1. Intro To Sales Management.docx

Introduction to Sales Management

TYBMS

Sales & Distribution

CHAPTER 1. INTRODUCTION TO SALES MANAGEMENT INTRODUCTION: Sales refer to the exchange of goods or services for an amount of money or its equivalent in kind. Selling is the most important and most difficult function in an organization. It is like fuel to an engine. Without the sales function, a firm cannot stay in business for long. Therefore, managing sales in an organization is a critical activity. If sales are so important to an organization, then what is the role of other activities of the firm such as advertising, marketing, public relations, and so on? Although these play a crucial role in creating a desire for the product in the minds of the customers, it is ultimately the interactions that the salespersons have with the customers that is critical in closing the sale. A company may spend a large amount of money on advertising, marketing, public relations and promotional activities to attract prospective customers, but all the money spent on marketing and promotion will go down the drain if the salesperson is ineffective. Thus, it is important to understand that sales are an important activity that can make or mar the future of an organization. CORE MARKETING CONCEPTS: 1. Target Market and Segmentation: A Marketer cannot satisfy everyone’s need. Needs & Wants differs from person to person. All do not have the same lifestyle, preferences. Not everyone likes the same soft drink, automobile, restaurant. Thus marketer creates Market Segment. Market Segmentation is the process of dividing the market based on the needs & wants of the customer. Marketers identify & profile distinct groups of buyers with similar needs & wants. The opposite of Market Segmentation is Mass Marketing. Mass Marketing focuses on having one product for the entire market, whereas Segmentation focuses on having one product for each segment. A marketer always targets a particular segment. What is Market? Traditionally, a “market” was a physical place where buyers & sellers gathered to exchange goods & services for a monetary value. Economists now describe a market as collection of buyers and sellers who transact over a particular product or product class. But marketers view sellers as comprising the industry & buyers as constituting the market. Following diagram shows the relationship between industry & market. INFORMATION

COLLECTION OF SELLERS

Goods & Services

COLLECTION OF BUYERS

Monetary Value

INDUSTRY

MARKET FEEDBACK

Sellers & buyers are connected by four flows. The sellers send goods & services & communications (ads, direct mail) to the market; in return they receive money & information (feedback/response) Page 1 of 14

Introduction to Sales Management

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2. Marketplace, Market space & Metamarket: Marketplace is physical, when one goes shopping in store. Market space is digital, as when one goes shopping on the internet. In India, scope of Market space has not picked up well except in few sectors like airlines, where the customers first preference is to book an airline ticket online. Metamarket is describes a cluster of complimentary products & services that are closely related in the minds of customers but are spread across a diverse set of industries. Example: an automobile metamarket consists of dealers, banks for financing the customers, component manufacturers, tyre manufacturer, insurance, etc. all of them are related to automobile industry. 3. Marketers and Prospects: A Marketer is someone who is seeking a response from another party called prospect. Marketer is one who initiates the 4 P’s of Marketing. A Prospect is a future or potential customer. A prospect may or may not become customer. 4. Needs Wants and Demand: Marketers try to understand the target marketers need, wants and demand. Needs describe basic human requirements. People need food, water, clothing and shelter to survive. People also have strong need for recreation, education and entertainment. These needs become wants when they are directed to specific object that might satisfy the needs. Example: We need food. But we want French fries, burger, pizza, etc. Wants are shaped by one’s society. Demands are wants for specific product backed by ability to pay & willingness to buy. Many people want a Mercedes; only few are able to and willing to buy one. Companies must major not only how many people want the product but also how many would actually be willing and able to buy it. 5. Product or Offering: People satisfy their needs and wants with product. A product is any offering that can satisfy a need or want. Major types of basic offerings are goods, services, experiences, events, persons, places, properties, organization, information and ideas. Product is also known as Market Offering as the marketer creates the product & offers the product in the market by making the product available at all places. 6. Values and Satisfaction: The product or offering will be successful if it delivers values and satisfaction to the target buyer. The buyer chooses between different offerings on the basis of which is perceived to deliver the most value. Value is defined as relation between Benefits & Costs. The customer gets benefits at a cost. The benefits include Functional benefit and Emotional Benefit. The cost includes monetary cost, time cost, energy cost and psychic cost. Thus value is given by: Value = Benefit = Functional Benefit + Emotional Benefit Costs Monetary Cost + Time Cost + Energy Cost + Psychic Cost The marketer can increase the value of the customer offering in several ways;  Raise Benefit  Reduce Cost  Raise Benefit and Reduce Cost  Raise benefit by more than the raise in cost  Lower benefit by less than the reduction in cost.

