SALES ORGANISATION: PURPOSE &

STRUCTURING
Sales organization bridges the gap between the market and the
productive capacity of the firm. As the market changes, the sales function
accommodates through adjusting its organization and manner of
operation. Shifts in size of market operation, market trends, competitive
position and other environmental factors may necessitate changes in
existing sales organizations.

An effective sales organization usually provides for growth and

adaptability to such changes.

Need for Sales Organization

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 a. Defines lines or authority:
b. Ensures that all necessary activities are assigned and performed
c. Establishes lines or communication:
d. Provides for coordination and balance:
e. Provides Insight into avenues or advancement:
f. Economizes on executive time:

Types of Sales Organization

The sales department’s structure evolves from the needs of the

business. No two companies have identical sales organizations, because
no two have identical needs. If sound practices are followed in setting up
the sales department, the resulting structure takes on features of one or
more of four basic types:

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  Line
 Line and staff
 Functional
 Committee

The grouping of activities into positions and the charting of relationships

of positions causes the organization to take on structural form.

The first two types (line and line and staff) are the most common.
Functional and committee organization are rare. Most sales
departments have hybrid organizational structures, with variations to
adjust for personalities and to fit specific operating conditions.

Line Sales Organization:

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The line sales organization is the oldest and simplest sales organizational
structure. It is widely used in smaller firms and in firms with small
numbers of selling personnel. For instance, in companies that covers a
limited geographic area or sells a narrow product line.

Characteristics:

All managers have line authority to direct and control subordinates.

Used in small firms / departments

Advantages: Simple organization, clear authority, quick decisions, low

cost

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Disadvantages: No support to line managers from subordinates who
have specialized knowledge / skills. Less time for planning / analysis

Head
Marketing

Sales
Manager

Area Sales Area Sales

Area Sales Area Sales
Manager3 Manager4
Manager1 Manager2

salespeople salespeople salespeople salespeople

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The basic simplicity of line organization is the main reason for its use. Because each
department member reports to only one superior, problems of discipline and control
are small. Lines of authority and responsibility are clear and logical, and it is difficult
for individuals to shift or evade responsibilities.

The greatest weakness of the line sales organization is that so much depends upon the
department head. The head needs outstanding ability and rare qualifications, and
should be well versed in all phases of sales management, for there are no subordinates
with specialized skills and knowledge. Even if the head is an all around expert, there is
insufficient time for policy making and planning, since rigidity of the line structure
requires that a great deal of attention be given to direction of sales operations.

Line & Staff Sales Organization

For rapidly growing concerns and for those with large sales staffs, the line
organizational structure is inappropriate.

Head-Marketing
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 Manager
Manager Customer Service
Manager

Area Sales Area Sales Area Sales

Manager-1 Manager-1 Manager-1

Salespeople Salespeople Salespeople

The line and staff sales department is often found in large and medium sized firms,
employing substantial numbers of sales personnel, and selling diversified product lines
over wide geographic areas. In contrast to the line organization, the line and staff
organization provides the top sales executive with a group of specialists and experts in
dealer and distributors relations, sales analysis , sales organization, sales personnel,
sales planning, sales promotion, sales training, service, traffic and warehousing, and
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similar fields, this staff helps to conserve the top sales executives time and frees them
from excessively detailed work, they make it possible for their chiefs to concentrate
their efforts where they have the most skill.

Characteristics: Specialist staff managers are available for senior marketing /

sales managers. Staff managers’ role is to assist / advise line managers. Used in
medium and large size organizations

Advantages: Better marketing decisions, superior sales performance

Disadvantages: High cost and coordination, slower decision making, conflict

may arise if staff managers’ role is not clear

Functional Sales Organization

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Some sales departments use functional organization. This type of organization is
based upon the premise that each individual in an organization, executive and
employee, should have as few distinct duties as possible the principle of
specialization is utilized to the fullest extent. Duty assignments and delegation
of authority are made according to function. No matter where a particular
function appears in the organization, it is in the jurisdiction of the same
executive.

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Characteristics: Each functional specialist has line responsibility over
salespeople. Used by a large firm with many products / market segments,
minimizing line authority to functional managers

Advantages: Qualified specialists guide sales force, simple to administer

Disadvantage: confusion due to more managers giving orders to sales force

Committee Sales Organization

Operations Team:
Research & Design Production /
Team: Operations
Customer Research Quality Assurance
Product / Service
Planning Team: Systems
Design
Strategic Planning Engineering
Accounts, Finance
HR, Administration
Chief Operation
Customer Support Officer Customer
Team: Satisfaction Team:
Information Sales & Marketing
Service Pricing, Promotion
Training Channels,
Logistics

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Characteristics: Removes management levels & departmental boundaries.
Except planning team, all others are members of cross-functional teams. Used
by firms having partnering relationships with customers.

Advantages: Reduction in supervision, unnecessary tasks, & cost; improved

efficiency and customer responses.

In committee sales organization the committee is never the sole basis for
organizing a sales department. It is a method organizing the executive group
for planning and policy formulation while leaving actual operations,
including implementation of plans and policies, to individual executives.

Other committees found in sales organization include customer relations,

operation, personnel, merchandising, and new products. The use of
committees in the sales department has advantages. Before policies are made
and action is taken, important problems are deliberated by committee members
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and are measured against varied viewpoints. Committee meetings, where ideas
are interchanged and diverse opinions are present, promote coordination among
members of the executive team.

