Organizing and Executing the Sales 1 2 Sales and Distribution Management

Sales Organization
structure because if the products are perishable like vegetable, fish, meat which have shrt
duration, for these sales organization is big for more supervision and support.

Scope and Importance of Sales Organization (iv) Size of the enterprise: For big enterprise big sales are required and automatically big
sales organization will be required and vice versa. Example: Tata, Wipro and other big
The scope and importance of sales organization are: companies have big sales organization.
(i) Reduction of risk: A good sales organization reduces the risk element of sales of (v) Selling policy of enterprise: Selling policy of the organization also helps to determine
the enterprise. When sales organization are efficient, the flow of purchase, sales, finance the structure of sales organization in such a way that if the enterprise adopts aggressive
and production will be absolute. sales policies then the sales organization will be difficult, complex.
(ii) Efficiency of management: A successful sales organization makes sure that the (vi) Number of products: If the company produces products of different varieties,
efficiency of work reduces sales cost, mutual friction, red tapism and all above rapid then automatically sales organization will be bigger and complex.
increase in sales efficiency of the sales free which helps the management to be more (vii) Financing facilities: If the company has large capital, then the company can sell
efficient. the product directly to customer and consumer and for the sales organization will be big.
(iii) Division: In a large seal of sales, one man is not able to work smoothly, for these a But if the company has small amount of capital then it has to sell the product through
good sales organization provides subdivision and division to control. By functioning all the wholesaler and other agencies for that small sales organization is required.
work smoothly the salesmen can be specialized in specific field.
(iv) Increase in sales: A good sales organization helps to increase the sale of goods of Different Types of Sales Organizations
the organization. These help the enterprise to increase the production, advertising and selling
of goods which indicate the mass production and mass distribution. The various types of sales organizations are:
(v) Market creation: Sales department of sales organization can create a good market (i) Formal and Informal Organization: Every firm has a formal and an informal
of the product by the creation of demand of product through market. organization. The formal organization is that of the management whereas the informal
(vi) Coordination and controlling: A better sales organization can coordinate and control all organization is often developed from the informal relationships existing within the
of the sales force, which lead to control and coordination of all organization. Also called the grapevine, informal organization is basically a
individual efforts and thus motivate them to work. communication pattern that emerges to facilitate the operation of its formal counterpart.
(vii) Other functions of management: Sales organization performs works like market Most formal organizations would be totally ineffective if it were not for a supportive
research, sales forecasting, sales budgeting, product planning, consumer, etc. informal organization.
which lead to the efficiency and profitability of the organization. The development of an effective sales organization requires that informal
(viii) Sales organization ensures effective coverage of the sales territory. relationships and communication patterns be recognized as being equally useful in
(ix) Reduces the repetition of activities. accomplishing sales objectives. They should be encouraged to the extent that they
improve organizational efficiency.
(x) Helps proper distribution of goods.
(ii) Horizontal and Vertical Organization: A sales force can have either a horizontal
Factors Influencing Sales Organization Structure or a vertical organizational format. This arrangement varies among companies even
within the same industry.
There are various factors which affect the structure of the organization. These factors are as A vertical sales organization has several layers of sales management - all of which
follows: report vertically.
(i) Nature of market: The nature of market helps to determine the sales organization. The other extreme is a horizontal organization. Here the number of management levels is
If the product is for local people and short period, the organization structure will be reduced appreciably, but the number of managers at any particular level is increased.
simple but if the product is for international market, the organization structure will be Instead of two or three district sales managers, there may be seven or eight.
vast and complex. The factor that determines whether a vertical or horizontal organizational structure
(ii) Price of product: Price affects the organization to determine its structure because should be employed is the effective span of control. The span of control refers to the
if the price of the product is more and not basic required good for all, then the number of employees who report to the next higher level in the organization. Horizontal
organization will be small like motor car, air cooler, etc. But if the price is less and on the structures tend to exist where larger spans of control are acceptable, while vertical
basic required goods like vegetable and rice, etc. then its organization is big and complex organization characterize cases in which closer managerial supervision is required.
for sale. (iii) Centralized and Decentralized Organizations: In a highly centralized
(iii) Nature of product: Nature of product affects in determining the sales organization organization, the sales function and its related tasks are managed from corporate
 Organizing and Executing the Sales 3 4 Sales and Distribution Management

headquarters. In a decentralized organization, field sales managers do the recruitment,

training, evaluation and compensation of sales force. The degree of centralization and
decentralization depends upon the size of operation, effectiveness and competitive
necessity.

