4 sales organization structure

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Types of Sales

Organization


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Module 4:

Sales Organization Structure and Sales Force Deployment

Sales Organization Concepts

SpecializationThe degree to which individuals perform some of the

required tasks to the exclusion of others. Individuals

can become experts on certain tasks, leading to better

performance for the entire organization.

Centralization

The degree two which important decisions and tasks

performed at higher levels in the management

hierarchy. Centralized structures place authority andresponsibility at higher management levels.


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Module 4:


Sales Force Specialization Continuum

Some specialization

of selling activities,

products, and/or

customers

All selling activities

and all products to

all customers

GeneralistsGeneralistsCertain selling

activities for

certain products forcertain customers

SpecialistsSpecialists


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Module 4:


Flat Sales Organization

Span of Control

Man

agementLeve

ls

National

Sales

Manager

District

Sales

Manager

District

Sales

Manager

District

Sales

Manager

District

Sales

Manager

District

Sales

Manager

Span of Control vs. Management Levels


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Module 4:


Tall Sales Organization

National Sales

Manager

Span of Control

M

anag

emen

tLevels

District

SalesManager

District

SalesManager

District

Sales

Manager

District

SalesManager

District

SalesManager

District

SalesManage

r

Regional Sales

Manager

Regional Sales

Manager

Span of Control vs. Management Levels


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Module 4:


National Sales Manager

Regional Sales Managers

District Sales Managers

Sales Training Manager


Salespeople

Staff Position

Line Position

Line vs. Staff Positions


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Module 4:


Organizational

Structure

Organizational

StructureEnvironmental

Characteristics

Environmental

CharacteristicsTask

Performance

Task

PerformancePerformance

Objective

Performance

Objective

SpecializationHigh Envir.

uncertainty Nonroutine Adaptiveness

CentralizationLow Envir.

UncertaintyRepetitive Effectiveness

Selling-Situation Factors and

Organizational Structure


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SimpleProduct

Offering

SimpleProduct

Offering

ComplexRange of

Products

ComplexRange of

Products

Customer Needs DifferentCustomer Needs Different

Customer Needs SimilarCustomer Needs Similar

Market-

Driven

Specialization

Product/Market-

Driven

Specialization

Geography-

Driven

Specialization

Product-

Driven

Specialization

Customer and Product Determinants

of Sales Force Specialization


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Module 4:


Geographical Structure


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Module 4:



This is the least specialized and most generalizedtype of sales-force.


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Module 4:



A potential weakness of the geographical structure isthat the salesperson is required to sell the full range ofthe companys products. They may be very different

technically and sell into a number of diverse markets. In such a situation it may be unreasonable to expect

the salesperson to have the required depth oftechnical knowledge for each product and be

conversant with the full range of potential applicationswithin each market. This expertise can only bedeveloped if the salesperson is given a morespecialized role.


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Module 4:


Geographic Sales Organization


Zone Sales Managers (4) Zone Sales Managers (4)

District Sales Managers (20)

Salespeople (100) Salespeople (100)


Eastern Region Sales Manager Western Region Sales Manager



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Module 4:


Product Specialization Structure


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Module 4:


Product Specialization Structure

If the companys products sell essentiallyto the same customers, problems of routeduplication (and hence higher travelcosts) and customer annoyance can arise.

Inappropriate use of this method can leadto a customer being called upon bydifferent salespeople representing thesame company on the same day.


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Module 4:


Product Sales Organization


Office Equipment Sales Manager Office Supplies Sales Manager


Salespeople (100) Salespeople (100)



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Module 4:


Strength & Weakness


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Module 4:


Customer-based structures

(Industry-Based Structure)


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Module 4:


Market Sales Organization


Zone Sales Managers (4)


Salespeople (150)


Commercial Accounts

Sales Manager

Government Accounts

Sales Manager

Sales Training

Manager

Salespeople (50)


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Module 4:



The problem of the same customer being served byproduct divisions of the same supplier, the complexityof buyer behavior, which requires not only input from

the sales function but from other functional groups(such as engineering, finance, logistics and marketing),centralization of purchasing, and the immense value ofsome customers have led many suppliers to rethink

how they organize their sales-force.Companies are increasingly organizing around

customers and shifting resources from product orregional divisions to customer-focused business units.


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Module 4:



(Market-centered structure)

Another method of specialization is by the type of market served.Often in industrial selling the market is defined by industry type.

