Introduction and Functions of Sales Organization Organization means the systematic coordination of the functions essential to achieving organizational objectives. The objective of a sales organization, therefore, is the performance of various activities necessary to promote sales. The functions of sales organization can be classified as follows. 1. Planning functions a) Sales forecasting b) Sales budgeting c) Selling policy Administrative functions a) Selecting salesmen b) Training salesmen c) Control of salesmen d) Remuneration of salesmen Executive functions a) Sales promotion b) Selling routine – execution of customer’s orders.

Role of Sales Organization Once the sales plan has been formulated, the next logical step is to organize a sales force to achieve the organizational objective. The qualified as sales objectives, which can be further divided, are shown in figure 1 given below. Major Qualified Sales Objectives Overall objectives 1. Total volume of products 2. Total annual value of products 3. Total annual selling costs 4. Total annual profit contribution Break up or Division Quarter, month and weak Product line and range Region and sales area Type of customer Figure 1

Role of Sales Organization Sales organization has the following basic purposes: Define the line of authority Ensure that all necessary activities are assigned and performed Establish lines of communication Provide for coordination and balance Provide insights into avenues of advancement Economics of executive time. Sales organization also depends on the type of sales force which is used, for example, field sales force, national account management, team selling, telemarketing, part-time sales forces, direct selling, etc.

Developing a Sales Organization Sales organization development refers to the formal, coordinating process of communication, authority and responsibility for sales groups and individuals. An effectively designed sales organization has a framework that enables the organization to serve its customers. Once the sales people know what their responsibilities are and who they report to, they can concentrate on doing their expected jobs to the best of their ability. Thus, a sales manager must recognize and deal with some basic problems faced by organizations, when developing his own sales organization. The five major issues are: Formal and informal organizations Horizontal and vertical organizations The line and staff components of organizations The size of the company.

Formal and Informal Organizations Marketing Vice President Assistant to Marketing Vice President Other functional or administrative organizations Director of Marketing Research General Sales Manager Manager of Sales Planning Director of Advertising Director of Public Relations District Sales Manager Manager of Distribution Sales persons Manager of Accounts Receivable Key Informal Organization Figure 2 – The informal Communication System in a Marketing Organization

Formal and Informal Organizations Salesperson District Sales Manager General Sales Manager Marketing Vice President Director of Research Figure 3 – A Lengthy Formal Communications Channel

Horizontal and Vertical Organizations Top Sales Executive Regional or Zonal Sales Manager District Sales Manager Sales Supervisor Salesperson Figure 4 – Vertical Sales Organization

Horizontal and Vertical Organizations Top Sales Executive New England District Sales Manager Southern District Sales Manager Southwest District Sales Manager Foreign Sales Manager Middle Atlantic District Sales Manager Midwest District Sales Manager Pacific District Sales Manager Figure 5 – Horizontal Sales Organization

Centralized and Decentralized Organization Line and Staff Components Marketing organizations also feature line and staff components. A line function is a primary activity and a staff function is a supporting activity. In a marketing organization, the selling function is the line component whereas advertising, marketing research, marketing planning, sales training and distributor relations are usually considered staff roles.

Centralized and Decentralized Organization Vice President for Sales General Sales Manager Regional Sales Manager A Regional Sales Manager B Regional Sales Manager C Figure 6 – A Line Marketing Organization

Centralized and Decentralized Organization Vice President for Marketing Assistant to the Marketing Research Advertising General Sales Manager Distributor Relations Sales Planning Analysis Training Regional Sales Manager A Manager B Manager C Key --- --- --- Staff Organization ______________Line Organization Figure 7 – Line and Staff Marketing Organization

Company Size and Organization A simple functional company organization is shown in Figure 8 . This structure is appropriate for most small and medium sized companies. These companies have relatively few products or services and use a limited number of distribution channels. As each functional area grows larger, the functional organization will be extended. A functional marketing organization is shown in Figure 9.

Company Size and Organization President Finance and Accounting Production Personnel Sales and Marketing Figure 8 – Functional Company Organization

Company Size and Organization Chief Marketing Executive Advertising Manager Sales Manager Customer Relations Manager Market Research Manager Sales Supervisors Salespeople Figure 9 – Functional Company Organization

Field Sales Organization Field sales force consists of salespersons who work primarily with customers in person, although they may also use the telephone or assistance from computer links to expedite orders and provide customer service. The structure of a field sales force is usually based on some means of specialization, such as geography, market, product, or activity/function, or a hybrid of these types. The following are the important field sales: Geographic sales specialization organization Product-based sales specialization organization Customer-based specialization organization Hybrid sales organization Team-based organization

Geographic Sales Organization FMCG Sales WEST DIVISION CENTRAL DIVISION EAST DEVISION Area Sales Manager Mumbai Surat Area Sales Manager Delhi Jaipur Chandigarh Area Sales Manager Kolkata Patna Figure 10 – Geographical Sales Organization Some advantages of geographic organizations are (a) Proper coverage of territory (b) Defining the responsibility (c) Familiarity with local economic and competitive conditions, making them better able to serve local customers.

Figure 11 – Product-based Sales Organization Medical Division of `K’ Pharma Ltd. Pharmaceuticals Equipment Supplies East West Central East West Central East West Central

Figure 12 – Customer-based sales Organization Sales Manager for India Regional Manager Branch Sales Manager Assistant Sales Manager- Agricultural Products Assistant Sales Manager Health Care Products

Activity/Function-based Organization Sales Method Telemarketing/cold calls * Prospecting * Presentation Face-to-face field sales * Service Personal visits

Figure 13 – Hybrid Sales Organization President Vice President Production Marketing Finance Sales Manager For India International Marketing Manager Consumer Goods Managers Industrial Goods Manager Functional Geographic Customer

Team-based Sales Organization Customer Sales Marketing Technical Support Manufacturing Figure 14 – Supplier Selling Team