Chapter 4

Organizing Sales Force

Main references :
Sales Force Management 2017 by Gregory A. Rich &
Selling & Sales Management 2019 David Jobber, Geoffrey Lancaster and
Kenneth Le Meunier-FitzHugh
 3. Specialization within a Sales Department
Chapter 4 Outline • By geography
• By product
• By market (or customer)
1. Nature of Sales Organizations
4. Key Account Management
2. Organization and Strategic
Planning 5. Buying Centers and Team Selling
3. Characteristics of a Good 6. Independent Sales Organizations
Organization • Independent Agents (Manufacturer’s Reps)
4. Basic Types of Organizations • Wholesale Distributors
• Line organization 5. E-Commerce and Inside Sales
• Line-and-Staff
6. Organizing for International Sales
• Functional
• Home- vs. Foreign-Country Intermediaries
• Horizontal
Organization
• An arrangement or working structure of activities involving a group of
people

• A control-and-coordination mechanism that has a direct and

significant bearing on the implementation of strategic planning

• Trend toward flatter organizations

• Favoring cross-functional teams over top-down control
Characteristics of a Good Organization
• Reflects a marketing organization
• Built around activities, not around people
• Responsibility and authority should be related properly
• Reasonable span of control
• Average number of salespeople per sales manager
• Stable but flexible
• Activities should be balanced and coordinated
Formal vs. Informal Organization
• In addition to responsibilities defined by the formal
organization, employees interact with colleagues and
customers informally
• This is sometimes good, sometimes bad
• When these informal behaviors are good, they are called
citizenship behaviors
• Defined as voluntary behaviors not part of formal job requirements
that nevertheless promote the effective functioning of the
organization
• Example of citizenship behavior…
• Experienced salespeople share selling techniques with rookies
Basic types of organizations President

Line Organization
Vice President
• Authority flows downward in a straight line
• Never any dispute about who is the boss
Sales
• Lends itself to quick-decision making Manager

• Over simplistic, hardly ever used except for

very small organizations Senior
Account
Manager

Junior
Account
Manager
Basic types of organizations

Line-and-Staff Organization
• Most widely used structure
• Allows for division of labor and
specialization
• Dotted line represents advisory
authority, not formal authority
Basic types of organizations

Functional Organization
• Like Line-and-staff except for
this one difference:
• Dotted lines change to solid
lines to represent formal
authority
• So, for example, the market
research manager has formal,
supervisory authority over
salespeople
Basic types of organizations

Horizontal Organization
• The trend is toward this type of
structure
• Focus is on self-managed, cross-
functional teams
• A salesperson is often just one
member of a team
• Other members might include
engineers, operations specialists, R&D,
etc.
• Gives customer direct access to a
team of specialists
Specialization Within Sales

Geographic
National Sales
Manager
• Each salesperson assigned to a
carefully defined geographic area Western Southwest Midwest Southeast Northeast
(territory) Regional Sales
Manager
Regional Sales
Manager
Regional Sales
Manager
REgional Sales
Manager
Regional Sales
Manager

• Each salesperson sells all products

to all customers within his or her District Sales
Managers
District Sales
Managers
District Sales
Managers
District Sales
Managers
District Sales
Managers
territory
• Assures coverage of entire market Territorial Territorial Territorial Territorial Territorial

• Does not allow for any

Salespeople Salespeople Salespeople Salespeople Salespeople

specialization of marketing
activities
Specialization Within Sales

Product Operating President

• Each salesperson… Advertising Customer

• Is assigned to a subset of the Manager General Sales
Manager
Service Manager
firm’s products (for all products) (for all products)

• Sells to all types of customers

(who might need the product)
• Allows salespeople to become
Sales Manager, Sales Manager,
Product A Product B
product experts
• Makes sense for…
• Complex, high-tech products Salespeople,
Product A
Salespeople,
Product B
• Companies that sell very
dissimilar, unrelated products
Specialization Within Sales
President
Product Staff
• Each salesperson sells all Product Product
General Sales
products to all customers Manager, Manager,
Manager
Product A Product B
• Each product line is supported
by a highly specialized group
headed by a product manager Staff Staff
Sales
Managers
• Common structure of
consumer goods producers
(e.g., P&G) Territorial
Salespeople
Specialization Within Sales

Market President

• Each salesperson sells all products,

Advertising Customer
but only to a subset of certain types Manager General Sales Service Manager
Manager
of customers (for all products) (for all products)