Thus, although the range of products sold is essentially thesame, it might be sensible for a computer firm to allocate its

salespeople on the basis of the industry served, e.g. banking,manufacturing companies and retailers, given that differentindustry groups have widely varying needs, problems andpotential applications.

Specialization by market served allows salespeople to gaingreater insights into these factors for their particular industry, aswell as to monitor changes and trends within the industry thatmight affect demand for their products. The cost of increasedcustomer knowledge is increased travel expenses compared with

geographically determined territories.


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Module 4:



(Account-size Structure)


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Module 4:Sales Organization Structure and Sales Force Deployment


(Account-size Structure)

The range of selling skills required is thereforewider than for the rest of the sales-force, whodeal with the smaller accounts.

Some organizations adopt a three-tier system,with senior salespeople negotiating with keyaccounts, ordinary salespeople selling tomedium-sized accounts, and a telemarketingteam dealing with small accounts.


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LargeLarge

SmallSmall

Complexity of AccountComplexity of Account

SizeofAcc

ount

SizeofAcc

ount

Large

Account

SimpleSimple ComplexComplex

Major

Account

Regular

Account

Complex

Account

Identifying Major Accounts


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Develop Major Account Salesforce

Assign Major Accounts to

Sales Managers

Assign Major Accounts to Salespeople

along with Other Accounts

Major Accounts Options


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C t b d t t


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Functional Sales Organization

The work is organized according to thefunctions e.g.

1.Sales2.Telemarketing

3.Promotion

4.After Sales Service


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Functional Sales Organization


Field Sales Manager Telemarketing Sales Manager

Regional Sales Managers (4)

Salespeople (160)

Salespeople (40)




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Mixed organization

In practice a combination of various sales organizationalstructures may be used.

Like many selling decisions, the choice of salesorganization is not a black and white affair, which is why

many sales forces are a blend of general territoryrepresentatives and specialists.

Many companies use all forms of selling simultaneously:for very big accounts they use key account specialists; for

the balance of small and medium accounts they usegeneral territory representatives, perhaps supplemented byproduct application specialists who help generalists acrossseveral territories.


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F u n c t i o n a l

G e o g r a p h i c

C u s t o m e r

P r o d u c t

P r e s i d e n t

V i c e P r e s i d e n tM a r k e t i n g

V i c e P r e s i d e n tP r o d u c t i o n

U . S .M a r k e t i n gM a n a g e r

I n t e r n a t i o n a lM a r k e t i n gM a n a g e r

C o n s u m e rG o o d sM a n a g e r s

I n d u s t r i a lG o o d sM a n a g e r s

I n t e r n a t i o n a lS a l e sM a n a g e r

E u r o p e a nD i v i s i o n

L a t i nA m e r i c a nD i v i s i o n

A s i a n aA f r i c a nD i v i s i o n

S o a p P r o d u c t sD i v i s i o n a lM a n a g e r

P a p e r P r o d u c t sD i v i s i o n a lM a n a g e r

F o o d P r o d u c t sD i v i s i o n a lM a n a g e r

E a s t e r nS a l e sD i v i s i o n

C e n t r a lS a l e sD i v i s i o n

W e s t e r nS a l e sD i v i s i o n

V i c e P r e s i d e n tE n g i n e e r i n g

Hybrid Sales Organization


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Hybrid Sales Organization

Structure


Major Accounts

Sales Manager

Regular Accounts

Sales Manager

Office Equipment

Sales Manager

Office Supplies

Sales Manager

Field Sales

Manager

Telemarketing

Sales Manager

Commercial Accounts

Sales Manager

Government Accounts

Sales Manager

Western

Sales Manager

Eastern

Sales Manager


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Comparison ofSales Organization Structures

Comparison ofSales Organization Structures

Organizational

Structure Advantages Disadvantages

Geographic

Low Cost No geographic duplication No customer duplication Fewer management levels

Limited specialization

Lack of managementcontrol over product or

customer emphasis

Product

Salespeople become experts

in product attr. & applications Management control over

selling effort

High cost Geographic duplication Customer duplication


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NEW FORMS OF ORGANIZATIONS

A strategic alliance is a formal relationship created with

the purpose of joint pursuit of mutual goals.

STRATEGICALLIANCES


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C u s t o m e r

S a l e s M a r k e t i n g M a n u f a c tT e c h n i c a l

S u p p o r t

S u p p l i e r S e l l i n g T e a m


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M d l 4

TEAM-BASEDORGANIZATIONS

Many organizations are more responsive to their

environment because they use work teams as their

basic building blocks.

4 sales organization structure

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