Module II: Sales Organisation

and control
Module II
• Sales Organization, setting, Types and
structures.
• Sales Territory: Concept and process of
devising sales territories.
• Sales forecasting Techniques
• Sales Budget: Purpose and Procedure
• Sales Quotas: Concept and types.
• Design of Sales Quotas and Territories
Sales Organization

• Organization is a network that defines the essential

relationships among people, tasks and activities with an aim
to optimally utilize and coordinate resources to achieve goals.

• A sales organization entails in organizing its sales force to

facilitate the act of selling and distributing a product.

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 functions of defines roles
A structural sales and
body management responsibilities
of sales people

marketing of
marketing of
products
products
procured for
manufactured
reselling.
 Helps in Defines formal
evaluation authority and
and control. responsibility

Purpose of Results in Spells out job

sales better service

to customers.
description and
selection
process.
organization
Generates sense Paves way for
of involvement
communicatio
and
commitment in n; horizontal
salespeople. and vertical.
Types of sales
organization structure?
• Territorial sales organization
• Product Sales organization
• Customer Sales organization
• Functional Sales organization
• Complex Sales organization
Territorial
sales
organization
Advantages and Disadvantages of Different Sales Organization
Structures

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Product
Sales
organization
Advantages and Disadvantages of Different Sales Organization
Structures

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Customer
Sales
organization
Advantages and Disadvantages of Different Sales Organization
Structures

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Functional
Sales
organization
Advantages and Disadvantages of Different Sales Organization
Structures
Complex
Sales
organization
Advantages and Disadvantages of Different Sales Organization
Structures
Principles of Developing
a Sales Organization

• Degree of centralization
• Degree of Specialization
• Line and staff positions
• Marketing Orientation
• Effective Co-ordination
• Span of control
Sales Territory
Issues to be dealt

• Sales Territory: Concept and

• process of devising sales territories.
• Sales forecasting and
• Sales Potential,
• Sales Forecasting Techniques
Sales territory is - A group of present and potential
customers assigned to an individual sales person, a sales
team, or a distributor at a given period of time.

It helps in sales planning and control along with cost saving.

 Benefits of Sales
Territories
• Increased customer / market coverage
• Control selling expenses and time
• Enable better evaluation of sales force
performance
• Improve customer relationship
• Increase sales force effectiveness
• Improve sales and profit performance
Factors influencing the modifications of
territory
• product life cycle change, product line change

• mergers, market consolidation, split in division

• sales force, turnover, customer relocations

 Procedure of Designing Sales
Territories
Build up
Approach

Select a Find Decide

control unit Location & basic
Potential of territory
customer

Break
Down
Approach
 1. Selecting a Control Unit

• Select Geographical Market Base

Called Control Unit or geographical
control unit (GCU) that will be use
for market analysis.

• Commonly used control units are

states, metros, cities, districts, pin
code areas.
 2. Find Location And Potential
Of Customers
• Find The Location And Sales Potential of
Present And Prospective Customers In Each
Control Unit.
• Company should estimate the total sales
potential in each geographic control unit.
• Market forecast should be estimated
3. Decide Basic Territories

3A. Build up Method:

• Decide Customer Call Frequencies
• Calculate Total Customer Calls In Each Control
Unit
• Estimate Workload Capacity Of A Salesperson
• Make Tentative Territories
• Develop Final Territories
• Objective Is To Equalize The Workload Of
Salespeople
3B. Break Down Method

• Estimate Company Sales Potential For

Total Market
• Forecast Sales Potential For Each
Control Unit
• Estimate Sales Volume Expected From
Each Salesperson
• Make Tentative Territories
• Develop Final Territories Objective Is
To Equal Sales Potential Of Territories
 Practice at Marico Industries
• Marico industries, use geographic information systems (GIS) software to
design territories.
• The GIS contains detailed maps of regions and allows the user to key in
demographic data of the market.
• Marico’s GIS software analyse satellite-based pictures to provide
relevant data on transportation, communication, and spread of retail
outlets.
• This software helps to look at customers purchase parity, to forecast
probable purchase levels and link it with distribution data for
transportation route and territory planning.
 Sales Territory Mapping
• A sales territory map is a plan of action for each salesperson.
• Proper mapping gives the sales manager ability to designate areas
and assign specific territories to each salesperson.
• Sales managers can use a sales territory mapping software for
greater revenue realization.
• Terralign- break territories on basis of customer location and
spending with a company.
• Badger Maps- used by salesperson to visualize customer data,
building routes, and focus on right customers.
• Alignstar, Mapinfo Pro and Batchgeo are other popular softwares
used by sales team.
 Assigning Salespeople
To Territories

(A) Relative Ability Of Salespeople

• Product Knowledge,
• Market Knowledge,
• Past Sales Performance,
(B) Salesperson’s Effectiveness In A Territory
• Decided By Comparing Social, Cultural, And
Physical Characteristics Of The Salesperson
• Objective Is To Match Salesperson To The
Territory
Management of Territorial Coverage

