Sales Organization

Sales organization

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

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

To permit the development of specialists

To assure that all necessary activities are performed

To achieve coordination or balance

To define authority

To economize on execution time

Setting Up a Sales Organization

Defining Objectives

Determination of Activities and their Volume of Performance

Grouping activities into positions

Assignment of Personnel to positions

Provisions for coordination and control

Factors influencing structure

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2.
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4.

Product and service related factors

Organization related factors
Marketing mix related factors
External factors:
the speed of market change

reduction in the number of vendors per buyer

closer to customer relationships

 changes in regulations and international practices

Basic Types of Sales Organisation 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 department have hybrid organizational structures, with variations to adjust for
personalities and to fit specific operating conditions.

Line 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.

All persons at the same level of org. are independent of each other.

This structure specifies responsibility and authority for all the positions limiting the area of action
by a particular position holder.

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Line & Staff Sales Organization

Refers to a pattern in which staff specialists advise managers to perform their duties.

Staff managers provide advice to the line manager who are generally specialists in the field.

Staff positions are purely advisory in nature. They have a right to recommend but have no
authority to enforce their preference on other dept.

The line executives are the DOERS or commanders, where as, the specialists are the THINKERS or
advisors
Advantages
Planned Specialization
Quality Decisions
Prospect for Personal Growth
Training Ground For Personnel
Disadvantages
Lack Of Well Defined Authority
Line & Staff Conflicts
Suitability
Not suitable for small org. as it is quite costly for them.

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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 & functional.
Characteristics of functional structure:
1. Emphasize on sub goals
2. Specialization by functions
3. Pyramidal growth of the organization
4. Line and Staff division

5. Functional authority relationships among various departments.

6. Limited span of management and tall structure.
Advantages:

Result into high degree of specialization

Brings order & clarity in the org.

Promotes professional achievements, provides satisfaction to the specialist.

Resources can be saved

High degree of control and coordination of functions.

Disadvantages:

Judging the performance of each dept is difficult.

Slow Decision Making process

Lack responsiveness necessary to cope up with new & rapidly changing work
requirements.

Offers usually line & staff conflict & interdepartmental conflict and results in
inefficiency.

Suitability

Required when small org. grows & business activities become more & more complex.

Works better if org. has one major product or similar product line.

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Line administration is subdivided

As marketing operations expand, line authority and responsibility eventually become excessively
burdensome for the Top Level executives.
To reduce the burden of the line administrative staff additional assistants are provided.
These new subordinates are given line responsibility narrower than those of the assistant general
sales manager.
Tasks of line administration are subdivided among these new assistants in one of the 3
ways:-

By Products: divisions created according to the type of product or service.

By Geographic area: divisions based on the area of a country or world served.
By Market: divisions based on the types of customers served.

Product Sales Organization

Advantages:

Salespeople become experts in product attr. & applications

Management control over selling effort

Disadvantages:

High cost

Geographic duplication

Customer duplication

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Geographic Sales Organization
Advantages:

Low Cost

No geographic duplication

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Fewer management levels

Disadvantages:

Limited specialization

Lack of management

Control over product or

Customer emphasis

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Market Sales Organization

Advantages:

Salespeople develop better understanding of unique customer needs

Management control over selling allocated to different markets

Disadvantages:

High cost

Geographic duplication

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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.

Advantages:

Salespeople develop better understanding of unique customer needs

Management control over selling allocated to different markets

Disadvantages:

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