quantities
desired by consumers.
Discrepancy of assortment: the lack of all those items that a consumer needs to get the
satisfaction of a product.
To overcome the discrepancies of assortment, marketing channels together in one place many of
the products needed to round out the assortment that the consumer needs.
Temporal mismatch: the difference between the time a product is produced and the time when a
consumer is ready to buy.
Marketing channels resolve discrepancies temporary holding inventories in anticipation of
demand.
Space-discrepancy: Since mass production requires many potential buyers, markets are often
arranged in large geographical regions, creating a dispersion of space.
Marketing channels achieving spatial discrepancies resolved that products are available in
convenient locations for consumers.
Providing contact efficiency: simplify the sale channels by reducing the number of transactions
required to get products from manufacturers to consumers, in addition to an assortment of goods
available in one place.
The use of intermediaries in the channel greatly reduces the number of required contacts. As a
result, producers offer their products effectively and cost efficiency to consumers worldwide.
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Channel Functions
Intermediaries marketing channels perform several essential functions that enable the flow of
goods between the producer and the buyer.
The three basic functions that develop intermediaries are:
1. Transactional functions refer to the contact and communication with potential buyers to make
them aware of existing products and explain its features, advantages and benefits
2. Logistics functions include selection, integration, mapping and classification of products in
homogeneous or heterogeneous sets.
3. Facilitation functions including research and funding. The research provides information about
the channel members and consumers. The funding ensures that channel members have enough
money to keep products flowing through the channel to the end consumer.
2.11.4 Channel Structure
A product takes many routes to the final consumer. Marketers seek the most efficient channel
among the many alternatives available. The structure of marketing channels is different for each
type of product:
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2.11.5 Channels for Consumer Products There are four ways in which manufacturers have products to consumers.
Producers use the direct channel to sell directly to consumers.
Broker channels commonly used in markets with many small manufacturers and many retailers
that lack the resources to find each other.
The agents and brokers meet manufacturers and wholesalers for negotiations, but do not get the
title to the goods.
Most consumer products are sold by retailers and wholesalers channels. It is more common a
retail channel when it comes to sizeable firms and wholesaler for inexpensive items.
Agreements alternate channel.
The different types of alternate channels are:
Multiple channels. When a manufacturer selects two or more channels to distribute the same
product to target markets, that arrangement s called dual or multiple sale.
Non-traditional channels: arrangements often non-traditional channels help differentiates a
company's product from those of its competitors. Non-traditional channels limit coverage of a
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brand, the manufacturer will offer a niche that serves a way to gain market access and gain the
customer's attention without having to establish channel intermediaries.
Channel Partners: use the channel already established party. Alliances are most often used when
the creation of relationships in the anal marketing is too expensive and time consuming.
Reverse channels: When the product is moved in opposite direction traditional consumer
channels back to the manufacturer. This type of channel is important for products requiring
repair or recycling.
2.11.6 Decisions on the Channel Strategy The design of the marketing channel strategy requires several crucial decisions. They must
ensure that the chosen channel strategy that is consistent with the product, promotion and pricing
strategies.
Factors affecting Channel Selection
Market factors: Among the most important market factors affecting the choice of sale channel
are considerations regarding target customer. Marketing managers must answer the following
questions: Who are the potential customers? What do they buy? Where do they buy? When do
they buy? How do they buy? Channel selection depends on the fact that the manufacturer sells to
consumers or industrial customers.
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The geographic location and market size are also important for channel selection. A very large
market demands more intermediaries.
Factors product: Products that are more complex, tailored and expensive tend to benefit from the
marketing channels more short and direct. This product sells better through direct sales
personnel.
The more standardized the product, the longer its sale channel and increased the number of
intermediaries involved.
The life cycle of the product is also an important factor in selecting a marketing channel.
Channel selection changes during the life of the product.
Another factor is the ease of maintenance of the product. Perishable products have a relatively
short duration. Fragile items may require less handling, these products require fairly short
marketing channels.
Factors manufacturer: Manufacturers with large financial resources, administrative and
marketing are better prepared to use direct channels. These producers have the ability to hire and
train their own sales staff, store your own products and extend credit to customers. Smaller
companies or weaker, must rely on intermediaries to provide these services for them.
Manufacturers selling several products in a related may choose more direct channels.
