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Part III SALES FORCE STRUCTURE Management Resource: Designing Territories
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Figure MR6-1: Unbalanced Territories for a Cosmetics Company 0.2 0.4 0.6 0.8 1.2 1.4 1.6 1.8 2.0 1.0 Workload -15% +15% 1 20 40 60 100 120 140 160 180 200 Territories Sorted by Workload Ideal Territory Workload Actual Territory Workload Workload Across Sales Territories Territory Design: Unbalanced Territories
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Territory Design: Why Sales Increase 500750100012501500 90 130 170 250 Sales Potential in Territory ($000) Sales in Territory ($000) Sales lost by reducing size of large territories is more than offset by sales gained by increasing small territories. Sales Gained Sales Lost NOTE: Each dot on the graph represents one territory
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Figure MR6-2: Reasons for a Major Territory Realignment A change in sales force size A change in sales force structure Mergers and acquisitions Shifts in market opportunities Demographic shifts New Products Need to shake things up Territory Design: Reasons for Realignment
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Figure MR6-3: Territory Design Process 1 Select geographic control units 2 Decide on alignment objectives 3 Choose starting points 4 Combine control units adjacent to starting points 5 Make final adjustments 6 Assign salespeople to new territories Mergers Division consolidation Division split Sales force turnover Plant relocations Product line changes Territory Design: Process Revise territory Boundaries to balance workload and potential Events triggering sales territory adjustments:
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What are triggering events? The Buildup Method -- Six Steps (9-1) 1. Select control units Census tracts -- good for dividing cities Counties - convenient and data readily available 2. Choose starting points Salesperson’s home Large customer - cut transportation cost Big city - convenient for services Territory Design: Process Steps
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Territory Design: Process Steps (Cont.) 3. Determine Allocation Criteria Territory balance -- effect on morale Customer balance - distribute commission Potential balance - share business growth Size balance - reduce transportation costs 4. Combine Adjacent Control Unit (9-3) 5. Compare Sales Territories Mountains, roads, population center locations? 6. Assign people to Sales Territories
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Table MR6-1: Geographic Control Units Used in Territory Design CountriesCities States or provincesZip codes CountiesCensus tracts Metropolitan areasCustomers Territory Design: Common Geographic Control Units
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Territory Design: Sample Alignment Metrics Pharmaceuticals: Doctor Specialty Counts Patient Volumes Epidemiology Data Influential Doctors Teaching Institutions Managed Care Org. Surgical Procedures Total Hospital Beds Health and Beauty Aids: Retail Outlets Store All Commodity Volume Call Activity Requirements Office Products: Number of White Collar Workers Office and Distribution Locations Headquarter Locations Number of Accounts Customer Types Diagnostic Equipment: Testing Volume Installed Machines Contract Information Building Materials: Housing Starts # of Architects, Builders, Contractors Projected Population Growth
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The numbers in each county are population figures and are a measure of potential. Kentucky Counties, Major Cities, and Population Centers TENNESSEE VIRGINIA WEST VIRGINIA INDIANA ILLINOIS OHIO Figure MR6-4: Kentucky Counties, Major Cities, and Population Centers Territory Design: Kentucky
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Figure MR6-5: Three Kentucky Sales Territories Territory Design: Three Kentucky Territories Three Kentucky Sales Territories TENNESSEE VIRGINIA WEST VIRGINIA INDIANA ILLINOIS OHIO Major super highways Territory borders Territory 3 Territory 2 Territory 1
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Table MR6-2: Comparing Three Kentucky Sales Territories Territory Design: Comparing Three Kentucky Territories Territory Potential as Measured by Population Number of Counties 11,124,89747 21,129,29027 31,131,13743
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Figure MR6-6: Dividing a Large Territory Territory Design: Dividing a Large Territory
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