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7. Exchange and Transaction: A person can obtain a product through exchange. Exchange is process which involves obtaining a desired product from someone by offering something in return. Exchange that involves a monetary value is a transaction. Example: A sells TV to B for a monetary value of Rs. 15,000. Transaction may or may not include the element of negotiation. 8. Competition: Competition includes all actual and potential rivals offering and substitutes that a buyer might consider.  Brand Competition: A Company sees its competitors as other companies offering similar product and services to the same customer at similar prices. Volkswagen might consider Toyota, Honda, Renault & other manufacturers as major competitor It would not see itself competing with Mercedes or Hyundai or Maruti.  Industry Competition: A Company sees its competition and as all companies making products and class of products. Volkswagen would see itself as competing against all other automobile manufactures. 9. Marketing Mix: Marketers use numerous tools to elicit desire responses from the target markets these tools constitutes the marketing mix Marketing Mix is a set of marketing tools that a firms uses to pursue its marketing objectives in the target market. McCarthy classifies these tools into 4 groups that he called 4P’s in marketing:  Product  Price  Place  Promotion 10. Customer & Consumer: Traditionally speaking, customer is one who purchases the product & a consumer is one who consumes or uses the product. But this interpretation is confusing for the marketer, whom should it focus on: customer or consumer. Actually a marketer never differentiates between customer and consumer. We are all customers of a specific brand & consumers of that industry. EVOLUTION OF THE SALES CONCEPT Selling has been an important part of business throughout history and will continue to be so. To understand the sales concept better, one needs to understand the evolution of selling Evolution of sales can be divided into seven generations. First generation: During the first generation, selling took place in the form of exchange of goods. In other words, a barter system was followed. The barter system has been around since the beginning of civilization and is the simplest form of exchange. Second generation: The second generation of sales involved the evolution of the store concept. Goods were stored for sale at one place from where the buyers could purchase whatever they required. Thus, rather than purchasing goods on a one-to-one basis, a stockpile of necessary or desired commodities was created. From the barter system of trade, sales graduated to the inventory form of trading. Third generation: In the third generation of sales, traders began peddling their wares by searching for and locating customers, rather than waiting for customers to arrive and purchase their wares from stores. Page 3 of 14

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Fourth generation: The fourth generation of sales can be considered as the first step toward adopting a systematic approach to selling. In this stage, traders realized that certain customers purchased goods from them repetitively and at regular intervals. Fifth generation: The fifth generation of sales was marked by the advent of need- based selling. Thus, the sales activity became more scientific in its approach. The emphasis of the trader in this generation of sales was to identify the customer's need and fulfill it with a product or service. This approach toward selling can be considered to have laid the foundation for modem day sales techniques. Sixth generation: The sixth generation of sales began somewhere around the late 60s. In this period, the sales approach underwent considerable transformation. This was because there was an increasing demand for salespersons to understand customers unique needs and offer solutions for them. The efforts of salespersons to understand the unique needs of customers gave rise to the ‘consultative selling’ approach wherein the salespeople and sales managers assisted buyers in their purchase decisions. In the consultative selling approach, salespeople give top priority to customers' needs. They also play the role of experts and try to resolve consumers' problems by identifying and offering them a product that best satisfies their needs. Seventh generation: In the seventh generation, the salesperson assumes the role of a moderator, his aim being to make the customer realize the implications of buying the product or service. In this stage of selling, the salesperson's focus is not on selling the product but to help the customer identify the long-term consequences of buying the product. DEFINITION: Sales management means the planning, direction and control of personal selling, including recruiting, selecting, equipping, assigning, routing, supervising, paying and motivating as these tasks apply to the personal sales force. ROLE & RESPONSIBILITIES OF A SALES MANAGER Sales managers are the front-line managers of a sales organization. Sales managers occupy middle level positions in an organization with the top management above and tile sales personnel below them. The quality of a sales organization is directly dependent on how well its sales managers fulfill their responsibilities. Sales managers have several key responsibilities. 1. Hiring: The sales manager plays a key role in hiring sales personnel for an organization. He is responsible for preparing job descriptions for various sales positions. A carefully worded job description prevents the management from hiring the wrong kind of people for the sales position thereby reducing the sales force turnover. 2. Training: It is the responsibility of a sales manager to train the sales persons in his team to achieve their sales targets. Sales training in a company may differ from that in another company. The training may be offered by a professional sales trainer, the sales manager, or by some other employee of the company having wide experience in sales. As part of the training, the sales managers should address basic issues such as key attributes of the product, potential customers, competitors and how to make the sale. The sales manager should also train sales persons on how to handle objections and close a sale by summarizing the key attributes of the product. Most organizations are willing to invest in sales training because they view it as a return-on-investment. However, a direct correlation cannot always be established between sales training and increased sales or enhanced performance of sales personnel.