45
The desire for a manufacturer to control prices, location, brand image and customer support also
tends to influence the selection of the channel.
Levels of Intensity Sale
Companies have three options of sale: intensive sale, exclusive sale or selective sale.
Intensive Sale: It focuses on maximum market coverage. The manufacturer is to have the
product available for sale in each unto where potential customers might want to buy it.
Most manufacturers who follow an intensive sale strategy to sell a large percentage of
wholesalers willing to store their products
Selective sale: Selective sale is achieved when filtered to remove a couple distributors all but a
few in a specific area.
Exclusive sale: The most restrictive of market coverage is exclusive sale, which means only one
or a few dealers in a given area.
2.11.6 Global Marketing Channels Global marketing channels are important for large companies that export products or
manufactured in other countries. Executives must learn respect for cultural, economic,
46
institutional and legal peculiar to each market before attempting to design marketing channels in
different countries.
Importance of Physical Sale
The physical sale covers all business activities that deal with the storage and transportation of
materials and parts and finished inventory until they reach the right place when they are needed
and in a usable condition.
Logistics
Broad term that defines the price of physical sale of raw materials and components production,
both the input and output of the process.
Physical Sale Service
Package of activities performed by a supplier to ensure that the right product is in the room and
at the right time.
Balance between Service and Cost
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Most sale managers try to fix their service level to a point that offers the best service but at
minimal costs. For this, they need to consider the total cost of all aspects of the physical sale
system storage, material handling, inventory control, order processing and transport through the
full cost approach. The basic idea of the total cost approach is the analysis of the relationship of
factors such as the number of wineries, the size of finished goods inventory and transportation
costs. Of course, the cost of any of these items should also be considered in relation to the level
of customer service.
Storage: Sale Managers oversee the constant flow of products from the manufacturer to the end
consumer. However, the end user may not need or want the articles at the same time the maker
produces and wants to sell.
Material Handling: Put the inventory to the warehouse, which moves within it and take it out of
there. The material handling includes these features:
· Receiving items to get them to the warehouse or sale center.
· Identification, selection and labeling of articles
· The delivery of the items to a temporary storage area.
· Recovery, selection or search for shipment (including packing the product in its protective
packaging for shipment).
The goal of the material handling system is to move the items quickly with minimum handling.
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Inventory control: System that develops and maintains an adequate range of products to meet
consumer demands.
Inventory decisions greatly influence the physical sale costs and the level of service provided.
Administrators inventory just in time (JIT): Redesign and simplification of the manufacturing
process by reducing inventory levels and delivering right parts when needed in the production
line.
Order Processing: It is essential to good communication between sales representatives, staff
offices and warehouses and shipments for correct processing of the order.
Transport: Transport is selected based on cost, transit time, reliability, capacity, accessibility,
and traceability.
Physical Sale Service
The fastest growing sector in the economy is the services sector, the same techniques and
strategies used to manage product inventory is useful for inventory management service:
Example:
· Hospital beds
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· Bank accounts
· Seats on airplanes
What distinguishes the sale of traditional sale services is that the production and consumption are
simultaneous in a service environment.
The benefits of a service are relatively intangible example:
In traditional or sale of goods, the delay in production is solved using safety stock.
This is not possible because the services are also intangible benefits, but if the consumer can
clearly see the benefits is that the customer is their priority.
The sale of services focuses on three main areas.
· Minimizing timeout. -
Reduce the minimum time that the client waits in a queue, to be served in a restaurant, waiting in
the doctor's office. This is a key factor in maintaining the quality of service.
Managing Service Capacity
For a manufacturer this is arranged having its stock during periods of peak demand, which is not
so easy for utilities, because if they are able to meet the demand, must reject some potential
customers, lower levels service, or increase capacity.
· Improved delivery through new sale channels.
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These new channels are able to extend the time in which the services are available as 24 hour
ATMs.
Alternatives have been developed in hospitals malls medical calls, these areas are equipped with
fountains, dining areas and other services.
Trends in Physical Sale
· Automation. -
The high computing efficiency of physical sale dramatically, a major goal of automation is to
bring updated information to the desktop of the decision maker, the links between suppliers,
buyers and transporters, are becoming increasingly easy and efficient.
