C HAPTER 4 Sales Force Organization

L EARNING O BJECTIVES Sales force organization and planning Characteristics of a good organization Basic Types of organization Organizational options in the 2000s

I NTRODUCTION 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.

P RINCIPLES OF O RGANIZATION D ESIGN 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.

B ASIC T YPES OF O RGANIZATION 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.

L INE - AND -S TAFF S ALES O RGANIZATION Chief Marketing Executive Salespeople Advertising Manager Marketing Research Manager General Sales Manager Sales Promotion Manager Sales Analysis Manager Staff advisory authority Line authority (Figure 4-2)

L INE - AND -S TAFF S ALES O RGANIZATION 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.

F UNCTIONAL S ALES O RGANIZATION Chief Marketing Executive Salespeople Advertising Manager Marketing Research Manager General Sales Manager Credit Manager Sales Promotion Manager Staff advisory authority Line authority (Figure 4-3)

F UNCTIONAL 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.

T HE H ORIZONTAL C ORPORATION Strategic Planning Team VP Strategic Planning VP Finance & Information Chief Operating Officer Human Resources Administration Manufacturing Team Systems Engineering Production Quality Control Customer Fulfillment Team Pricing and Promotion Sales Distribution Product Design and Development Team Customer Research Customer Analysis Design Engineering Customer Support Team Information Training Service Research (Figure 4-4)

T HE 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.

G EOGRAPHICAL S ALES O RGANIZATION Chief Marketing Executive Western Regional Sales Manager Advertising Manager Marketing Research Manager General Sales Manager Sales Promotion Manager Sales Analyst 4 District Sales Managers Salespeople each with own territory Eastern Regional Sales Manager 4 District Sales Managers Salespeople each with own territory (Figure 4-5)

S ALES O RGANIZATION WITH P RODUCT - S PECIALIZED S ALES F ORCE Chief Marketing Executive Sales Manager Product A Advertising Manager Marketing Research Manager General Sales Manager Sales Promotion Manager Customer Relations Manager Salespeople Product A Sales Manager Product C Salespeople Product C (Figure 4-6) Sales Manager Product B Salespeople Product B

S ALES O RGANIZATION WITH P RODUCT M ANAGERS AS S TAFF S PECIALISTS Chief Marketing Executive Advertising Manager Marketing Research Manager General Sales Manager Manager Product A (Figure 4-7) Assistant Sales Manager Salespeople Manager Product B Manager Product C

P RODUCT 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.

S ALES O RGANIZATION S PECIALIZED BY T YPE OF C USTOMER Chief Marketing Executive Sales Manager Transportation Industry Advertising Manager Marketing Research Manager General Sales Manager Sales Promotion Manager Customer Relations Manager Salespeople Sales Manager Petroleum Industry Salespeople (Figure 4-8) Sales Manager Steel Industry Salespeople

O RGANIZATIONAL O PTIONS FOR THE 2000 S (Figure 4-9) Organizational Options for the 2000s Strategic account management Team selling E-commerce and telemarketing Independent reps

S TRATEGIC 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

T EAM 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).

T HE R ELATIONSHIP B ETWEEN A S ALES T EAM AND A B UYING C ENTER Organizational selling center Marketing Sales Manufacturing R&D Engineering Physical Distribution Organizational buying center Purchasing Manufacturing R&D Engineering Marketing Exchange Process Purchasing Agent Sales- person Information Problem Solving Negotiation Friendship, Trust Product/Services Payment Reciprocity

I NDEPENDENT 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.

U SES OF T ELEMARKETING 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