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3. Coaching: The sales manager should observe how his sales team performs in the field to identify the training needs and gauge the effectiveness of the sales training. The sales manager should provide honest and constructive feedback to the salesperson. Thus, the coaching function of the sales manager involves identifying the reasons why the salesperson is not performing satisfactorily and devising a solution to correct the problem. 4. Motivating: The following three factors plays role in increasing the productivity of an employee – the belief that his work is important, recognition of his accomplishments and a motivated leader. The sales manager should ensure that it is not just the top performers in the sales force who require to be praised. On the contrary, the salespersons who display only a slight improvement in performance should also be praised to ensure that they show further improvement. A sales manager also plays a vital role in designing compensation plans for sales personnel. Different individuals are motivated by different factors. They motivate the sales personnel by designing attractive financial and non-financial incentive schemes for them. 5. Setting Targets: A sales manager sets targets for the salespersons under his supervision. The sales targets may be in the form of new accounts, amount of revenue to be generated, or it may even be in the form of the ratio of sales per customer. The sales manager may even set additional targets for the prospecting efforts of the salesperson. This may be in the form of number of phone calls made, number of letters mailed or number of visits made in a week. However, the sales manager should ensure that the targets set by him are realistic and achievable. After setting the targets, it is the responsibility of the sales manager to constantly track and publicize their achievement by posting the results on the company bulletin board or the intranet, as the case may be. This acts as a great morale booster for those who have worked hard to achieve their targets. 6. Conducting Sales Meetings: One of the prime responsibilities of a sales manager is conducting sales meetings. These meetings when conducted effectively serve as great morale boosters for the salespersons. To conduct effective sales meetings, sales manager should send the agenda beforehand to the participants so that they come prepared for the meetings. The sales manager while conducting sales meetings must take care to cover the following aspects - review of the sales performance of the organization, review of the performance of each individual salesperson, recognize and reward excellent performers, offer effective sales tips present, motivational lectures and video presentations, etc. Sales managers also need to ensure that during the meeting, participants do not lose focus and issues and problems are resolved by the end of the meeting. 7. Other Roles: Other roles of a sales manager include that of: i. A Sales Forecaster: As a sales forecaster, a sales manager forecasts the likely sales of the organization. ii. A Strategic Planner: As a strategic planner, he devises strategies that would help in achieving organizational objectives. iii. An observer of buyer behavior: As an observer of buyer behavior he observes the buying behavior of prospective and existing customers on the basis of which he plans future sales strategies for tile sales personnel. iv. A market analyst: As a market analyst, he continuously monitors & analysis the marketing environment & identifies opportunities & potential threats. Page 5 of 14