· Electronic sale. -
It is the latest advancement of physical sale includes all types of products and services either in
traditional forms such as fiber optic cable, via satellite transmission of electronic signals
· Environmental issues. -
Environmental legislation and consumer concerns have a profound effect on the businesses that
operate in the country (U.S.), so that managers are much more involved in environmental issues
that affect their businesses.
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Contract Logistics and societies. -
It is a fast growing segment in the sale industry, in contract logistics, a manufacturer or supplier
transmits all the purchasing function and management of transport or other physical sale
subsystem, to an independent third party, allows companies deposits placed fewer plants and sale
centers and sale centers and still provide the same level of service.
Quality in Transport -
Companies that hire the shuttle transport know that quality is a crucial part of their success, and
many of them have made quality measurement programs for transport they use.
The most important quality characteristics are the reception and on-time delivery, competitive
rates and reliable times and itineraries, most carriers responded by developing systems to track
and trace shipments and reduce paperwork.
Global sale-
Businesses find that the global market is more attractive than before, as global trade becomes a
decisive factor in the success or failure of businesses of all sizes, it becomes more important to
overall well-thought strategy.
But the uncertainty of business regarding shipments appears to be the reason why companies are
reluctant to enter international markets.
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Price
It is what is delivered in exchange for a good or service or the money that usually exchanged for
a good or service, the price means one thing for the consumer and something different for the
seller, the consumer is the cost of something, while for the seller, represents income.
Prices are the key revenue which in turn, is for the company's profits, income is the price charged
by the customer, multiplied by the number of units sold, the income is paid by each of the
activities business, production, finance, sale, sales, etc...
The solution to Deregulation
Many service industries that underwent deregulation in recent years changed their pricing
strategies, an example would be in America when the airline industry was regulated, requiring
that all charged the same price per ticket, passengers now encounter a huge number of options, in
fact the best ticket price sometimes changes from one traveller to another agent.
The income-oriented Prices
They focus on maximizing the surplus of revenue over costs; a limitation is that the
determination of costs is difficult for many services
Prices Operationally Oriented
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Looking coupled supply and demand, prices vary
Example: in a hotel is the customers demand and supply rooms, this is achieved by increasing
the rates for the fourth peak seasons and lowering them in slack seasons.
· Prices oriented sponsorship. -
They try to maximize the number of customers using the service, prices vary with the ability to
pay, in different market segments, and offers methods of payment, which increase the likelihood
of purchase, customers can also have capacity negotiating prices.
2.12 Summary Sales management research about improving sales organization performance and effectiveness
has been focused on identifying the characteristics of individual salesperson performance.
According to Churchill et al. (1985), these studies have produced inconsistent results with
respect to the factors affecting sales organization performance. In addition, the hypothesized
predictors explained little of the variation in salesperson performance. In a meta-analysis of the
factors affecting salesperson performance, Churchill et al. (1985) found no single salesperson
characteristic that could explain the significant variation in sales performance amongst sales
representatives and concluded that no single factor or even several factors in a single category of
predictors could accurately predict salespeople’s future sales performance. In addition,
theoretical models that hypothesize multiple determinants and categories of determinants of
salesperson performance were more accurate for explaining sales performance. Whether the
shortfalls found in the meta-analysis by Churchill et al. represent attention to the incorrect sales
54
performance indicators and sales performance dimensions or merely the use of poor sales
performance measures is still uncertain.
The theoretical and empirical studies reviewed offered other approaches to improving sales
force performance. The findings from these studies proposed that improving sales force
performance requires increased emphasis on assessing salesperson job behaviour, as opposed to
only salesperson results. Salesperson performance in activities such as the number of sales calls,
preparing for sales calls, presenting sales information, and the degree of participation in team-
based selling might be a substantial contributor to overall sales organization effectiveness.
Researchers and sales executives recognize the importance of situational contingencies such as
systems of sales management control and sales territory design. These contingencies may act as
moderators and/or predictors of sales organization effectiveness. The analysis of such
contingencies is apparent in research focused on sales management practices and sales
organizations as opposed to the characteristics of individual salespeople. Prior research studies
supported the seminal work by Anderson and Oliver (1987) that a positive relationship exists
between behaviour-based performance and the affective and motivational states of salespeople.
However, the strength of the relationship between the factors and sales organization performance
were weak. Few of these studies examined these relationships within sales organization in the
coffee industry. When evaluating sales force performance, the sales manager should separate and
recognize uncontrollable factors that can influence individual salesperson’s outcome
performance such as market potential. Both controllable and uncontrollable factors are
significant for understanding what drives sales performance.
