sales ion structure(sales and distribution)
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Sales Organization Structure andSales Organization Structure and
Sales Force DeploymentSales Force Deployment
Module FourModule Four
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Merging Two Sales ForcesMerging Two Sales ForcesAn Experts Viewpoint:An Experts Viewpoint:
Zeneca and Astra were two independent pharmaceuticalZeneca and Astra were two independent pharmaceutical
companies that merged, forming AstraZeneca. Integratingcompanies that merged, forming AstraZeneca. Integrating
the two sales forces was a major challenge, for example,the two sales forces was a major challenge, for example,
Astra was more decentralized and Zeneca was moreAstra was more decentralized and Zeneca was more
centralized. The decision was made to develop a newcentralized. The decision was made to develop a new
sales model that blended the advantages of centralizationsales model that blended the advantages of centralization
and decentralization, and they decided to move to aand decentralization, and they decided to move to a
market-oriented sales organization structure.market-oriented sales organization structure.
ActionAction
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Merging Two Sales ForcesMerging Two Sales ForcesAn Experts Viewpoint:An Experts Viewpoint:
The new sales organization has been successful inThe new sales organization has been successful ingenerating significant sales and market share growth.generating significant sales and market share growth.
Tony Zook, vice president of sales at AstraZeneca,Tony Zook, vice president of sales at AstraZeneca,
thinks that by bringing together two winners, you canthinks that by bringing together two winners, you can
create a champion.create a champion.
ResultResult
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Sales Organization ConceptsSales Organization Concepts
SpecializationSpecialization
The degree to which individuals perform some of theThe degree to which individuals perform some of the
required tasks to the exclusion of others. Individualsrequired tasks to the exclusion of others. Individuals
can become experts on certain tasks, leading to bettercan become experts on certain tasks, leading to betterperformance for the entire organization.performance for the entire organization.
CentralizationCentralization
The degree two which important decisions and tasksThe degree two which important decisions and tasks
performed at higher levels in the managementperformed at higher levels in the management
hierarchy. Centralized structures place authority andhierarchy. Centralized structures place authority and
responsibility at higher management levels.responsibility at higher management levels.
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Sales Force Specialization ContinuumSales Force Specialization Continuum
SpecialistsSpecialistsCertain sellingCertain selling
activities for certainactivities for certain
products for certainproducts for certaincustomerscustomers
GeneralistsGeneralistsAll selling activitiesAll selling activities
and all products toand all products to
all customersall customers
Some specializationSome specialization
of selling activities,of selling activities,
products, and/orproducts, and/or
customerscustomers
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Flat Sales OrganizationFlat Sales Organization
Span of ControlSpan of Control
Manag
emen
tLev
els
Managemen
tLev
e ls
NationalNational
SalesSales
ManagerManager
DistrictDistrict
SalesSales
ManagerManager
DistrictDistrict
SalesSales
ManagerManager
DistrictDistrict
SalesSales
ManagerManager
DistrictDistrict
SalesSales
ManagerManager
DistrictDistrict
SalesSales
ManagerManager
Span of Control vs. Management LevelsSpan of Control vs. Management Levels
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Tall Sales Organization
National SalesNational Sales
ManagerManager
Span of ControlSpan of Control
M
anageme
ntLevels
M
anageme
ntLevels
DistrictDistrict
SalesSales
ManagerManager
DistrictDistrict
SalesSales
ManagerManager
DistrictDistrict
SalesSales
ManagerManager
DistrictDistrict
SalesSales
ManagerManager
DistrictDistrict
SalesSales
ManagerManager
DistrictDistrict
SalesSales
ManagerManager
Regional SalesRegional Sales
ManagerManagerRegional SalesRegional Sales
ManagerManager
Span of Control vs. Management LevelsSpan of Control vs. Management Levels
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National Sales ManagerNational Sales Manager
Regional Sales ManagersRegional Sales Managers
District Sales ManagersDistrict Sales Managers
Sales Training ManagerSales Training Manager
Sales Training ManagerSales Training Manager
SalespeopleSalespeople
Staff PositionStaff Position
Line PositionLine Position
Line vs. Staff PositionsLine vs. Staff Positions
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Setting up sales organisationSetting up sales organisation
Define objectivesDefine objectives Quantitative and qualitativeQuantitative and qualitative
Delineate necessary activitiesDelineate necessary activities Necessary activitiesNecessary activities
Volume of performanceVolume of performance
Grouping activities into positionsGrouping activities into positions Closely related tasks assigned to same positionsClosely related tasks assigned to same positions
Assignment of personnel to positionsAssignment of personnel to positions
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Setting up .Setting up .
