1. Dr. Bea Bourne 1

2. 2 If you have any troubles in seminar, please do call Tech Support at: 1-866-348-1196 They can assist if you get “bumped” from the seminar room or experience other difficulties.

3.  This unit focuses on sales organizational structures and sales force deployment.  How do we structure a sales department? Where to we deploy the sales staff? How many people do we need inside and outside? We address these and related questions in Unit 4.  Questions 3

4.  Last week included a discussion of personal selling strategies, methods, and processes followed by an introduction to the organizational fundamentals for the sales function. 4

5.  A sales organization must be structured to facilitate all required selling and management activities.  Organizations need to deal with issues surrounding specialization vs. centralization in sales force organization decisions.  Organization structures can be oriented to products, geography, markets, or functions.  Deployment decisions must include factors such as "people" considerations, size of the sales force, experience levels of employees, and adaptation to the organization's needs over time 5

6.  By the end of this unit, you should be able to: Define the key management concepts of job specialization, centralization of control, span of control over teams versus management levels and line versus staff positions within the organization  Describe the different ways that sales forces might be specialized to meet an organization's needs  Evaluate the advantages and disadvantages of various sales organizational structures that could be utilized to meet organizational objectives  Explain the importance of setting up sales territories and the steps in the territory layout process  Explain the different methods for determining the number of salespeople to have in the sales force  Explain the critical role of recruitment and selection in developing a highly productive sales force  Describe the key tasks in sales force recruitment and hiring  Identify the legal and ethical considerations in sales force selection and hiring processes 6

7.  What do we mean when we say sales organization structure? 7

8. 8  A sales organization structure provides a framework for sales organization operations by indicating what specific activities are performed by whom.  The sales organization structure is also a vehicle through which strategic plans are translated into selling operations in the marketplace.  Sales organizations can be structured in many different ways.  However, the basic concepts involved within the structure are similar.

9.  More than likely salespeople are specialists or generalists.  What are the differences? 9

10. 10 Specialists focus on certain selling activities for certain products to certain customers. Generalists focus on all selling activities and all products to all customers. Can you think of an example of specialist and generalist sales positions?

11.  What is meant by centralized or decentralized? 11

12. 12 A centralized structure is one in which authority and responsibilities are placed at higher management levels. An organization becomes more decentralized as tasks become the responsibility of lower-level managers. Centralization is a relative concept in that no organization is totally centralized or totally decentralized. Organizations typically centralize some activities and decentralize others. However, most organizations tend to have a centralized or decentralized orientation. What type of orientation is your company... centralized or decentralized?

13.  Span of control is the number of individuals who report to each sales manager.  The larger the span of control, the more subordinates a sales manager must supervise.  Management levels define the number of different hierarchical levels of sales management within the organization.  Typically, span of control is inversely related to the number of sales management levels. 13

14.  Management levels define the number of different hierarchical levels of sales management within the organization.  Typically, span of control is inversely related to the number of sales management levels. 14

15.  What is the difference between a flat and a tall organization? 15

16. 16  In a flat sales organization structure there are relatively few sales management levels.  Sales manager have a relatively large span of control.  In a tall structure there are more sales management levels and thus a smaller spans of control.  Flat organizations tend to be decentralized.  Tall structures are generally more centralized organizations.  The span of control also tends to increase at lower sales management levels.

17. 17 What's the difference between line versus staff sales management positions?

18. 18  Line sales management positions are part of the direct management hierarchy within the sales organization.  Line sales managers have direct responsibility for a certain number of subordinates and report directly to management at the next highest level in the sales organization.  Staff sales management positions are not in the direct chain of command in the sales organization structure.  Instead, those in staff positions do not directly manage people...  but they are responsible for certain functions (e.g., recruiting and selecting, training) and are not directly involved in sales-generating activities.  Staff sales management positions are more specialized than line sales management positions.

19.  What is sales force deployment? 19

20. 20 Sales force deployment When we talk about sales deployment we are referring to allocating selling effort, determining sales force size, and designing territories. Your text goes into some great detail on sales deployment but we will just summarize tonight. The allocation of selling effort is one of the most important deployment decisions a sales manager can make. The sales force size and sales territories are both based on the allocation decision. There are three basic analytical approaches to determining the allocation of a selling effort.

21. 21 3 basic analytical approaches  There are three basic analytical approaches to determining the allocation of a selling effort. ◦ single factor models, ◦ portfolio models, and ◦ decision models.  In a single factor model you classify all accounts on one factor, such as market potential then assign all accounts in the same category the same number of sales calls.  Exhibit 4.3 on page 95 is a great illustration of a single factor model.

22.  Portfolio models are a more comprehensive analysis.   In a portfolio model each account served by a company is considered part of an overall portfolio of accounts.   Accounts within the portfolio represent different situations and receive different levels of selling effort attention.   Selling effort is allocated so that the more attractive accounts receive more selling effort. 22

23.  With a decision model a mathematical formulation is used to allocate sales calls to accounts that promise the highest sales return from the sales calls.  The objective is to achieve the highest level of sales for any given number of sales calls and to continue increasing sales calls until their marginal costs equal their marginal returns.  23

24. 24  How does the organization determine sales force size?

25.  Key considerations for determining the sales force size include productivity, turnover, and organizational strategy.  When we talk about productivity what are we talking about?  Productivity in sales is the ratio of sales generated to the selling effort used or the sales per salesperson.  Why do you think sale force productivity in considered when determining sales force size? 25

26.  What’s turnover? 26

27.  Why is turnover an important consideration?  Sales force turnover is extremely costly.  Because some turnover is going to occur for all companies it needs to be considered when determining sales force size.  Once the appropriate sales force size is determined this figure should be adjusted to reflect expected turnover.  If an increase of current sales force size is desired, excess salespeople should be in the recruiting pipeline.  If a decrease is desired turnover might be all that is necessary to accomplish it. 27

28.  What is organizational strategy? 28

29.  Sales force size decisions must be consistent with the firm’s organizational strategy.  Companies that focus on serving current customers and achieving limited growth during slow economic times might reduce sales force size as a way to lower costs.  On the other hand, companies trying to gain market share, capture new customers, and take advantage of market opportunities are likely to increase sales force size.  29

30. 30. Read Case 4.1 about Protek Packaging, Inc. Answer the four questions at the end of the case. 1. Is it time for PPI to reconsider its sales force organization by product line? 2. What are the advantages and disadvantages of organizing the PPI sales force by product line? 3. What are the advantages and disadvantages of developing a new sales organization for the Western Region that would organize according to these customer types: (a) grocery chains and food co-ops; (b) distributors, including paper and plastic distributors, restaurant wholesalers, institutional food wholesalers, and janitorial, wholesalers; and (c) end users, including meat and poultry processors, grocery store delis, egg packers/processors, laundries and dry cleaners, uniform rental companies, and garment manufacturers? Directions for Submitting Your Project Before you submit your project, you should save your work on your computer in a location and with a name that you will remember. Make sure your project is in the appropriate format (Word, Excel, PowerPoint, or other), then, when you are ready, you may submit on the Dropbox page.

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32.  I appreciate your time and attention during our 1 hour seminar today. If you have questions, feel free to contact me: BBourne@kaplan.edu and I’ll be happy to help! BBourne@kaplan.edu  See you in Class! 32