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Chapter 3: Methodology
3.1 Introduction The purpose of the present study is to examine the relationships between sales management
control, sales territory design, sales force performance, and sales channels effectiveness in
starbucks coffee. Past research results from different industries suggested that examining
situational contingencies such as sales management control and sales territory design may
provide an alternative approach for identifying factors to improve sales organization
effectiveness. Research shows the independent variables, namely, sales management control,
sales force performance, behavioural and outcome performance, and sales territory design. The
research also shows the dependent variable, namely, sales organization effectiveness and
hypothesized relationships between the constructs. The present study used the empirical model to
test hypotheses among sales managers in starbucks.
3.2 Research Design A quantitative research methodology using an explanatory correlation research design was
employed. In correlation research designs, a correlation technique is used to describe and
measure the degree of association or relationship between two or more variables or sets of
scores. A correlation research design does not attempt to control or manipulate variables. Instead,
the design is used to relate two or more scores using the correlation coefficient. Creswell
identified two primary forms of correlation research: explanation and prediction. Correlation
research assists with explaining the association between two or more variables or predicts an
outcome.
56
Based on the purpose of the present study, employing a quantitative explanatory correlation
research design is considered appropriate. The purpose of the present study is to explain the
magnitude of the relationships between the independent variables of sales management control,
sales territory design, and sales force performance and the dependent variable of sales
organizational effectiveness within Starbucks.
3.3 Appropriateness of Design In a quantitative research methodology, problems in which trends need to be described or
explanations developed for relationships between variables are studied. In contrast, qualitative
research is used to examine a research problem in which a central phenomenon is explored.
According to Creswell, an exploration implies that little is known about the phenomenon under
investigation and more needs to be learned from the participants. Because the present study is an
extension of prior quantitative research and endeavours to explain the relationship between
variables, using a quantitative explanatory correlation research design is considered appropriate.
Quantitative research can be divided into intervention and non-intervention research.
Intervention research, such as experimental and quasi experimental research, is used to explain
whether an intervention influences an outcome for one group as opposed to another group. Non-
intervention research, such as correlation research, is focused on examining the association or
relationship among one or more variables. Consistent with non-intervention research, the present
study examined the relationships among variables using a correlation research design.
57
3.4 Population The population for the present study consisted of managers in Starbucks. According to Curry and
Frost (2001), managers in starbucks are responsible for managing territory sales representatives
within a specific locale. The managers were asked to evaluate their own activities and those of
their sales unit. The sales unit typically comprises a group of salespeople reporting to a first-line
sales manager and is a common denominator across sales organizations. Unlike previous studies
that were focused on sales management control, the present study does not focus on addressing
issues related to the number of levels or the structuring of the broader sales organization, but is
limited to a focus on the sales unit in Starbucks.
3.5 Sampling Frame Creswell (2002) defined a sample as a subgroup of the larger population that is the focus of a
study. According to Creswell, the purpose of using a sample is to generalize the research results
to the target population. The target population for the present study is managers employed by
Starbucks Coffee. Starbucks Coffee consists of four separate coffee operating companies with
different customer and product portfolios. Each operating company has different sales
management personnel. The objective of the sampling plan is to include managers from each of
the operating companies within Starbucks Coffee managers sampled for the present study varied
by operating company, performance, industry tenure, and manager experience. According to
Creswell (2002), the most rigorous form of sampling in quantitative research is probability
sampling. In probability sampling, individuals are selected from a target population that is
representative of the total population being studied. According to Creswell, probability sampling
is the most rigorous form of sampling in quantitative research because a claim that the sample is
58
representative of the population studied can be made and, as such, generalizations to the
population can be made. A less rigorous form of sampling is called non-probability sampling
where individuals are selected because they are available and convenient and represent some
characteristic the investigator seeks to study. Probability sampling is used for the present study.