Centralized (concentrated) Decentralized (dispersed)

Plant, Personnel, Product, service and business Products, services and business
Equipment functions concentrated in one functions scattered in many
(Facilities) building or in several buildings within areas; multi-plant operation; each
a localized area. subunit is a separate entity; may be
autonomous self- sufficient entity
performing most major business
functions.
Authority High degree of concentration High degree of delegation and
(Decision-making) and retention of decision- making at dispersion of decision-making
upper levels of management; horizontally or vertically downward
subordinates highly dependent. to lower levels of management;
subordinates relatively independent;
“Profit
Fig. 2.1. Span of control vs. management levels.
Centre” concept.

(iv) Line and Staff Components: Marketing organization also features line and staff Flat Structure
components. A line function is a primary activity and a staff function is a supporting
activity. In a marketing organization, the selling function is the line component whereas In flat organization structure authority is delegated and span of control is wide. It reduces the levels
advertising, marketing research, marketing planning, sales training and distributor of management. Decision-making capacity is more decentralized.
relations are usually considered staff roles.

Although the use of terms—line and staff—has been criticized in many quarters, the basic
premise behind them remains applicable to marketing organizations. A modern sales force has to
receive various types of support in order to accomplish its objectives. If the needs of the
marketplace become more complex, or if the company expands, then there is usually a need to
add specialists prepared to deal with these problems. Over time, these specialists become the
staff departments found in most large organizations. Line executives are in command and
have power. Staff does not enjoy
the power to command. They may become backroom boys.

Tall (Vertical) & Flat (Horizontal) Organization Structures

Tall Structures
In this structure numbers of hierarchical levels are more and span of control is narrow. As
numbers of levels are more, communication gets difficult. Decision-making is highly centralized.

Fig. 2.2. Span of control vs. management levels.

 Organizing and Executing the Sales 5 6 Sales and Distribution Management

Basic Types of Sales Organization Structure

The grouping of activities into positions and the charting of relationships of positions causes the
organization to take on structural form. The most common structures are line & line and staff.
Functional organizational structures are rare. Most sales departments have hybrid organizational
structures, with variations to adjust for personalities and to fit specific operating conditions.

Line Sales Organization

In this kind of sales organization lines of authority and instructions are vertical, i.e., they flow
from the top to the bottom. The unity of command is maintained in a straight and unbroken line.
It implies that each subordinate receives instructions from his immediate superior alone and is
responsible to him only.

Fig. 2.4. Line & staff sales organization

Functional Sales Organization

Functional structure is created by grouping the activities on the basis of functions required for the
achievement of organizational objectives. Authority relationships in functional structure may be in
the form of line, staff and functional.

Fig. 2.3. Line sales organization.

Line & Staff Sales Organization

Refers to a pattern in which staff specialists advise managers to perform their duties. Here, staff
managers provide advice to the line managers who are generally specialists in the field.
Staff positions are purely advisory in nature. They have a right to recommend but have no
uthority to enforce their preference on other dept. The line executives are the “DOERS” or
commanders, whereas, the specialists are the “THINKERS” or advisors.

Fig. 2.5. Functional sales organization.

 Organizing and Executing the Sales 7 8 Sales and Distribution Management

Schemes for Dividing Line Authority in the Sales Organization The most common means of specialization of the sales force is by geographic region. In a
As marketing operations expand, line authority and responsibility eventually become excessively geographically based sales force, a salesperson has to visit all current and potential customers in a
burdensome for the top sales executive. There is an increasing number of people to supervise. given geographic territory. Some advantages of geographic organizations are like proper coverage
Ordinarily, the first remedial step taken is to add a general line assistant, for example an assistant of territory, defining the responsibility, familiarity with local economic and competitive
sales manager. As the burden of line administrative work continues to grow, it is necessary to conditions, etc. making them better able to serve local customers.
provide additional assistants. These new subordinates are given line responsibilities narrower than The disadvantages of this kind of structure is that the salespersons need to be responsible for
those of the assistant general sales manager. Although they work with a variety of matters, their the entire product line in their territory even though they may not be having uniform knowledge
assignments cover a limited area of operations. Tasks of line administration are subdivided among about all products. Further, within their territory, they may choose to concentrate on products and
these new assistants in one of three ways: (i) by geographic area, (ii) by-products or, (iii) by customers that are easy prospects.
customers or marketing channels.
Product Sales Organization
Product based organizations are useful for complex products because they require the sales force
to concentrate on a limited product line. Product specialization is generally combined with
geographical specialization at the higher levels, while at the level of field operators, different
salesmen may be assigned to specific product lines.
Organization includes duplication of calls and buyer frustration. This duplication of
coverage can lead to increased selling costs.

