Sales OrganizationListen to the Customer & act on what they tell you- Pat Nathan, Vice PresidentDell Computer

Dr. Neeraj DixitAssociate ProfessorIES Management College, Bandra*

ContentsDefinition of Sales OrganizationPrinciples of Organization DesignAdvantages of Sales OrganizationChanging Structural Characteristics of Modern CorporationsIssues in Developing a Sales Organization StructureBasic Types of Sales OrganizationMajor trends in Sales Organization*

What is an OrganizationAn Organization is simply an arrangement-a working structure-of activities involving a group of people.The goal is to arrange these activities so that the people involved can act better together than they can individually.Organization is the basic management function of arranging the firms work activities.Organization is often viewed as merely the determination of a structure.Organization is a continuing task requiring constant management attentionAn Organizational structure is like an human skelton structure*

Definition of Sales OrganizationA Sales Organization is an organization of individuals either working together for the marketing of products and services manufactured by an enterprise or for products that are procured by the firm for the purpose of reselling.An Organizational structure-whether it is for sales force or any other group involved in a joint effort to meet a goal-is a control and coordination mechanism.The Organizational structure has a direct and significant bearing on the implementation of the strategic planning.*

Principles of Organization DesignOrganizational structure should reflect a marketing orientation.Organization should be built around activities, not around people.Responsibility and authority should be properly related.Span of control should be reasonableOrganization should be stable but flexible.Activities should be balanced and coordinated.

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Advantages of the Sales OrganizationEffective structure allows the maintenance of order, which is a fundamental task in any organization whether it is Private, Governmental or NGO.Organization structure also permits the assignment of specific tasks to a position whose incumbent is then charged with responsibility for accomplishing them. An effective organization does not permit buck passing.A sales force organization allows for integration and coordination. Various functional areas of the firm can be coordinated. Functional goals can be integrated to accomplish the primary corporate or company goals.

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Changing Structural Characteristics of Modern Corporation

One large corporationMini-business units & cooperative relationshipsVertical communicationHorizontal communicationCentralized top-down Decentralized participative Decision Makingdecision makingVertical integrationOutsourcing & virtual organizationsWork/quality teamsAutonomous work teamsFunctional work teamsCross-functional work teamsMinimal trainingExtensive trainingSpecialized job design Value-chain team-focused job designfocused on individualOld Organizational Design New Organizational Design*

Issues in Developing a Sales OrganizationDeveloping a Sales Organization is not an easy task. Sales managers must recognize and then deal with the following basic organizational issues.Formal and Informal organizations.Horizontal and vertical organizations.Centralized and decentralized organizational structures.The line and staff components of the organizationThe size of the company

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Formal and Informal organizations

Every firm has a formal organization and an informal organization.The formal organization is a creation of management whereas the informal organization is often developed from the social relationships existing within the formal organizational structure.The informal organization is basically a communications pattern that emerges to facilitate the operations of the formal organization, it is sometimes called the grapevine.*

Horizontal and vertical organizationsSales forces can have either horizontal or vertical organizational formats. This arrangement varies among companies even within the same industry. Following figures show horizontal and vertical organizations.*

Horizontal sales organization *

Vertical sales organization*

Centralized and decentralized organizational structuresIn decentralized sales organization responsibility and authority are delegated to lower levels of management.In a centralized sales organization the responsibility and authority for decisions are concentrated at higher levels of management.*

The line and staff components of the organization

Marketing organizations also feature line and staff components.A line function is a primary organizational activity and a staff function is a supporting organizational activity.In a marketing Organization the selling function is the line component, whereas advertising, marketing research, market planning, sales training and distributor relations are usually considered staff roles.Following are examples of line organizational structure and Line and staff organizational structures. *

Line organizational structures*

Line-and-Staff Sales Organization*Chief Marketing ExecutiveSalespeopleAdvertising Manager Marketing Research ManagerGeneral Sales ManagerSales Promotion ManagerSales Analysis ManagerStaff advisory authorityLine authority

The size of the company

For a small company there is likely to be no formal organizational structure. The Owner-manager is involved in all aspects of business.When the company grows big then realizing that supervision is required he may hire sales managers and ultimately the small company may evolve into a Functional organization-one organized by the various activities performed within a firm.This structure is appropriate for most small and medium sized companies.When the company becomes bigger then managers of each functional department tends to think only in terms of their own functions problems and needs, at this stage functional organization looses its relevance and companies move on to other sophisticated form of sales organization.

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Functional company organization

Basic Types of Sales Organization.Most company sales force are organized on the basis of GeographyCustomersProductsCombination of above factors.*

Geographic specializationAccording to geographic specialization field sales force is given the responsibility for direct selling activities in a given geographical area or territory.The sales representative is responsible for selling the firms full line of products.Territories are treated as separate profit centers for purposes of analysis and for the evaluation of sales force.*

Geographical Sales Organization*Chief Marketing ExecutiveWestern Regional Sales ManagerAdvertising Manager Marketing Research ManagerGeneral Sales ManagerSales Promotion ManagerSales Analyst 4 District Sales ManagersSalespeople each with own territoryEastern Regional Sales Manager4 District Sales ManagersSalespeople each with own territory

Customer SpecializationSales forces may be organized in terms of customers for various reasons, a concept referred to as customer specialization. The firms customers may require a specialized knowledge of their industry.According to proponents of customer specialization, organizing around customers is necessary if the sales force is to focus on customers needs and build the best possible relationships with clients. *

Sales Organization Specialized by Type of Customer*Chief Marketing ExecutiveSales Manager Transportation IndustryAdvertising Manager Marketing Research ManagerGeneral Sales ManagerSales Promotion ManagerCustomer Relations ManagerSalespeopleSales Manager Petroleum IndustrySalespeopleSales Manager Steel IndustrySalespeople

Product SpecializationProduct specialization allows salespeople and sales Managers to concentrate their efforts on particular lines, brands or individual itemsIn most cases product sales specialists are used when a products complexity limits other options. Although clients reap the advantage of the specialized knowledge provided by each salesperson, they may resent the extra time they must be spend dealing with two vendor representatives. Another disadvantage is the expensive duplication of sales effort. *

Sales Organization with Product-Specialized Sales Force*Chief Marketing ExecutiveSales Manager Product AAdvertising Manager Marketing Research ManagerGeneral Sales ManagerSales Promotion ManagerCustomer Relations ManagerSalespeople Product ASales Manager Product CSalespeople Product CSales Manager Product BSalespeople Product B

Combination OrganizationsTraditional approaches to sales organization have not been effective in the rapidly changing, high growth in which these firms compete. As a result many high-tech companies are attempting to develop new organizational strategies.These new combination organizations can be characterized by the following traits.Market, Product and FunctionDecentralized staff and line personnelComplex staff-line relationshipsOverlaid organizational mechanisms *

Combination Organizations*

Major Trends in Sales OrganizationTelemarketing-Inbound & OutboundNational account Management-key, major, strategic, global or corporateIndirect sales Channels- Independent Reps or Manufacturers Reps, brokers, agents, wholesale distributorsTeam SellingE-Commerce*

Pharmaceutical Companies-Sales Organization Structure*President/Vice President (Sales)General ManagerRegional Sales ManagerArea ManagerMedical Representative

Motorola- Sales StructureMotorola manages 4 types of sales force1. A strategic market sales force composed of technical, applications, and quality engineers and service personnel assigned to major accounts 2. A geographic sales force calling on thousands of customers in different territories3. A distributor sales force calling on and coaching motorola distributors4. An inside sales force doing telemarketing and taking orders via phone and fax.*

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