3.6 Sample Size When selecting participants for a study, determining the size of the sample is essential. Creswell
(2002) maintained that a general rule is to select as large a sample as possible from the
population or from the individuals available. The larger the sample, the more similar it will be to
the population and the more dependable generalizations made will be. One way to determine the
sample size is to select a sufficient number of participants for the statistical procedures that were
used. As a rough estimate, Creswell suggested the following:
1. The selection of approximately 15 participants in each group in an experiment,
2. The selection of approximately 30 participants for a correlation study to relate variables, and
3. The selection of approximately 350 individuals for a survey study.
These numbers are estimates based on the size needed for statistical procedures such as group
comparisons, relating variables, and obtaining a large enough sample in a survey so that the
findings based on the sample are likely to be reliable estimates of the characteristics of the
population.
59
3.7 Confidentiality Permission was obtained from senior management of Starbucks Coffee to collect data from
managers. Participant responses were kept anonymous and confidential. The results of the study
will be reported to the senior management of Starbucks Coffee as part of the conditions for
conducting the study.
3.8 Data Collection Data was collected in a manner consistent with previous sales management control research. The
sample for the present study was managers employed by Starbucks Coffee who resided in
different locations in the United States. Data was collected using an electronic questionnaire
completed by managers in the participating organization; the sales unit was the unit of analysis.
Managers evaluated their sales unit by answering questions on the administered questionnaire.
Participants accessed the electronic questionnaire via the Internet.
The research questionnaire was emailed to the study participants with specific directions for
completion. A high response rate was expected because the study sample was notified and asked
to volunteer to complete the questionnaire by senior management at Starbucks Coffee.
According to Creswell (2002), using the electronic questionnaire reduces the risk of inaccurate
data collection from the study participants and increases the probability of accurate responses
and timely completion of the questionnaire.
The questionnaire was used to collect data for the independent variables of sales management
control, sales territory design, and sales force performance and the dependent variable, sales
organization effectiveness. The data collected was consistent with previous studies that
investigated the relationships between sales management control, sales territory design, sales
60
force performance, and sales organizational effectiveness in different target populations.
Consistent with past research managers evaluated their sales unit regarding the relationships
between the independent and dependent variables by answering questions from the administered
questionnaire.
3.9 Data Analysis The sequence of analysis involved in the present study included four stages. Stage 1 included a
pre-analysis data examination and data preparation. Stage 2 included validation of the measures.
Stage 3 included a correlation analysis of the constructs as guided by the hypotheses. Stage 4
included an assessment of the structural model and the path estimates. The chosen analytical
approach is consistent with past research about sales management control, which the present
study extends to a new sample. The present study includes multiple independent variables.
According to Creswell (2002), multiple regressions, or multiple correlations, are correlation
statistical procedures for examining the combined relationship of multiple independent variables
with a single dependent variable. In regression, the variation in the dependent variable is
explained by the variance of each independent variable, as well as the combined effect of all
independent variables designated R² (Kline, 1998). The present study used multiple regression
coefficients to explain the influence of the independent variables of sales management control,
sales territory design, and sales force performance on the dependent variable of Starbucks’
effectiveness.
61
3.10 Summary The purpose of the present quantitative explanatory correlation study is to examine relationships
between sales management control, sales territory design, sales force performance, and sales
channels effectiveness in Starbucks. The constructs for the present study extended previous
research about sales management control to a new target population. Past research about sales
management control has not been performed for Starbucks. The target population for the present
study is managers within the company. Managers have the responsibility to monitor, coach, and
assess territory sales representatives’ job activities and ensure that they achieve their assigned
territory sales goals. The unit of analysis was the sales unit, which typically comprises a group of
salespeople reporting to a manager. Managers evaluated their sales unit regarding the
relationships between the study independent and dependent variables by completing an
electronic questionnaire. The sample of managers came from Starbucks Coffee.
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Chapter 4: Results and Discussion
4.1 Introduction The intent of this quantitative study, which uses an explanatory correlation research design, was
to examine the relationships between sales management control, sales territory design, sales
force performance, and sales channels effectiveness in starbucks. An electronic questionnaire
was administered to collect data to measure the variables. Data was collected from managers
within company. An overview of the data analysis and study results is presented in this chapter.
4.2 Data Analysis Process The data analysis constituted four stages. The four stages of data analysis included pre-analysis
data examination and data preparation, which was stage 1; validation of the measures, which was
stage 2; a correlation analysis of the constructs and hypotheses, which was stage 3; and an
assessment of the structural model and the path estimates, which was stage 4. The first section of
this chapter presents the results of the first two stages of data analysis; subsequent sections
present the results of the remaining two stages of the data analysis and results. The various
analyses in the present study were undertaken using the SPSS 12.0, LISREL 8.80, and AMOS
6.0 computer programs. The measurement characteristics of the constructs included in the
research model are initially examined; in the sections that follow the results of these initial
analyses are described.