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v. A leader: the sales manager leads & guides the team & also motivates the sales force. vi. A cost and profit analyst: As a cost & profit analyst, he analyzes the cost & profit involved in various segments of the market vii. A budget manager: As a budget manager, he sets the budget requirement of the sales organization for carrying out various activities involved in personal selling process viii. A communicator: He also plays a role of a communicator by transmitting information from the marketing/strategy planners to the sales force. ROLE OF SALES DEPARTMENT Selling helps an organization achieve its business goals. It has other roles as well, such as that of enhancing knowledge about both the internal and external environments, such as customers, suppliers, distributors, employees and other people; developing a positive relationship with the customers, suppliers and distributors; and negotiating with customers to sell the company's products profitably. The sales team of an organization can play these roles effectively only when it receives the required support from other departments. All the roles of the sales team are interdependent and the success of one role depends upon the success of the others. Information exchange among the departments of the organization is very crucial and the sales department has to share necessary information with other departments such as production. For instance, if the sales team forecasts a higher sale, then such information should be communicated to the production department so that it can take the necessary steps to increase the level of production. The sales team continuously monitors the changes taking place in the external environment regarding competitors, customers, government and other regulatory agencies; advances in technology; and industry trends. This provides the sales personnel with vital information regarding trends in organizational sales, product development, and budgets. By offering the management vital inputs pertaining to such information, the sales team helps the management in organizations to develop objectives. There is another important role that selling has to play – the sales team should identify potential prospects, qualify them, and develop a long-term relationship with such customers. Locating new customers while retaining existing ones is the most important function of a sales team. Sales personnel can locate new customers by obtaining information about them from personal acquaintances, existing customers, & referrals from satisfies customers. Developing & maintaining a good relationship with the customers is also an important function of sales team. QUALITIES OF A SALES MANAGER There are two opinions on the characteristics or qualities required by sales managers. (1) Sales abilities are inborn qualities (2) Sales abilities are developed. Some of the sales abilities like gift of gab, pleasing mannerism and extrovert nature are inborn. However, others like analytical ability, negotiation skills, leadership, etc. can be developed. Following qualities are identified: (1) Leadership and Supervision: Motivating salesmen in a competitive environment needs leadership qualities. Leadership means the ability to influence subordinates in a manner that they willingly do their work meticulously. This involves proper delegation of authority, effective supervision through direction and control, better communication skills etc. By effective supervision, work is distributed based on capabilities and aptitudes of each. Motivating each member by complimenting their success and encouraging them in lean periods of sale is a hallmark of a great sales manager.

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(2) Planning and Foresight: Planning is vital for success in sales and the essential ability for a manager is his capability to foresee far into the future. The rapid changes in lifestyle affect market conditions. Technological changes affect products. Competitors launch new products in market. Easy access to the internet and national & international trends make consumers demand better and latest products. Sales manager must be able to foresee these changes in advance and alert his management to take corrective actions in time to attain and sustain competitive advantage in market. Furthermore, such changes must be incorporated in the planning by updating or amending plans. (3) Self-Direction and Self-Control: Sales executives are the "live wire" in an organisation and are the revenue earners. Being at the centre stage of activities, sales manager must know what the company expects from him. Whether defined or not, he must assign his own duties and responsibilities and act accordingly. Being a specialist in his field, he does not look to anyone in his organisation to guide and control him. As and when market conditions change, he rewrites his own agenda and assumes responsibility of new tasks. (4) Organizing Ability: Sales manager must be a good organizer and real "Go-Getter. He must organise an effective team, make a structure suitable for a given situation, recruit and select proper salespersons to manage different territories & products, delegate authority, coordinate and control their activities, motivate and compensate their work, recognize their efforts and acknowledge good work. He has to develop his team giving them adequate monopoly & freedom of action; and at the same time maintaining control on their activities, so that they do not lose sight of organizational objectives. (5) Time-Management: Time is limited and vital when the sales manager has to manage multiple product lines and respond quickly to market changes. Sales Manager has to balance his time between planning functions and operating functions. He must also find time for meeting his salesmen, distributors and some customers and as well as liaison with other departments in the company. (6) Innovativeness: It is important for a sales team manager to always think about how to get the best out of their teams not just collectively, but individually as well. If something isn't working in the sales process, a great manager can't look to others to solve the issue but must determine ways to achieve success on his own. Looking ahead and solving these problems before they occur is a key to success. The ones who win are those working on turning weaknesses into strengths. Great sales managers should constantly assess his or her team objectively and look for better ways to sell. (7) Communication Skills: Whether the sales manager communicates with his team verbally or in writing, he/she needs to be clear, effective and efficient. Without this skill he/she will not be able to give clear instructions that can be understood and followed by the sales team. (8) Teamwork: A sense of team can make a significant difference in whether the sales manager meets the sales objectives. He/she should hold team meetings to share information, tips and successes. Also it is vital to create and maintain a strong bond across the team. Better human relations skill inculcates team spirit and enhances "empowerment". This reflects in a sense of belongingness, work commitment and positive attitude of the sales team INTERFACE OF SALES & OTHER MANAGEMENT FUNCTIONS: 1. Sales & Marketing Management: As sales management is a part of marketing management, sales planning should be integrated with marketing planning. A company's marketing team typically consists of two basic groups: (a) Field selling (or personal selling) team, and