• How Salesperson Should Cover The

Assigned Sales Territory
• It Includes Three Tasks For A Sales
Manager:
• Planning Efficient Routes For
Salespeople
• Scheduling Salespeople’s Time
• Using Time-management Tools
Routing

• Routing Is A Travel Plan Used By A

Salesperson For Making Customer Calls In
A Territory
• Benefits of Routing:
• Reduction In Travel Time And Cost
• Improvement In Territory Coverage
• Importance Of Routing Depends On
The Application:
• Nature Of The Product
 Scheduling
• Scheduling is planning a salesperson’s
time of visit to the customers.
• Salesperson Records Actual Time Spent
On Various Activities
• Sales manager and sales person discuss
and reach to a mutually agreed time
schedule
Management of Sales
Quota
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Sales Quota
• It is an expected performance
objective to be achieved in a specific
period of time
• it is routinely assigned to the sales
units (e.g. departments, divisions, and
individuals)
• Setting of sales quotas is a challenge
to the sales manager and to be
handled with adequate skill.
• Defining annual objectives
• Procedure for setting sales quota

• Conferencing with each sales person

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 Types of Sales Quota
• Sales Volume Quota
• Sales Budget Quota
• Sales Activity Quota
• Combination Quota

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Sales Volume Quota

• Sales volume quotas communicate the organization’s expectations in

terms of what amount of sales for/in what period.
• For example, Torrent Pharmaceuticals uses rupee sales objectives,
whereas a company like General Motors uses the number of cars and
commercial vehicles.

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Sales Budget Quota

• These kinds of quotas are set for various units by the organization in
order to control expenses (expenses quota), gross margins, and net
profits (profit quota).
• This means the cost to acquire customers should be less than the
revenue generated from those new customers.

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Sales Activity Quota

• The salesperson is not always involved in sales realization; for

example, a retail salesperson has a job of providing information only.
• Activity quota is mostly seen in insurance selling where salespeople
must continuously do prospecting, generate sales lead, and develop
new business.

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Combination Quota

• A combination sale quota can be achieving a sales target of 1000

units along with developing 20 new key accounts, identifying 100
prospects, and bringing back 50 lost customers.

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 Approaches of setting sales quota

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Popular methods of setting quota?
• Quotas are based on Sales Potentials
• Quotas based on Sales Forecast
• Quotas based on Past Sales or Experience
• Quotas based on Executive Judgment
• Quotas based on Judgment of Salespeople
• Quotas based on Compensation

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 45

Sales Budget
Sales budget is essentially a set of
planned expenses that is prepared on
an annual basis.

Sales budget has two important

wings;
(a) revenue goals and
(b) expense ceilings.

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 Sales budget
• Takes into account allocation and utilization of company’s resources.
• It has a time limitation and Device to control costs.
• It arranges provisioning of funds for different heads of expenditure.
• Indicates the standards of performance.
• Facilitates comparison between actual and anticipated results
• Helps in formulating other budgets like production budget.
• It is communicative information from top management to lower-level staff.

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 Rationale of setting sales budget
• To gather information on the allocation of selling expenses.
• To monitor progression of sales plans.
• To caution managers not to act beyond the confines of sales plans.
• To watch that the activities are undertaken on the pre-planned routes.
• To act as a guide to control and co-ordinate different sales activities.

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 Methods of Determining
Sales Budgets
• Percentage of Sales Method.
• Competitive parity method.
• Objectives and task method.
• What you can afford method.
Percentage of Sales Method.

• Fixed percentage of last year’s sales revenue.

• Advantages
• Simple and easy to calculate.
• Maintains balance between revenues and selling expenses.
• Effective for stable marketing environment.
• Disadvantages
• Lacks logic.
• Percentages are subject to approximation.
• Not applicable for new products.
• Suicidal for fluctuating market situations.

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Competitive parity method
• Company follows budget of leading competitor(s).
• Company may also use average percentages of selling expenses
incurred by the industry as a whole.
• Information on competitors spending can be gathered from company
websites, annual reports, news from trade associations, trade
journals etc.
• Comparatively a safe practice.
• Reflects the collective wisdom of the industry.
• Prevents marketing warfare

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Objectives and task method
• Company decides its sales objectives.
• Company decides on the tasks to achieve those objectives.
• Company estimates how much money will be needed to accomplish
these tasks.
• Element of realism.
• Flexible.
• Periodic review of budgets possible.

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What you can afford method.

• Capacity to spend decides the budget.

• Advantages
• Simple, safe and flexible.
• Disadvantages
• Lacks planning process.
• Arbitrary discretion in deciding budget levels.

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 Factors Influencing
Sales Budget
• Market size
• Company’s intention to curb selling expenses.
• Company’s financial resources.
• Market potential.
• Sales potential.
• Production efficiency.
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