Fig. 2.8. Customer sales organization.

Organization with several separate and distinct markets, accounting for major portions of their
sales, often organize their markets on the basis of customers. Customer specialization enables the
salespersons to become more knowledgeable about the unique problems and needs of each group
Fig. 2.6. Product sales organization.
of customers. A customer-oriented sales force is consistent with the marketing concept with its
increased emphasis on consumer satisfaction. The main disadvantage of this form of
Geographic Sales Organization
specialization is that geographical territories may typically overlap.

Hybrid Sales Organization Structure

Many large organizations have divisional structures where each manager can select the best
structure for that particular division. One division may use a functional structure, one geographic,
and so on. This ability to break a large organization into many smaller ones makes it much easier
to manage.

Area Sales Manager Area Sales Manager Area Sales Manager

– Bangalore, Chennai – Kolkata, Patna – Ahmedabad, Mumbai
Fig. 2.7. Geographic sales organization.
 Organizing and Executing the Sales 9 Organizing and Executing the Sales 49

materials, fabricating parts and other items can be procured in advance of scheduled production
runs. Sometimes these data are furnished through an intermediary such as the production
department or data-processing unit. Second, the purchasing department informs the sales
department, again sometimes through an intermediary, of material surpluses and shortages so
sales emphasis can be changed with regard to products made from these materials. Third, data on
sales department needs are furnished to the purchasing department so that purchases can be made
on advantageous terms.
Functional
Sales and Legal
Legislation regulating and effective marketing activities make effective coordination of the sales
and legal departments imperative. Every sales department activity has, or can have, legal
Geographic implications. Sales executives require legal advice on contracts with sales personnel, pricing,
relations with competitors and trade associations, salesperson recruiting policy and practice
and disputes with customers. Sales executives and legal officers are in continuing communication
to avoid costly litigation and unfavourable publicity. Formal coordination of the sales and legal
departments is achieved through top management, but interdepartmental coordination on legal
Customer matters in informal.

Sales and Public Relations

Fig. 2.9. Hybrid sales organization structure.
The sales department works closely with the public relations (PR) department. PR department is
consulted on any contemplated moves that might have public relations repercussions, and the sales
In this type of organization structure there are two or more different types of organization department assists public relations personnel by relaying information, secured through its contacts
types are combined. This structure is designed to overcome the problems of individual sales with various PR departments, that has public relations significance. Relations between the two
organizations. Its main advantage is the ability to offer customers the service they need using departments are normally informal and with frequent personal contacts, with formal coordination
the most efficient method. The primary disadvantage of hybrid sales organization is the difficulty being the responsibility of top management.
of managing multiple sales forces, whether they are serving the same or different customers.
Distributive Network Relations
• SALES DEPARTMENT RELATIONS Sales department relations with other departments Developing and maintaining good relations with the channel partners is an important function of
the sales department. Distribution channels are the conduits through which goods of a company
The success of an organization largely depends on effective marketing department and in turn on flow to the final buyer. Any hindrance in smooth flow of goods to the buyers is bad for the health
the performance of the sales department. It must gear its activities in terms of satisfaction of of any company. Even companies like HUL, who have a strong consumer pull for their products
customer needs and desires. For this sales department must establish good relationship with other pay due importance to relations with the distribution partners. Since sales personnel are dealing
functions departments such as research and development department, production and operation directly with the distributor, they are the face of the company to the distributors. Hence, relation
department, finance and accounting department and human resource department, legal of sales department with the distributor is crucial for the smooth flow of goods to the final
departments, public relations department, etc. buyers.
Sales and Production Need for Setting up Cooperative Programmes with Distribution Network
Coordination of sales and production activities is essential. Whereas at one time production was The role of distribution outlets is crucial for a company in implementing its marketing
started only after orders were on hand, today most production is in anticipation of future sales. programme. When a company plans an aggressive advertising campaign to launch a product, it is
Similarly, although some products, such as defence materials for the armed forces, are very important that adequate stocks of the product are available at the retail outlets. If there is no
manufactured to specifications established by buyers, most products today are manufactured coordination between the advertising campaign and the
according to specifications set within the company itself.
 Organizing and Executing the Sales 47

Fig. 2.10. Selling process.