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(b) Head quarter marketing team. Field selling teams (or field sales force) are in their territories (or branches, or regions) contacting existing and prospective (or new) customers. The headquarter marketing team performs support and service functions or activities to assist or help field salespeople in their jobs. These headquarter based service and support functions are: (a) Promotion: Consists of advertising, sales promotion, public relations, publicity, and direct marketing. (b) Marketing research: Collecting and interpreting information on customers, competitors, products, markets and so on. (c) Market logistics: Physical distribution of finished goods including warehousing, inventory, transportation and order processing. (d) Customer service: Pre-sales and post-sales" service as well as delivery service to existing and prospective customers. (e) Co-ordination: Sometimes there is a need to co-ordinate between customers, company's salespeople and production or operations, by employing inside salespeople. The support activities are either handled within the company or outsourced to specialists like marketing research agencies and advertising agencies. The real integration between sales and marketing teams would take place if there is a harmonious relationship that is built on the understanding of common goals and effective process of delivering service to the consumers. 2. Sales & Logistics: If Logistics & SCM is managed accurately, it helps in efficient sales to the customer. If logistics is not managed properly it will impact the sales adversely. Because of non availability of the product the customer may be disappointed & might shift to any other brand. Efficient logistics department can become an effective sales tool. 3. Sales & HRM: Quality of Sales Force i.e. Human Resources will determine the success of sales department. Role of HRM includes (a) Recruitment & Selection (b) Training (c) Performance Appraisal & (d) Motivating. All these roles are required for effective Sales management. 4. Sales & CRM: Sales team should develop effective CRM with the existing customers with an objective of customer retention. DEVELOPMENT OF SALES MANAGEMENT In the fast changing environment new trends are coming up in every field of business. Marketing and selling are also undergoing such changes. The three environmental factors that are driving the new trends or development in sales management are:  Increasing competition  Speed and efficiency in operations  Greater focus on customers Following are the major developments in the sales management: 1. Effectiveness to Efficiency Effectiveness means plan-output relationship that indicates how much of the plan has been fulfilled or realized. Efficiency, on the other hand, is input-output relationship that indicates how much has, been produced or achieved per unit of input or cost. Thus effectiveness focuses on contribution in relation to target or objective, and efficiency means contribution in relation to cost. Even if both input and output are low, efficiency can be high. Similarly, even if input and output are high, efficiency can still be low. Effectiveness is important, but the Page 8 of 14

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final focus should be on efficiency because every result or achievement has to be assessed in terms of cost. To face competition effectively, companies are now concentrating on improving efficiency to secure price competitiveness. Efficiency can be achieved in two ways: i) By increasing productivity. ii) By reducing cost through better cost management. The improvement in productivity can be at the manufacturing level and also during all subsequent operations like logistics, distribution and selling. Cost management or cost reduction can take place at various stages right from procurement of raw materials through the entire supply chain. 2. Multi-Disciplinary Approach: The focus on efficiency is forcing the companies to adopt a multidisciplinary approach to marketing and selling. In manufacturing, increase in productivity or cost reduction involves four different functions or departments - R&D, procurement, production process and quality control or management - each of these being handled by different specialists or disciplines. Hence 'total' marketing or selling activity / function becomes multidisciplinary in approach. 3. Internal Marketing: Internal marketing focuses on the interaction between organization & its employees. It emphasizes on motivating the employees of the organization. The logic is that if the employees are satisfied, they will perform their job well & serve the customer efficiently. 4. Increasing use of internet: Internet is being widely used by the companies for two basic reasons:  Selling on the internet or e-commerce  Information management (MIS) Digital revolution and the management of information have greatly increased the capabilities of consumers and marketing organisations. Buyers today can get information on products, compare suppliers prices, and place orders on the Internet in a matter of seconds. Companies can collect more information about markets, customers, prospects & competitors by using internet. They can establish websites & communicate information about the company, its products & services, & other things to the visitors. MIS in relation to sales management relates to collection, storage (i.e creating/developing a database), analysis & dissemination of information to required destinations in connection to sales. Through MIS, companies have developed/ developing appropriate monitoring & control system so that sales be managed with speed, consistency & reliability. 5. Customer Relationship Management (CRM) Combining relationship marketing with information technology has resulted in customer relationship management or customer relationship marketing (CRM). Customer relationship management (or marketing) enables companies to provide excellent real-time customer service by focusing on meeting the individual needs of each valued customer, through the use of CRM software packages. CRM skill requires building a customer database and doing datamining to detect trends, segments, and individual customer needs. Many companies have initiated CRM programmes to expand relationships with existing customers, because getting new customers costs five times more than the costs involved in retaining existing customers. CRM system integrates sales, customer service, and market information from various sources with the help- of the software. It lives up-to-date information to the employees on each valued customer to enable them to give superior service.