Provision for coordination and controlProvision for coordination and control Span of controlSpan of control
Formal or informalFormal or informal
Out put is a written job descriptionOut put is a written job description
Job descriptionJob description Reporting, objectives , duties responsibilities,Reporting, objectives , duties responsibilities,
performance measurementsperformance measurements
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Organizational
Structure
Environmental
Characteristics
Task
Performance
Performance
Objective
SpecializationSpecializationHigh Envir.High Envir.
uncertaintyuncertaintyNon routineNon routine AdaptivenessAdaptiveness
CentralizationCentralizationLow Envir.Low Envir.
UncertaintyUncertaintyRepetitiveRepetitive EffectivenessEffectiveness
Selling-Situation Factors and Organizational Structure
Selling Situation ContingenciesSelling Situation Contingencies
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Customer and Product DeterminantsCustomer and Product Determinants
of Sales Force Specializationof Sales Force Specialization
SimpleSimple
ProductProduct
OfferingOffering
ComplexComplex
Range ofRange of
ProductsProducts
Customer Needs DifferentCustomer Needs Different
Customer Needs SimilarCustomer Needs Similar
Market-Market-
DrivenDriven
SpecializationSpecialization
Product/Market-Product/Market-
DrivenDriven
SpecializationSpecialization
Geography-Geography-DrivenDriven
SpecializationSpecialization
Product-Product-DrivenDriven
SpecializationSpecialization
Selling Situation ContingenciesSelling Situation Contingencies
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Geographic Sales OrganizationGeographic Sales Organization
National Sales ManagerNational Sales Manager
Zone Sales Managers (4)Zone Sales Managers (4) Zone Sales Managers (4)Zone Sales Managers (4)
District Sales Managers (20)District Sales Managers (20)
Salespeople (100)Salespeople (100) Salespeople (100)Salespeople (100)
District Sales Managers (20)District Sales Managers (20)
Eastern Region Sales ManagerEastern Region Sales Manager Western Region Sales ManagerWestern Region Sales Manager
Sales Training ManagerSales Training Manager
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Product Sales OrganizationProduct Sales Organization
National Sales ManagerNational Sales Manager
Office Equipment Sales ManagerOffice Equipment Sales Manager Office Supplies Sales ManagerOffice Supplies Sales Manager
District Sales Managers (10)District Sales Managers (10)
Salespeople (100)Salespeople (100) Salespeople (100)Salespeople (100)
District Sales Managers (10)District Sales Managers (10)
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Market Sales OrganizationMarket Sales Organization
National Sales ManagerNational Sales Manager
Zone Sales Managers (4)Zone Sales Managers (4)
District Sales Managers (25)District Sales Managers (25)
Salespeople (150)Salespeople (150)
District Sales Managers (5)District Sales Managers (5)
Commercial AccountsCommercial Accounts
Sales ManagerSales ManagerGovernment AccountsGovernment Accounts
Sales ManagerSales Manager
Sales TrainingSales Training
ManagerManager
Salespeople (50)Salespeople (50)
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Functional Sales OrganizationFunctional Sales Organization
National Sales ManagerNational Sales Manager
Field Sales ManagerField Sales Manager Telemarketing Sales ManagerTelemarketing Sales Manager
Regional Sales Managers (4)Regional Sales Managers (4)
Salespeople (160)Salespeople (160)
Salespeople (40)Salespeople (40)
District Sales Managers (2)District Sales Managers (2)
District Sales Managers (16)District Sales Managers (16)
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Comparison ofComparison ofSales Organization StructuresSales Organization Structures
OrganizationalOrganizational