PROSPECTING
Succeeding in today’s competitive environment means that a company must constantly find new
customers. A salesperson’s basic strategy should be to spend as much time as possible with
excellent prospects—people who recognize their need and are ready to buy. As Phil Clark, an
IBM regional sales manager in Dallas, succinctly told his sales force, “The idea is that through our
advertising and promotional efforts, we stand on a ladder shouting loudly all over Dallas,
‘Everyone who is ready to buy a computer please raise their hands.’ Then we go and sell one
computer to each person who responds.”
Prospecting is the method or system by which salespeople learn the names of people who
need the product and can afford it. There are two steps in successful prospecting. The first step is
identifying leads—generating potential customers. The second step is qualifying leads according
to which—who is most likely to buy.

Identifying Leads

Fig. 2.11. Generating leads.

 Organizing and Executing the Sales 51 52 Sales and Distribution Management

Salespeople may also plan how they are going to approach the buyer and what kind of
questions they want to ask. It is important that salespeople recognize differences across selling
situations and adapt their presentations accordingly. Based on their precall customer research,
they will make a tentative judgement as to which of their products best meet their customers’
needs and then formulate a tentative plan for presenting the features and benefits of those
products. Of course, the information gained by salespeople during the actual call may often cause
them to alter their initial objectives or plans. This is called adaptive selling.

THE APPROACH
Once the sales rep has the name of a prospect and adequate preapproach information, the next step
is the actual approach. Making an appointment to see the buyer increases the chances that the
salesperson will have the buyer’s attention during their meeting.
Fig. 2.12. Qualifying leads. A good approach makes a favourable impression and establishes some degree of rapport
between the salesperson and the buyer. In order to make a favourable impression with customers in
Customer Research the United States, the salesperson should have a firm handshake, be professionally attired, and
make good eye contact. Usually each call starts with an introduction (unless the salesperson has
The sales rep should learn everything possible about the prospective customer’s business—its called on this customer before) and a limited amount of small talk. Sometimes salespeople will
size; its present purchasing practices; the location of its plants; the names of its executives; and, draw attention to their products by handing the buyer a sample or by highlighting some benefit in
most important, the names of people who make the buying decision as well as those who influence which the buyer will likely be interested.
the purchase. It is also helpful to learn something about the buyers’ background, such as their The approach usually takes up only the first minute or so of a call, but it can make or break
education, social affiliations, or personality. If the prospective buyer has been having problems, the entire presentation. If the approach fails, the salesperson often does not get a chance to give a
the seller should, if possible, become familiar with those problems. presentation. At the end of the approach, the salesperson must gain the buyer’s agreement to
When researching a current customer or one that has been called on previously by a move into the need assessment stage of the call.
salesperson from your company, start by reading the company files. They should provide a wealth
of background information on the company and possibly on the buyers as well—sales records, NEED ASSESSMENT
correspondence, past sales, call reports, and other relevant information. Many companies store
information about their customers in a database to which their salespeople have easy access Companies and consumers purchase products and services to satisfy needs or to solve problems.
using laptop or notebook computers. In a business situation, the company’s purchases are always related to the need to improve
For new customers, you can easily obtain a great deal of information by using the Internet or performance—to become more efficient and effective at fulfilling
online information services such as LexisNexis, Dialog, and Dow Jones News/ Retrieval. Other
sources include trade magazines, industrial directories, magazine and newspaper articles,
chambers of commerce, and government publications, as well as the annual reports of
companies. Sometimes the company’s current suppliers, customers, and certain employees can
provide information.

