Chapter 4

1. Chapter 4 Sales Force Organization

2. Learning Objectives • Sales force organization and planning • Characteristics of a good organization • Basic Types of organization • Organizational options in the 2000s

3. Introduction Nature of sales organization What business are we in? • Objectives –strategies - tactics • An organization – an arrangement of a working structure of activities involving a group of people. Organizational structures changes, why? • Constantly evaluating business and making adjustments.

4. Principles of Organization Design • Organizational structure should reflect a marketing orientation – focus on market and customer. • Organization should be built around activities, not around people – skills and knowledge • Responsibility and authority should be related properly –clear responsibility and authority delegated. • Span of executive control should be reasonable – recent trend broader spans of control. • Organization should be stable but not flexible – firm but flexible enough. • Activities should be balanced and coordinated – sales & advertising : sales reps can inform about effective advertisements to retailers.

5. Basic Types of Organization • A line organization- simplest form. Used in very small firms or within a small department • A line-and-staff organization – a line organization and staff assistants • A functional organization – a step beyond; each activity specialist has line authority over the activity in relations with sales force • A horizontal organization – eliminates both management levels and dept. boundaries. A small group of senior exec. oversee the support functions.

6. Line-and-Staff Sales Organization (Figure 4-2) Chief Marketing Executive Advertising Manager MarketingResearchManager GeneralSalesManager SalesAnalysisManager SalesPromotionManager Salespeople Line authority Staff advisory authority

7. Line-and-Staff Sales Organization The most widely used basic form or organization in sales departments. Appropriate when: • Sales force is large • Market is regional or national • Line of products is varied. • Number of customers is large. Benefits and disadvantages: • Division of labor and exec. specialization. • Total cost of organization can be high, especially when staff assistants have their own depts.

8. (Figure 4-3) Functional Sales Organization Chief Marketing Executive Advertising Manager MarketingResearchManager GeneralSalesManager SalesPromotionManager CreditManager Salespeople Line authority Staff advisory authority

9. Functional sales organization • Used in large company with variety of product line and/or markets. • A functional exec. has line authority to order the assistant sales manager and the sales people to do the job. Benefits and disadvantages. • The more giving orders, the more trouble. • Specialization of labor and assurances that functional exec. plans and programs will be carried out.

10. (Figure 4-4) The Horizontal Corporation Manufacturing TeamSystems Engineering ProductionQuality Control Product Design and Development TeamCustomer ResearchCustomer AnalysisDesign Engineering Strategic Planning TeamVP Strategic PlanningVP Finance & InformationChief Operating OfficerHuman ResourcesAdministration Customer Fulfillment TeamPricing and PromotionSalesDistribution Customer Support TeamInformationTrainingServiceResearch

11. The horizontal corporation • A small group of senor exec. at the top oversee the support functions. Everyone else is a member of cross-functional teams that perform core processes. • These teams are self-managed. • Used by large and small companies seeking greater efficiencies and customer responsiveness. Benefits and disadvantages • Various cross-functional teams work with customers’ teams to solve problems and create opportunities for greater productivity and growth. • Reduces supervision and eliminates activities that are not necessary for the process. • Costs reduces and customer responsiveness is enhanced.

12. (Figure 4-5) Geographical Sales Organization Chief Marketing Executive Advertising Manager MarketingResearchManager GeneralSalesManager SalesAnalyst SalesPromotionManager Western RegionalSales Manager Eastern RegionalSales Manager 4 DistrictSales Managers 4 DistrictSales Managers Salespeople eachwith own territory Salespeople eachwith own territory

13. (Figure 4-6) Sales Organization with Product-Specialized Sales Force Chief Marketing Executive Advertising Manager MarketingResearchManager GeneralSalesManager CustomerRelationsManager SalesPromotionManager Sales ManagerProduct A Sales ManagerProduct B Sales ManagerProduct C SalespeopleProduct A SalespeopleProduct B SalespeopleProduct C

14. (Figure 4-7) Sales Organization with Product Managers as Staff Specialists Chief Marketing Executive Advertising Manager MarketingResearchManager GeneralSalesManager ManagerProduct A ManagerProduct C ManagerProduct B Assistant SalesManager Salespeople

15. Product specialization Used when: • A variety of complex, technical products • Very dissimilar, unrelated products – a rubber company may use three sales force to sell; a track and tires, rubber footwear, industrial rubber products.

16. (Figure 4-8) Sales Organization Specialized by Type of Customer Chief Marketing Executive Advertising Manager MarketingResearchManager GeneralSalesManager CustomerRelationsManager SalesPromotionManager Sales ManagerTransportation Industry Sales ManagerSteel Industry Sales ManagerPetroleum Industry Salespeople Salespeople Salespeople

17. (Figure 4-9) Organizational Options for the 2000s Strategic account management E-commerce and telemarketing Independentreps Organizational Options for the 2000s Team selling

18. Strategic account management (SAM) • Also known as global account management (GAM). • Companies developed separate structure to deal with major accounts. • Three commonly used approaches are: • Creating a separate sales force • Using executives • Creating a separate division

19. Team selling • A selling team is a group of people representing the sales department and other functional areas such as finance, production, and research and development (R&D).

20. Organizational selling center Marketing Sales Manufacturing R&D Engineering Physical Distribution Purchasing Agent Exchange Process Sales-person Organizational buying center Purchasing Manufacturing R&D Engineering Marketing Information Problem Solving Negotiation Friendship, Trust Product/ServicesPayment Reciprocity The Relationship Between A Sales Team and a Buying Center

21. Independent sales organizations • Manufacturer’s representative or manufacturer’s agent. • Most of used in the following situations: • When a manufacturer does not have a sales force. • When a producer wants to introduce a new product but does not want to use existing sales force. • When a company wants to enter a new market that is not sufficiently developed for the seller to use its own sales force. • when it is not cost-effective for a company to use its own reps because the sales potential does not justify the cost.

22. Uses of Telemarketing and e-commerce • Identify prospective customers • Screening, qualifying leads • Sales solicitation: small customers, re-orders • Order processing • Product service support • Account management and reporting • Customer relations