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Chapter. 13. TM 13-1. Sales Territories. You have to recognize when the right place and the right time fuse and take advantage of that opportunity. There are plenty of opportunities out there. Ellen Metcalf. Sales Territory. TM 13-2.

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  1. Chapter 13 TM 13-1 Sales Territories You have to recognize when the right place and the right time fuse and take advantage of that opportunity. There are plenty of opportunities out there. Ellen Metcalf

  2. Sales Territory TM 13-2 • Comprises a number of present and potential customers, located within a given geographical area and assigned to a salesperson, branch, or intermediary (retailer or wholesaling intermediary). • Key word: customers

  3. Benefits of Good Territory Design TM 13-3 • Enhances customer coverage • Reduces travel time and selling costs • Provides more equitable rewards • Aids evaluation of sales force • Increases sales for the sales organization • Increases morale

  4. Procedure for Designing Sales Territories TM 13-4 (Fig. 13-1) Determine Basic Territories Select a Control Unit Determine Location and Potential of Customers Assign Salespeople to Territories Set Up Territorial Coverage Plans Evaluate Effectiveness of Design

  5. Territorial Control Units TM 13-5 • States • Counties • Cities • Zip-code areas • MSAs (Metropolitan Statistical Areas)

  6. Buildup Method of Territorial Design TM 13-6 (Fig. 13-3) Management must determine: Desirable call patterns: Call frequency per account per year Total calls needed in each control group Workload capacity: Total calls possible per rep per year = number of daily calls x days selling Tentatively set territorial boundary lines by combining control units until total calls needed = total calls possible Modify territories as needed

  7. Control Units Illinois Iowa Kentucky Customer Call Calls Calls Calls class frequency Accounts per year Accounts per year Accounts per year A 2 per month 10 240 7 168 5 120 B 1 per month 30 360 17 204 10 120 C 1 every 2 months 68408 55330 27162 108 1,008 79 702 34 402 Distribution of one rep’s calls 1,008 + 491 or 402 year (1,500)* Possible control combinations 100% 70% or 100% Illinois Iowa Kentucky Alternative territories 100% Illinois + 100% Kentucky 100% Illinois + 70% Iowa *6 calls/day x 5 = 30 calls/week x 50 = 1,500 calls/year Territory Design: Build-Up Method Worksheet TM 13-7

  8. Territory Size and Workload Factors TM 13-8 Workload Factor Territory Size Increase/Decrease Nature of Job: Lots of presale and post-sale activity Decreases Nature of product: A frequently purchased product Decreases A limited repeat-sale Increases Market development stage: New market--fewer accounts Increases Established market--more accounts Decreases Market coverage Selective coverage Increases Extensive coverage Decreases Competition: Intensive Decreases – unless market is oversaturated Limited Increases

  9. Breakdown Method of Territorial Design TM 13-9 (Fig. 13-5) Management must determine Company sales potential Sales potential in each control unit Sales volume expected from each sales person Tentatively set territorial boundary lines by combining control units total sales potential = total sales volume expected Modify territories as needed

  10. TM 13-10 Territory Design: Break-Down Method Worksheet Company sales potential = $200,000,000 Targeted volume rep = $ 10,000,000 Number of reps needed Company sales potential$200,000,000 Targeted volume/rep $ 10,000,000 Territory volume as Targeted volume/rep $ 10,000,000 Company sales potential $200,000,000 = = = 20 = = = 5% Each territory should comprise 5% of sales potential or $10,000,000 Combine adjacent control units until each sales potential of $10,000,000

  11. TM 13-11 Sales Territories for Pharmaceutical Sales Reps • Divide… • The 48 states into 5-10 regions • Each region into several districts • Each district into 8-12 territories (typically 1 rep per territory)

  12. Computers in Territory Design TM 13-12 • Geographic Information System (GIS) • Combines multiple layers of information to provide in-depth understanding of a sales territory. • Elements of a complete GIS: • Software • Hardware • Data • Trained people

  13. Routing the Sales Force Area C Area B Area A x TM 13-13 • Routing is the managerial activity that establishes a formal pattern for sales reps to follow as they go through their territories. • Reduces travel expenses as it ensures a more efficient territory coverage. • Some reps resent it. • Best for routine sales jobs with regular call frequencies. Area B: Typically the “problem” area.

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