63
4.3 Pre-Analysis Data Examination and Data Preparation
4.3.1 Population and Sample Selection This study was conducted at Starbucks Coffee. The random sample for this quantitative study,
which used an explanatory correlation research design, was drawn from Starbucks Coffee. The
random sample consisted of 200 managers. Each of the 200 managers was randomly selected for
the sample using a random numbers. Each manager assigned to the random sample received an
electronic questionnaire to complete. In total, 153 managers returned the electronic
questionnaire, resulting in a 77% response rate. The response rate exceeded the goal of 100
responses. The higher response rate is attributed to senior sales management of Starbucks Coffee
creating awareness and asking each manager to voluntarily complete the questionnaire. A
missing value analysis resulted in two cases being deleted from the sample, making the final
sample 151. Examination of the final sample revealed that more than two thirds of the
participants (68%) had worked in the coffee industry for more than five years.
4.3.2 Descriptive Statistics for the Individual Items A total of 78 items were used to estimate the five constructs included in the suggested model.
The constructs included four measures for sales management control, one each for satisfaction
with sales territory design and sales force performance, six for sales force behavioural
performance, and three for sales channels effectiveness. Consistent with previous sales
management control research the construct measures in the present study were treated as
continuous scales. Sales management control was measured using a 10-point scale that ranged
from 1, meaning not at all, to 10, meaning to a great extent. Sales territory design was measured
using a 7-point scale that ranged from 1, meaning not at all satisfied, to 7, meaning very
satisfied.
64
The sales force performance construct was measured using a 7-point scale that ranged from 1,
meaning needs improvement, to 7, meaning outstanding. The sales channels effectiveness
construct was measured using a 5-point scale that ranged from 1, meaning much worse, to 5,
meaning much better.
4.3.3 Missing Values According to Tabachnick and Fidell (2001), “Missing data is one of the most pervasive problems
in data analysis” (p. 58). Missing data can have serious effects on the reliability, validity, and
generalizability of the data. Missing data can be indicative of lack of knowledge, fatigue, or
sensitivity or it can be the result of a participant’s interpretation that a question is irrelevant.
According to Tabachnick and Fidell, when the number of missing cases is small (< 5%), it is
common to exclude the cases from the analysis. In the present analysis, there were two cases
with 100% and 40% missing values. Before conducting an exploratory factor analysis, it must be
determined if missing data is systematic (represents bias) or can be ignored. Missing data also
has other important ramifications, especially in factor analysis. Factor analysis using list wise
deletion should not be conducted unless the missing data is missing completely at random
(MCAR).
4.3.4 Missing Value Analysis The SPSS missing value analysis (MVA) was used to analyze the data for both missing at
random (MAR) and MCAR data loss using an expectation maximization technique. Little’s
MCAR test (Little & Rubin, 2002), which is a chi-square test for missing completely at random,
was used for the analysis. The results from Little’s MCAR test suggested that the missing data is
65
not MCAR and that the data loss pattern is systematic, χ2 (92, N = 153) = 211.11, p = .000.
Cases 107 and 121 were deleted and the analysis was rerun. After rerunning the analysis, Little’s
MCAR test result implied that the data is missing completely at random and is not systemic, χ2
(83, N = 151) = 71.5, p = .812.
4.4 Validation of the Measures The model of sales organization effectiveness is dependent on sales management control, sales
territory design, sales force behavioural performance, and sales force outcome performance.
Babakus et al. (1996) and Piercy et al. (1999) employed the same model using different samples.
That sales outcome performance will have a positive effect on sales organization effectiveness
was anticipated. Similarly, sales force outcome performance is dependent on sales force
behavioural performance, sales management control, sales territory design, and a residual
disturbance term. The residual error term, also called disturbance term, reflects unexplained
variance or the effect of unmeasured variables plus measurement error. Sales force behavioural
performance is dependent on sales management control, sales territory design, and a disturbance
term. Sales territory design is dependent on sales management control and a residual disturbance
term that represents all the variation in sales territory design not explained by the latent,
exogenous variable, sales management control. The disturbance term is assumed to be
independent of the exogenous variable and is also assumed to be independent of the disturbance
terms attached to sales force behavioural performance, sales force outcome performance, and
sales organization effectiveness.