Planning the Sales Presentation

The most important part of planning the sales presentation is defining the objective or goal for the
particular call. The goal is not necessarily to close or complete the sale on each call. In fact,
salespeople report that, on average, it takes four calls to close a sale. However, on each call the
salesperson does want to obtain from the buyer some type of commitment for action that moves
the sale forward. For example, the salesperson may try to obtain a list of the customer’s vendor
selection criteria or get the buyer to set up a meeting with some of the other people who will be Fig. 2.13. Probing needs.
involved in the decision. The objective may be any agreement on an action that moves the sales
forward.
 Organizing and Executing the Sales 53 Organizing and Executing the Sales 55

customer’s needs. Need assessment is the stage in which the salesperson must discover, clarify, are correct in your understanding or provide additional information. Sometimes this step can
and understand the buyer’s needs. The best way to uncover and understand needs is by asking uncover a misunderstanding that the buyer has about your product and/or service.
questions. In fact, research has determined that the more questions salespeople ask, the more Respect the buyer’s concern. Acknowledge that you understand and appreciate the
likely it is that they will be successful. concerns. Remember that the buyer is not attacking you personally, so you should not become
Salespeople ask these questions in the logical order just presented. The situational questions defensive.
should be asked first, followed by the problem discovery questions, the problem impact questions, Respond to the objection. It is important that you respond to the buyer’s concern.
the solution value questions, and then the confirmatory questions. Each type naturally leads to the The specific response to the objection depends on the type of objection it is.
following type, and each one helps build the buyer’s interest in hearing about the solutions the The most common types of objections and specific strategies for handling them are discussed
salesperson has to offer. It should be noted that studies by Neil Rackham of 35,000 sales calls next.
demonstrate that the most successful salespeople are those who use fewer situational questions
and more problem discovery, impact, and solution value questions. Price or Value Objections
Buyers who say “I don’t need it” or “It costs too much” are indicating that they don’t think the
THE PRESENTATION
value of solving the problem or meeting the need is worth the cost. In this case, the salesperson
After assessing the needs and desires of the customer, the salesperson moves into the main body must convince the buyer of the importance of the problem and of the value of the solution. It may
of the sale, the presentation. The presentation is primarily a discussion of those products and/or be necessary to go back to the need assessment part of the call to ask some additional problem
service features, advantages, and benefits that the customer has indicated are important. While impact and solution value types of questions to increase the buyer’s perception of the seriousness
most presentations are oral, they often include written proposals and supporting material as well of the problem and the importance of a solution. If the buyer acknowledges the importance of the
as visual aids. The goal of the presentation is to convince the customer that the product or service problem but still feels that the company can’t afford the product/service or that it is not a price-
being sold will satisfy the customer’s needs better than that of a competitor. competitive solution, then the salesperson can offer some price value comparisons of alternative
Features describe the characteristics of the product or service, advantages describe how the solutions.
feature changes the performance of the product or service, and benefits describe how the
advantage will help the buyer. For each feature and advantage that a salesperson presents, he or she Product/Service Objections
should also present one or more benefits of that feature to the buyer. In fact, the benefits should be
Sometimes the buyer acknowledges the importance of a problem but doubts whether the product
those that address specific needs mentioned by the customer.
or service can solve his problem or improve his operations. The buyer may disagree with the
salesperson’s assessment or, in some cases, even doubt the genuineness of the salesperson. In this
Prepared Sales Presentations
case the salesperson needs to convince the buyer that her/his product will do what she/he says.
The advisability of using a prepared sales presentation, better known as a canned sales talk, is She/he must demonstrate or prove that the product has the capability to fulfil the need.
debatable. Without doubt, a prepared presentation done poorly and without feeling is a dismal
experience. However, many firms do use canned talks successfully. The prepared presentation has Hidden Objections
several advantages:
Prospects may state their objections to a proposition openly and give the salesperson a chance to
• It gives new salespeople confidence. answer them. This is an ideal situation, because everything is out in the open and the salesperson
• It can use tested sales techniques that have proven effective. does not need to read the prospect’s mind. Unfortunately, prospects often hide their real reasons
• It gives some assurance that the complete story will be told. for not buying. Further, stated objections may be phony. A prospect may say she does not like the
• It greatly simplifies sales training. looks of a product, when she really thinks the price is too high. The rep must determine the real
barrier to the sale to be able to overcome it.
The use of a prepared presentation does not mean that sales reps must use someone else’s
words. Above all, the salesperson’s own feelings and personality should be evident in the GAINING COMMITMENT
presentation.
At some point after the salesperson has convinced the buyer that his or her products at least warrant
Developing Effective Presentations further attention, the salesperson must ask the buyer to commit to some
The task of developing a presentation is not an easy one. Some simple advice may be helpful here:
 Organizing and Executing the Sales 57 58 Sales and Distribution Management