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6. Professionalism in Selling Selling has increased in complexity, because competition is more intense, customers are more sophisticated, and products and services have become more technical. Success mostly comes to those salespersons that have a combination of natural ability and acquired skills. A study on what do buyers like most in a salesperson indicated qualities like reliability, credibility, professionalism, integrity and product knowledge as most valued4. The knowledge, skills, and the right attitudes to meet complex and competitive market conditions of today are acquired by the professional salesperson through intensive training and practice. Some of the successful organisations have their own centers for training and management development. Today's companies spend a lot of money each year to train salespeople in the art of selling and to make them professional. STRUCTURE OF SALES ORGANISATION: Developing a successful sales organization involves adapting organizational processes and structure to meet the demands of the ever-changing market place. A company decides on a particular type of sales force structure depending upon factors such as type of market (developing or fully developed), region or country, type of industry being operated in, customers to which it caters, level of sales desired, size of the sales force and the width and depth of the product mix. On the basis of these factors, there can be five types of sales force structure – 1) Functional based, 2) Product- based structure, 3) Market based, 4) Territory based & 5) Combination/Hybrid structure. Usually organizations select the type by weighing the profits that can be accrued from each structure against the costs involved in coordinating the sales effort using that structure. They then choose the best option. 1. Functional Sales Organisation In this sales organisation, the principle of specialization is fully used. Each staff specialist manager, such as marketing research manager and promotion manager, has line authority (or functional authority) of his/her function over salespeople. For example, marketing research manager can directly issue instructions to all salespeople through area sales managers to obtain certain market information. As shown in the diagram, salespeople receive instructions from four different managers. A few large-sized companies, with many products and/or market segments may use functional line organisation structure, with a modification of limiting the number of staff managers who may use the functional line authority. The advantages of qualified specialists guiding the sales force and high degree of division of labour get nullified by confusion and frustration of salespeople, who have to respond to several bosses. The main advantage of a functional sales organisation is its administrative simplicity. However, its effectiveness is reduced as the company's products and market segments increase. Besides, the marketing head has as a very difficult task of co-ordination of competing functional heads reporting to him. The Disadvantages are: Reporting to multiple bosses, effectiveness reduced as the company’s products & segment increases & difficult for marketing head to co-ordinate

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Figure 1 2. Product Specialization: Product specialization is useful when the company has a large number of products and/or brands. There are two types of product specialization: (a) Sales organisation with product managers (or divisional marketing managers with responsibility for a group of products) as staff specialists, and (b) Sales organisation with product specialized sales force. Figure 2(b) shows the company having two groups of products-product group A and product group B. Each divisional marketing manager (usually called product manager) has the responsibility for planning and implementing a marketing plan for each group of products. They have no line authority over the field sales managers and the sales force. They can only recommend or request to the regional sales managers. Each salesperson sells all the products of groups A and B, as there is no specialization by product. In Figure 2(a), salespeople in each group sell only the products included in that group. The regional and district sales managers are line managers and have no staff assistance. The advantage of this organisation is that each product gets a specialized attention from salespeople and territory sales managers. But the main disadvantage is that more than one salesperson from the company calls on the same customer, resulting in customer dissatisfaction and increase in selling cost.