StructureStructure AdvantagesAdvantages DisadvantagesDisadvantages
GeographicGeographic
Low CostLow Cost
No geographic duplicationNo geographic duplication No customer duplicationNo customer duplication Fewer management levelsFewer management levels
LimitedLimitedspecializationspecialization Lack ofLack of
managementmanagement
control over productcontrol over product
oror
customer emphasiscustomer emphasis
ProducProduc
tt
Salespeople becomeSalespeople becomeexpertsexperts
in product attr. &in product attr. &
applicationsapplications Management control overManagement control over
selling effortselling effort
High costHigh cost GeographicGeographic
duplicationduplication Customer duplicationCustomer duplication
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Comparison ofComparison ofSales Organization StructuresSales Organization Structures
MarketMarket
Salespeople developSalespeople develop
better understanding ofbetter understanding ofunique customer needsunique customer needs
Management control overManagement control over
selling allocated to differentselling allocated to different
marketsmarkets
High costHigh cost GeographicGeographic
duplicationduplication
FunctionFunction
alal
Efficiency in performingEfficiency in performing
selling activitiesselling activities
GeographicGeographic
duplicationduplication Customer duplicationCustomer duplication Need for coordinationNeed for coordination
OrganizationalOrganizational
StructureStructure AdvantagesAdvantages DisadvantagesDisadvantages
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Hybrid Sales Organization StructureHybrid Sales Organization Structure
National Sales ManagerNational Sales Manager
Major AccountsMajor Accounts
Sales ManagerSales ManagerRegular AccountsRegular Accounts
Sales ManagerSales ManagerOffice EquipmentOffice Equipment
Sales ManagerSales ManagerOffice SuppliesOffice Supplies
Sales ManagerSales Manager
Field SalesField Sales
ManagerManagerTelemarketingTelemarketing
Sales ManagerSales Manager
Commercial AccountsCommercial Accounts
Sales ManagerSales ManagerGovernment AccountsGovernment Accounts
Sales ManagerSales Manager
WesternWestern
Sales ManagerSales ManagerEasternEastern
Sales ManagerSales Manager
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LargeLarge
SmallSmall
Complexity of AccountComplexity of Account
Sizeo
fAcc
ou
nt
SizeofAcc
ou
nt
LargeLarge
AccountAccount
SimpleSimple ComplexComplex
MajorMajor
AccountAccount
RegularRegularAccountAccount
ComplexComplexAccountAccount
Sales Organization Structures:Sales Organization Structures:
Identifying Major AccountsIdentifying Major Accounts
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Develop Major Account SalesforceDevelop Major Account Salesforce
Assign Major Accounts toAssign Major Accounts to
Sales ManagersSales Managers
Assign Major Accounts to SalespeopleAssign Major Accounts to Salespeople
along with Other Accountsalong with Other Accounts
Sales Organization Structures:Sales Organization Structures:
Major Accounts OptionsMajor Accounts Options
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Salesforce DeploymentSalesforce Deployment
1.1. How much selling effort is needed to cover accounts andHow much selling effort is needed to cover accounts and
prospects adequately so that sales and profit objectives willprospects adequately so that sales and profit objectives willbe achieved?be achieved?
2.2. How many salespeople are required to provide the desiredHow many salespeople are required to provide the desired
amount of selling effort?amount of selling effort?
3.3. How should territories be designed to ensure proper coverageHow should territories be designed to ensure proper coverage
of accounts and to provide each salesperson with aof accounts and to provide each salesperson with a
reasonable opportunity for success?reasonable opportunity for success?