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4.5 Assessing Reliability and Validity of Constructs and Indicators One of the most important advantages offered by latent variable analyses is the opportunity to
assess the reliability and validity of variables. In general, reliability refers to consistency of
measurement, and validity refers to the extent to which an instrument measures what it is
intended to measure. For example, a survey is reliable if it provides essentially the same set of
responses for a group of participants upon repeated administration. Similarly, if a scale is
developed to measure sales channels effectiveness and scores on the scale do, in fact, reflect
participants’ underlying levels of sales behaviour performance, the scale is valid. For both
reliability and validity, a number of different ways that reliability and validity may be measured
exist. Estimates for the present study were obtained using the LISREL 8.80. The reliability of an
indicator, or observed variable, is defined as the square of the correlation between a latent factor
and that indicator. For instance, the standardized loading for the path between monitor and
control is .722 and the reliability is .522. Looking at the range of indicator reliabilities, many
have relatively high reliability (.60 and above), and several have low reliability, like planning
with an indicator reliability of .180.
4.6 Summary Chapter 4 provided a detailed overview of the study sample, data analysis, and results. A random
sample of 200 managers was included in the study. All managers were employed in the coffee
industry. Each of the managers within the random sample received an electronic questionnaire to
complete. In total, 153 managers completed the questionnaire, resulting in a response rate of
77%, which was higher than expected. The results of the correlation analysis found that a
significant relationship exists between sales force behavioural performance and sales force
67
outcome performance. Sales force outcome performance has a significant influence on sales
organization effectiveness. Behavioural-based sales management control is strongly related to
sales force behavioural performance. Satisfaction with sales territory design has a significant
relationship with sales force behavioural performance.
The results of the structural equation model suggested that sales force behavioural performance
has a significant relationship to sales force outcome performance. Sales force outcome
performance has the greatest influence on sales organization effectiveness. Satisfaction with
sales territory has a positive influence on sales channel effectiveness, mainly through its
significant relationship with sales force behavioural performance. Finally, behavioural-based
sales management control has a significant influence on sales force behaviour performance.
Chapter 5 provides a detailed summary of the conclusions, implications, and recommendations
reached in this study.
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Chapter 5: Conclusions and Recommendations
Limited research exists about what factors influence sales force performance in coffee sales
organizations. Sales leaders within coffee sales organizations therefore, lack information to
improve sales force performance. Past research from other industries attempted to help identify
reliable and valid predictors of sales force performance by studying the determinants of
individual salesperson’s performance. However, the hypothesized predictors explained little of
the variation in sales force performance. The purpose of the present quantitative study, using an
explanatory correlation research design, was to examine the relationships between sales
management control, sales territory design, sales force performance, and sales organization
effectiveness in sales organizations within the coffee industry. Examining these constructs within
Starbucks extended and built upon the findings of the research about sales force management
control by distinguishing between behaviour-based and outcome-based sales management
control approaches in a new sample. In addition, the constructs evaluated in the present study
were found in past studies examining sales management processes and modelling the
interrelationships between them followed the general propositions formulated by Walker et al.
(1979). According to Babakus et al. (1996), Walker et al. research is considered the foundation
for much of the contemporary sales and sales management research.
The scope of the present study was limited to managers employed by Starbucks Coffee.
Managers were considered first-line sales managers within coffee sales organizations. The
present study examined the influence of sales management control, sales territory design, and
sales force performance on sales organization effectiveness in four separate operating companies
69
within Starbucks Coffee. The data collection activities associated with the present study was
limited to managers within the four operating companies of Starbucks Coffee.
5.1 Validation of the Measures The model used for the present study had five latent constructs. Both composite reliability and
construct validity were examined for each of the constructs. Composite reliability was computed
for each latent factor and was found to meet the minimum acceptable level. Validity was
examined using variance extracted estimates. Variance extracted estimates assess the amount of
variance explained by an underlying factor in relation to the amount of variance due to
measurement error. The variance extracted estimates for the present study met the minimal
threshold, so the validity of all latent constructs were deemed acceptable.