Specialization within Sales Organization

• Needed to increase effectiveness of sales force

• Done by expanding basic sales organization

• Basis of specialization

• Geography

• Type of product

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 • Market

• Combination of above

• Criteria for selection – (1) nature of product, (2) sales force abilities, (3)
demands of selling job, (4) customer and market facts

The major purposes of setting up a field sales organization are more adequate
market coverage control of sales expenses. Better coordination with regional
requirements, and in case of new products, more vigorous market cultivation.

The field sales forces are typically organized on the basis of geographic, customer or
product wise specialization, with many sales organizations combining customer and
product specializations with geographic territories.

Geographic Specialization:

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The most common pattern organizing a sales force is by geographic territories
where sales personnel are assigned to a specified geographic area, and will sell
only to customers in that area.

Head-Marketing

Marketing Research General Sales Customer Service

Manager Manager Promotion Manager
Manager

Branch Sales Branch Sales Branch Sales Branch Sales

Manager-1 Manager-2 Manager-3 Manager-4

Salespeople Salespeople Salespeople Salespeople

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Characteristics: salespeople, assigned geographic areas, are responsible for all
selling activities to all customers within assigned areas. Branch sales managers
adjust marketing plan to local needs

Advantages: Better market coverage and customer service, more control over
sales force, quick response to local conditions & competition

Disadvantages: Limited specialisation of marketing tasks. Hence, it is

combined with product / market sales organisation

Product Specialization:

Product specialization is usually called for when the product line is large and
diverse or when the products are technical enough to warrant specialized
applications knowledge, or when adequate technical knowledge is an important
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determinant of successful selling. Product specialization is generally combined
with geographic territorisation at the higher levels, while at the level of the field
operators, different salesmen may be assigned to specific product lines. Instead
of selling the entire product line in a specific territory, a salesperson assigned to
a particular product/product group, will sell only that product to the customers in
that area.

There are two types of product specialization

1. Sales organization with product specialized sales force

2. Sales organization with product managers as staff specialists

Head-Marketing

Marketing Research General Promotion Sales Training

Manager Sales Manager Manager Manager

Area Sales Managers – Area Sales Managers –

Product Group ‘A’ Product Group ‘B’ 16

Salespeople – Salespeople –
 Sales Organisation with product specialized salesforce

In the above example since the product line is both technical and diverse. It is
not possible for one sales person to acquire enough technical knowledge to sell
the entire product line successfully. Product specialization, as shown above
would allow the sales personnel to specialize in their respective product lines
which in turn would result in more effective sales performance. Customer
queries and sales resistance can be handled more effectively on account of
intensive product knowledge. On the other hand, each salesman in the above

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example would have to tour the entire state, which would result in higher travel
time and expenses.

Advantage: Each product gets specialized attention from the sales force

Disadvantage: Sometimes, more salespeople contact the same customer,

resulting in customer dissatisfaction and higher cost

The sales organization structure of Dabur, which produces a very wide range of
health and personal care products it has initially been divided geographically but
the field operators have been given charge of different product groups. The
company has divided its product line into two major product groups’ i.e. health
care products and family use products. Even though two salesmen may be
assigned to the same territory, each will be responsible for only the product
group assigned to him.

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Sales Organization with Product Managers as Staff Specialists
Head-Marketing

Marketing Research Promotion General Product Manager Product Manager

Manager Manager Sales Manager Product Gr. ‘A’ Product Gr. ‘B’

Area Sales
Managers

Salespeople

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Characteristics: Each product manager plans and implements marketing plan,
for a product group

Advantage: Corrects the problem of duplication calls on a customer by

salespeople

Disadvantage: Lack of product specialization by salespeople

Customer specialization:

Customer specialization is practiced in situations when almost identical products

are marketed to consumers each of which may present a different set of selling
problems. In this kind of organizational scheme each sales person sells the entire
product line to the selected buyers.

Customer specialization enables the sales persons to become more

knowledgeable about the unique problems and needs of each group of
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Customers. A Customer oriented sales force is consistent with the marketing
concept with its increased emphasis on consumer satisfaction.

General Sales
Manager

Sales Manager- Sales Manager- Sales Manager-

Sales Manager-
International- Government Consumer Markets
Commercial
Markets

Area Sales Mgrs Area Sales Manager- Area Sales Manager- Area Sales Mgrs-
International Commercial Government Consumer Markets

Sales Executives Salespeople Salespeople Salespeople

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Characteristics: Desirable when customers are classified by type, user industry,
or channel. Salespeople carry out all activities for all products only for specific
customer groups

Advantages: Meets needs of specific customer groups, implements customer-

centered philosophy of the company

Disadvantages: Geographic duplication, high cost

Combined Sales Organization:

Director – Sales
& Marketing

General Manager General Manager General Manager

General Manager Sales - East Sales - West Sales - South
Sales - North 22

Regional Sales Regional Sales Regional Sales

 Salespeople Salespeople Salespeople

• Characteristics: Many firms use some combination of specialization

organizations, called hybrid or combination sales organization, with a view
to minimize disadvantages and maximize advantages of specialization
organizations.

Alternatives for Major Accounts

• All Major accounts / customers are called by various names like key
accounts, corporate accounts, house accounts

• They make up a large share of a firm’s sales volume and profits

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• Firms use the following alternative approaches to deal effectively with them

• Create a position of major / national account manager

• Use existing territory sales managers

• Create a separate division

• Create a separate sales force

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