Sales Force deployment decisions can be viewed as
providing answers to three interrelated questions.
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Interrelatedness ofInterrelatedness of
Sales Force Deployment DecisionsSales Force Deployment DecisionsHow much selling effort is needed to cover
accounts and prospects adequately so that sales
and profit objectives will be achieved?
How many salespeople are required to provide the
desired amount of selling effort?
How should territories be designed andsalespeople assigned to territories to ensure
proper coverage of accounts and to provide each
salesperson with a reasonable opportunity for
success?
Allocation ofAllocation of
Selling EffortSelling Effort
Allocation ofAllocation of
Selling EffortSelling Effort
Sales ForceSales Force
SizeSize
Sales ForceSales Force
SizeSize
TerritoryTerritory
DesignDesign
TerritoryTerritory
DesignDesign
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Single FactorSingle Factor
ModelsModels
Single FactorSingle Factor
ModelsModels
Easy to Develop and UseEasy to Develop and Use
Difficult to Develop and UseDifficult to Develop and Use
LowLowAnalyticalAnalyticalRigorRigor
HighHighAnalyticalAnalyticalRigorRigor
PortfolioPortfolio
ModelsModels
PortfolioPortfolio
ModelsModels
DecisionDecision
ModelsModels
DecisionDecision
ModelsModels
Allocation of Selling Effort:Allocation of Selling Effort:Analytical Approaches to Allocation of Selling EffortAnalytical Approaches to Allocation of Selling Effort
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Allocation of Selling Effort:Allocation of Selling Effort:Single Factor ModelsSingle Factor Models
Easy to develop and use/low analytical rigorEasy to develop and use/low analytical rigor
Accounts classified into categories based on oneAccounts classified into categories based on one
factor, such as market potentialfactor, such as market potential
All accounts in the same category are assigned theAll accounts in the same category are assigned thesame number of sales callssame number of sales calls
Effort allocation decisions are based on the analysisEffort allocation decisions are based on the analysisof onlyof only oneone factor and differences among accounts infactor and differences among accounts inthe same category arethe same category are notnotconsidered in assigningconsidered in assigningsales call coveragesales call coverage
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Allocation of Selling Effort:Allocation of Selling Effort:Single Factor Model ExampleSingle Factor Model Example
Market PotentialMarket Potential
CategoriesCategories
A
B
C
D
Average Sales Calls toAverage Sales Calls to
an Account Last Yearan Account Last Year
25
23
20
16
Average Sales Calls toAverage Sales Calls to
an Account Next Yearan Account Next Year
32
24
16
8
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Allocation of Selling Effort:Allocation of Selling Effort:Portfolio ModelsPortfolio Models
Account Opportunity - an accounts need forAccount Opportunity - an accounts need for
and ability to purchase the firms productsand ability to purchase the firms products
Competitive Position - the strength of theCompetitive Position - the strength of the
relationship between the firm and an accountrelationship between the firm and an account
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Allocation of Selling Effort:Allocation of Selling Effort:Portfolio Model Segments and StrategiesPortfolio Model Segments and Strategies
Competitive PositionCompetitive Position
Segment 1Segment 1 Segment 2Segment 2
Segment 4Segment 4Segment 3Segment 3
StrongStrong WeakWeak
Low
Low
High
High
Accou n
tOpportu
nit
y
Accou n
tOpportu
nit
y
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Allocation of Selling Effort:Allocation of Selling Effort:Decision ModelsDecision Models
Simple Basic Concept - to allocate salesSimple Basic Concept - to allocate sales
calls to accounts that promise the highestcalls to accounts that promise the highest
sales return from the sales callssales return from the sales calls
Optimal number of calls in terms of salesOptimal number of calls in terms of sales
or profit maximizationor profit maximization
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Sales Force Size: Key ConsiderationsSales Force Size: Key Considerations
Sales ProductivitySales Productivity- the ratio of sales- the ratio of sales
generated to selling effort usedgenerated to selling effort used In early stages, the addition of salespeople increases salesIn early stages, the addition of salespeople increases sales
considerably more than the selling costs. As salespeopleconsiderably more than the selling costs. As salespeople
continue to be added, sales increases tend to decline until acontinue to be added, sales increases tend to decline until a
point is reached when the costs to add a salesperson arepoint is reached when the costs to add a salesperson are
more than the revenues that salesperson can generate.more than the revenues that salesperson can generate.