Figure 2(a) Organisation structure in Figure 2(b) corrects the problem of duplicate calls on a customer, but its weakness is the lack of product specialization by salespeople. Fast moving consumer goods (FMCG) companies like Proctor and Gamble use the product staff specialization [Figure 2(b)] organisation to ensure adequate attention to product lines Page 11 of 14

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and brands at the planning level. The product managers develop a cost effective marketing mix strategy for each product and brand, and react quickly to changes in market place. The trend is to move from product or brand driven organisation (like Pepsodent toothpaste) to category management (like any toothpaste category) to customer-need management (mouth care). Thus, the focus of the organisation is on a basic customer need.

Figure 2(b) Example: Many consumer goods companies like Proctor and Gamble and Pillsbury, and some service organisations, such as large commercial banks, use sales organisations with product, brand, or divisional marketing managers, who support specific product groups [see Figure 2(b)]. Each product or brand manager is responsible to ensure effective planning, coordination, development, promotion and achievement of objectives for the respective product group or the brand. Some other companies, which have wide range of products, like 3M Corporation, uses sales organisation with product specialization sales force [see Figure 2(a)]. In 3M, separate groups of salespeople sell different group of products, such as healthcare, safety and security, home and leisure, displays and graphics, manufacturing and industry, and so on. 3. Market Based Structure An increasing important type of specialization is market specialization. Market specialized sales organisation is desirable when customers are classified by specific types, user industry, or by channel of distribution, Figure 3 shows a sales organisation structure with market specialization. In this structure, salespeople carry out all the selling activities for all products but for certain specific customer groups. These customer groups, such as government, commercial, and dealers have different buying practices and preferences. The use of market specialization in sales organisation structure is increasing in recent years, while the use of product specialization has been reducing. The advantage of market specialization is that sales and marketing efforts are organized to meet the needs of specific customer groups. This is consistent with the customer orientation or market-centered philosophy of the company. There are several examples of companies reorganizing along market specialization. Crompton Greaves, which had product groups orientation, changed over to customer type sales organisation, as shown in Fig.3. Similarly Xerox switched from a product-oriented sales organisation to a market-oriented structure. Other examples of companies that have already changed over to the market specialization sales organisations are IBM, General Electric, and Hewlett-Packard.

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There are some disadvantages of market specialization structure such as duplication of territory coverage (different salespersons working in the same territory but covering separate customer groups) and resulting in higher selling costs.

Figure 3 4. Geographic Specialization Many large companies, selling in national markets, organize their sales operations along geographic specialization. Typically, salespeople are assigned a geographic area and are responsible for all selling activities to all customers within the assigned area. A reasonable number of salespeople are placed under a territory manager. The territory sales manager is generally called a branch, area, district, or regional sales manager. Companies with large number of salespeople, often have two or three levels of territorial sales managers, as shown in Fig. 4. There is a trend towards regionalization and localization. The national market is subdivided into regional markets based on ethnic and demographic segmentation, with different promotional strategies for each region.

Figure 4 Many companies now have local marketing managers (or area market managers) to support local sales efforts at regional and district levels in high sales volume markets. These area market managers help the company's marketing plan and strategies to adjust to the local needs. They prepare regional and district plans for selling all the products of the company. 5. Combination/Hybrid Structure: A structure that combines various types of structures and takes the best of each structure's individual merits, while eliminating the demerits associated with it, is called a combinationbased sales force structure. Nowadays, companies are adopting a mix of product, customer and geography-based sales force structures. This is effective for companies with a large sales force, a wide range of products and widely dispersed customers. What has been discussed Page 13 of 14

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previously by comparing the advantages and disadvantages of sales organisation structures. It is seen that the strengths of one organisation structure are the weaknesses of other sales organisation structures. Due to this reason, many companies use combination or hybrid sales organisation structures that include many specialization organisation structures discussed earlier. These companies rninimise the disadvantages and maxirnise the advantages. One example of combination or hybrid sales organisations is shown in Fig. 5. This sales organisation structure combines geographic and market specializations. The basis of specialization will vary from company to company, but some kind of specialization is needed for firms to remain competitive.

Figure 5 Advantages of a combination based sales force structure: A combination-based sales force structure offers flexibility to handle diverse product lines, operate in territories with varying potential and operating conditions and cater to customers having diverse needs. The appropriate structure can be used based on the variation in product lines, territories and customers. Disadvantages A large number of staff with specialized skills is required to handle different functions within the organization. This means high administrative costs.

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