Sales and

Distribution
Management 2e
Tapan K. Panda
Sunil Sahadev
Oxford University Press 2012. All rights

Chapter 6
Sales
Organization
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Learning Objectives
Understand the nature of the sales organization

Discuss the factors affecting the changes and its

design

Recognize the principles of a sales organization

Understand the different types of organizational
design
Analyze the factors leading to the emergence of a
modern organizational design
Explain the concept of total quality management
Calculate the sales force required for a sales
organization
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Sales organization
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.
A sales organization defines duties, roles, rights, and
responsibilities of sales people engaged in selling
activities meant for the effective execution of the
sales function.
A structural body through which the functions of sales
management are carried out.
sales organization always makes efforts to increase
sales, thereby achieving the principle of profit
maximization, which contributes to the overall growth
of enterprise.
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Factors influencing structure

product and service related factors
organization related factors
marketing mix related factors
external factors:
o the speed of market change
o reduction in the number of vendors per buyer
o closer to customer relationships
o changes in regulations and international
practices
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Structural Change in a Sales

Organization
From top down command and
control-driven

To horizontal and customer-driven

Information processing

Knowledge creation

Compartmentalized knowledge

Shared knowledge

Functions retain power

Core process team has the power

Functions own skills

Core competencies supply skills

Dominant function leads

Leader represents team

Narrow result focus (suboptimization)

Broad process focus (optimization)

Rewards are within chimneys

(functions)

Rewards are based on the overall

performance of the organization

Slow/bureaucratic

Quick/empowered

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Organizational principles
span of control
unity of command
hierarchy of authority
stability and continuity
coordination and integration
homogeneity
objectivity
specialization
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Organizational design
formal and coordinated task
assigning territories
establishing flows of communication and
responsibilities of sales groups and individuals to
customers effectively

Line organization

Mr. Ratnakar Shetty

President / Owner
Mr. Chandrakant
VP (Sales)

Five sales people

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Typical structure of a line

organization
Consumer
market

National
Distributors

Regional
Distributors

Directto- home

Institutional
market

Direct
marketing

Distributor
s

Corporate
market

Bundling

Consumer

Retailers

Consumers

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Gifting

Design by territory

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Design by management
function
Mr. Dara Singh,
VP
(Marketing)

Staff Function

Mrs. Chitra Mohanty,

Advt / Sales
Promotion Mgr

Line Function

Mr. Dibya Behera,

Sales Manager

Mr. Chandra De,

Manager,
Marketing Research

20 Salespeople

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Design by product
President
(Marketing)
Product Manager (A)

Manager
(Sales)

Manager
(Training)

Manager
(Promotion)

Manager
(Sales)

Manager
(Training)

Manager
(Promotion)

Product Manager (B)

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Design by customer
President
(Marketing)
Vice President
(Marketing)

Sales Manager
Industrial Relations

Sales People

Sales Manager
Wholesalers

Sales Manager
Retail Sales

Sales People

Sales People

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Sales Organization
Key account sales
focus on CRM
customer profitability and value analysis
the few accounts give incremental returns
national accounts

Sales process automation

EDI Electronic Data Exchange

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Emerging organizational
design

agency and distribution selling

shared sales force

telemarketing

TQM and team-based selling

Customer

Sales

Marketing

Technical
Support

Manufacturing

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Number of sales people

determined by:
territories vary in their demand structure for
prospecting
product mix demands
levels and types of prospecting
nature of the customer segments
Affordability method (based on sales budget)
Incremental method
(Number of
(Ideal
(Number
X
X frequency
existing
of
Workload method
customers)
of calls)
Potential
customers
Number of sales people = Ideal selling
time available for a
salesperson

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(Length
of a call)