Salesforce TurnoverSalesforce Turnover Is very costlyIs very costly
Should be anticipatedShould be anticipated
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Sales Force Size: Analytical ToolsSales Force Size: Analytical Tools
Salesforce size = Forecasted sales / Average sales per personSalesforce size = Forecasted sales / Average sales per person
TheThe Breakdown ApproachBreakdown Approach is used to determine theis used to determine the
number of salespeople needed to generate a forecastednumber of salespeople needed to generate a forecasted
level of sales. This approach is easy to develop.level of sales. This approach is easy to develop.
However, it is weak conceptually. The concept underlyingHowever, it is weak conceptually. The concept underlying
the calculations is that sales determine the number ofthe calculations is that sales determine the number of
salespeople neededputting the cart before the horse.salespeople neededputting the cart before the horse.
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Sales Force Size: Analytical ToolsSales Force Size: Analytical Tools
TheThe Workload ApproachWorkload Approach determines how much sellingdetermines how much selling
effort is needed to adequately cover the firms market.effort is needed to adequately cover the firms market.
Then the number of salespeople required to provide thisThen the number of salespeople required to provide this
amount of selling effort is calculated. This approachamount of selling effort is calculated. This approach
relatively simple to develop and is sound conceptually.relatively simple to develop and is sound conceptually.
Number of salespeople =Number of salespeople =Total selling effort neededTotal selling effort needed
Average selling effort perAverage selling effort persalespersonsalesperson
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Sales Force Size: Analytical ToolsSales Force Size: Analytical Tools
TheThe Incremental ApproachIncremental Approach is the most rigorous foris the most rigorous for
calculating salesforce size. Its basic concept is tocalculating salesforce size. Its basic concept is to
compare the marginal profits and marginal costscompare the marginal profits and marginal costs
associated with each incremental salesperson. The majorassociated with each incremental salesperson. The major
advantage of this approach is that it quantifies theadvantage of this approach is that it quantifies the
important relationships between salesforce size, sales,important relationships between salesforce size, sales,
and costs. However, the incremental method is difficult toand costs. However, the incremental method is difficult to
develop, and it cannot be used for new sales forces wheredevelop, and it cannot be used for new sales forces where
historical data and accurate judgments are not possible.historical data and accurate judgments are not possible.
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Designing TerritoriesDesigning Territories
Territories consist of whatever specificTerritories consist of whatever specificaccounts are assigned to a specificaccounts are assigned to a specificsalesperson. The territory can be viewedsalesperson. The territory can be viewed
as the work unit for a salesperson.as the work unit for a salesperson.
Territory ConsiderationsTerritory Considerations Trading areasTrading areas
Present effortPresent effort Recommended effortRecommended effort
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Territory Design ProcedureTerritory Design Procedure
FinalizeFinalizeTerritoryTerritory
DesignDesign
FinalizeFinalizeTerritoryTerritory
DesignDesign
AssessAssessTerritoryTerritory
WorkloadWorkload
AssessAssessTerritoryTerritory
WorkloadWorkload
Form InitialForm Initial
TerritoriesTerritories
Form InitialForm Initial
TerritoriesTerritories
AnalyzeAnalyze
Planning andPlanning and
Control UnitControl Unit
OpportunityOpportunity
AnalyzeAnalyze
Planning andPlanning and
Control UnitControl Unit
OpportunityOpportunity
SelectSelectPlanning andPlanning and
Control UnitControl Unit
SelectSelectPlanning andPlanning and
Control UnitControl Unit
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