Obstacles to Sales The selling tactics followed affect the ease of closing the sale. Low pressure sales are closed more
easily than the high pressure ones. On low pressure sales, prospects feel that they are reaching the
Obstacles are real or apparent reasons that the prospect has for not buying. If the obstacle is real, it buying decisions themselves, and primarily through rational processes of thought, so there is no
precludes the consummation of the sale. But it is apparent; there are ways to circumvent it. A need for extra push just before the sales are consummated. In high pressure sales, the main thrust
prospect says a temporary shortage of cash prevents buying an obstacle, not an objection and the is to the prospect’s emotions, so salespersons attempt to propel prospects into buying decisions.
salesperson helps the prospect to circumvent it by explaining a method for financing the purchase. Often, the prospect regains normal perspective as the sale nears its climax, and, if this happens,
Some obstacles can be circumvented, some cannot, when an obstacle arises, the salesperson the salesperson needs unusually effective persuasion to close the sale.
determines whether or not there is a way to get around it. If the salesperson recognizes the Every salesperson approaches certain closings with apprehension.
specific obstacle and knows a way to circumvent it, the next move is to present the solution to
the prospect.

Sales Objection
Objections are never good reasons for failing to complete the sale, but they nearly always divert
the salesperson’s presentation from its main course. At best, an objection requires a satisfactory
answer; at worst, it blocks the sale. Adroitness in handling objection is a difference between
effective and ineffective salespeople. Sincere objections trace to incompleteness, inaccuracy, or
vagueness in the sales presentation. Prospects may not recognize the nature of their needs, or they
may have doubt about the appropriateness of the product to fulfil those needs.
Prospects may be confused in some respect, or may react unfavourably to the salesperson’s
personality. Except when personality conflict cannot be resolved (a real obstacle, not an
objection), sincere objections are overcome by patient and thorough explanations. Prospects raise
insincere objections to discourage salespersons, to get rid of them, to test their competence, and as
false excuses for not buying. When salespersons sense that an objection is insincere, they seek to
regain the offensive as soon as possible. They do not permit an insincere objection to provoke an
argument—one of the surest ways to lose a sale. Some sales executives say that every objection, no
matter how insincere, should be treated with the utmost courtesy. Others say that insincere Fig. 2.17. Techniques for closing the sale: Which close should be used?
objections should be ignored. The best defensive strategy often is the strong counterattack, and
the salesperson should seek to regain the initiative as soon as he or she can gracefully do so.
At closing time, either the salesperson sells the prospect an order or the prospect sells the
CLOSING SALES salesperson on a “no sale.” Closing time provides an opportunity to register tangible proof of
selling skill. Occasionally even the best salesperson must rely upon closing skill to make the sale.
Prospecting, if well done, puts the salesperson in the proper frame of mind for the close. The
salesperson feels that a real service is being performed for the prospect, not that “a bill of goods is
being sold.” There is no doubt that the product is the best solution to the prospect’s problems.
But even after an excellent presentation, and in spite of thorough prospecting, some prospects
refrain from positive commitments. The natural tendency of many people is to let inertia guide
their reactions. Many are happy to leave things as they are, and salespersons leave empty handed
unless they jolt these prospects into buying. The skilled closer gives the extra push that triggers a
buying response. But failures to get an order result as much from poor prospecting and inept
presentations as from ineffective closing. When an attempted close fails, the salesperson should
normally try another. The refusal does not necessarily imply an unwillingness to buy; it may
Fig. 2.16. Closing the sale. indicate the prospect’s need for additional information or for clarification of some point. Some
executives
 Fig. 2.18. Following up.

Fig. 2.19. Selling job factors.

Selling is studied as the cumulative experience of salespersons and advertising professionals.

It distils knowledge from practice, and psychology learnt through experience. It teaches how all
this can be put into practice. The emphasis is on ‘how to’ rather than ‘why’. Empirical evidence is
considered more valuable than a systematic body of knowledge. But such knowledge can never be
foolproof.