5.2 Implications of the Findings The findings represented by the model in Figure 4 offer strong support for past research in other
industries that suggested systems of sales management control play a critical role in: (a)
designing effective sales organizations, and (b) influencing behavioural and outcome
performance. Consistent with prior research in other industries, the results from the present study
suggested that coffee manager satisfaction with sales territory design is directly related to sales
organizational effectiveness. However, unlike prior research, the sales territory design
relationship to sales organization effectiveness was the significant relationship with respect to
sales force behavioural performance. This is important because sales force behavioural
performance demonstrated a significant relationship to sales force outcome performance, and
70
sales force outcome performance had a significant relationship to sales organization
effectiveness. In addition, behavioural-based management control was found to have a strong
relationship to sales force behavioural performance. These findings supported past sales
management principles that had not been tested empirically in sales organizations within the
coffee industry.
The strong relationship found between sales force behavioural performance and outcome
performance contributed to the research about sales management control. The results strongly
suggested that coffee managers expect salespeople to perform well on both behaviour and
outcome performance measures. Consistent with past research by Babakus et al. and Piercy et al.,
the results from the present study contradicted the relationship proposed by Anderson and Oliver
(1987). Anderson and Oliver predicted that salespeople operating under behaviour-based control
systems would perform poorly on outcome measures of performance. This finding is important
because Anderson and Oliver conducted seminal research on systems of behavioural and
outcome sales management control.
5.3 Recommendations for Future Research The findings from the present study provided important information for coffee sales leaders
about factors that may increase sales channels effectiveness. However, the research was limited
to the variables and sample studied. The remainder of this section provides recommendations for
future research. First, the results of the present research suggested that a need exists to better
understand the relative influence of sales manager monitoring, directing, evaluating, and
rewarding in the context of an overall sales management control system and its influence on
sales force behavioural performance. It was noted that in the present study the manager activity
71
of directing showed a weaker relationship with sales force behavioural performance than was the
case for the other elements of behaviour-based sales management control. It would be valuable
to understand these interrelationships as a basis for designing effective systems of sales
management control in coffee sales organizations. While it is often suggested that sales manager
coaching activities are important, linking different degrees and types of coaching to outcomes
would be of immense value to managers. Second, the present study confirms earlier findings
from other industries that sales territory design influences sales force behavioural and outcome
performance, and hence sales organization effectiveness. Clearly, while sales territory design has
been demonstrated to have an influence on performance, the design of sales territory is not
normally a factor within the control of the individual salesperson and, to some extent, is not
under the control of the manager. As a result, consistent with Piercy et al.’s (1999)
recommendation, a key question is the extent to which ineffective or outdated sales territory
designs represent an uncontrollable factor that should be assessed in salesperson performance
evaluations. By bringing attention to the important role played by sales territory design on the
sales management process, these studies suggest that future evaluations of sales force
performance and sales channels effectiveness should include explicit consideration of the role
and influence of sales territory design factors. Third, the results suggested that behavioural-based
sales management control was not related to satisfaction with sales territory design. Based on the
results of the present study, sales territory design has a significant influence on behavioural
performance and behavioural performance on outcome performance and requires further
investigation. It may be useful to understand the relationships between these two constructs
within coffee sales organizations more thoroughly, especially because, unlike previous research
findings (Piercy et al, 1999) from other industries, this study found that sales territory design and
72
behavioural-based sales management control is strongly related to sales force behavioural
performance.
Fourth, the findings from this research indicated that sales territory design had a positive non-
significant correlation with sales force outcome performance. This finding was contrary to prior
research examining the same relationships in other industries. Because this study found outcome
performance has a significant and direct relationship to sales organization effectiveness, it may
be beneficial to understand this relationship within coffee sales organizations. The cost of
employing a sales force is expensive in the coffee industry. As a result, leaders in sales
organizations in the coffee industry need to identify ways to influence outcome performance
through choices about sales territory design.
5.4 Summary This study made use of an explanatory correlation research design to examine the relationships
between sales management control, sales territory design, sales force performance, and sales
organization effectiveness in sales organizations within the coffee industry. The objective of the
study was to explain the magnitude of the relationships of the independent variables, namely,
sales management control, sales territory design, and sales force performance on the dependent
variable, namely, sales organization effectiveness. The theoretical framework for the study was
based on a sales management control system. According to Anderson and Oliver (1987), a
control system is an organization’s set of procedures for manager supervision, guidance,
assessment, and compensation of its employees.
73
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