• Allows salespeople to become

industry or market experts, and thus
Sales Manager, Sales Manager,
better understand customer needs grocery stores military bases

• Makes sense when selling to a

diverse market that contains distinct
categories of customers (e.g., Salespeople for Salespeople for
grocery stores miltary bases
grocery stores vs. military bases)
Additional strategic organizational alternatives
A type of
Key Account Management (KAM) market specialization

• Also called Strategic Account Management, Global Account

Management, National Account Management, and/or Major Account
Management
• Involves a separate group of salespeople that focus on one (or just a
few) large customers
• Example: P&G sales team focusing on Walmart
• Involves a close partnership between buyer and seller
Additional strategic organizational alternatives

Selling Teams and Buying Centers

• A buying center includes all the individuals from the customer firm
that are involved in the purchasing decision process
• Users, influencers, deciders, gatekeepers, and buyers
• The selling firm often uses a team of specialists (i.e., a sales team) to
service buying centers
• This is especially true with large buying centers from important customers
• The account manager or salesperson is the key facilitator of all
information flowing into and out of the buying center
Additional strategic organizational alternatives

Independent Sales Organizations

• Producers sometimes outsource the selling function through independent sales
organizations, such as manufacturers’ representatives and/or wholesale
distributors
• Characteristics of Manufacturers’ Reps
• Sell for several manufacturers of related (but not competing) products
• Do not take ownership/title
• Paid on straight commission
• Less expensive than having your own sales force – especially when sales are relatively small
• Know the customers in their territory very well
• Sometimes used to enter new markets
Figure 4-9 Captive versus Independent Sales Force

What does this graph say about when it is

best to outsource the sales function through
Manufacturers’ Reps?
Additional strategic organizational alternatives

E-Commerce and Inside Sales

• Inside sales (also called telemarketing)
• Salespeople that contact customers via the telephone (and that seldom make face-to-face
sales calls)
• E-Commerce
• Interaction with customers electronically on the Internet, for the purpose of both basic
communication and commercial transactions
• For some firms, these less personal alternatives are the primary way they interact
with at least some of their customers
• Increases selling efficiency
• In fact, some customers prefer this type of interaction
• Often used as a way to support the direct, face-to-face salespeople
Organizing for International Sales
Three options:
1. Turn over the export of products to home-country
intermediaries
2. Partner with foreign-country intermediaries
3. Establish its own company sales force in the foreign
country
Should U.S. firms (going with option #3) hire
foreign salespeople from the host country or
American salespeople who will move to that country?
Key Terms
• Buying center telemarketing) • Product operating
• Central American Free • Key account management specialization
Trade Agreement (CAFTA) (KAM) • Product specialization
organization
• Citizenship behaviors • Line-and-staff organization
• E-commerce • Line organization • Product staff specialization
• Functional organization • Manufacturers’ • Selling centers
representative • Selling team
• Global account
management (GAM) • Market specialization • Strategic account
• Horizontal organization • North American Free Trade management (SAM)
• Independent agent Agreement (NAFTA) • Wholesales distributors
• Organization • World Trade Organization
• Informal organization (WTO)
• Inside sales (or • Product managers
Tutorial 4
Read Jobber pg 389.
Silverton Confectionery Silverton Confectionery is a growing Berkshire-based
company specialising in selling quality chocolates and sweets at higher-than-
average prices through newsagents and confectioners.
At present, its span of operation is limited to England and Wales, which is covered
by a sales force organised along geographical lines.
Each salesperson is responsible for sales of the entire product line in their territory
and for seeking out new outlets in which to develop new business.
The system works well with Silverton’s salespeople, who are well known by their
customers and, in most cases, well liked.
The salesperson’s responsibilities include both the selling and the merchandising
functions. They are paid on a salary plus commission system. The success of this
company, which has exploited a market niche neglected by the larger confectionery
companies, has led Silverton management to expand into Scotland.
Tutorial 4
You, as national sales manager, have been asked to recommend the appropriate
number of salespeople required.
The coverage objective is to call upon all outlets with a turnover of over £200,000
three times a year, those between £100,000 and £200,000 twice a year and those
below £100,000 once a year.
As a first step, you have commissioned a market research report to identify the
number of outlets within each size category. The results are given below. A
salesperson can be expected to call upon an average of 60 outlets a week, and a
working year, after holidays, sales meetings, training, etc., can be assumed to be 43
weeks.
Category No. Of outlets Q1:How many salespeople are
required?
Under £100,000 2950
£100,000– 1700
£200,000
Over £200,000 180