Chapter Summary

An organization is an arrangement of activities involving a group of people. The goal is to arrange the activities so that the people who are involved can work better than they can individually.The sales force organizational structure has a significant influence on the implementation of a company’s strategic planning.

The general characteristics of a good organization are: (1) an organizational structure that reflects a market orientation; (2) an organization that is built around activities and not around the people performing these activities; (3) responsibilities that are clearly spelled out, and sufficient authority granted to meet the responsibility; (4) a reasonable span of executive control; (5) stability combined with flexibility; and (6) balanced and coordinated activities both within the sales department and between sales and nonmarketing departments.

Most sales organizations can be classified into one of three basic categories: a line organization, a line-and-staff organization, or a functional organization. A line organization is the simplest form of organization and is often appropriate for small firms. A line-and-staff organization enables a company to use staff assistants who are specialists in various areas of marketing. A functional organization carries specialization a step further by giving more line authority to the executive specialists. Also, a new horizontal structure being used by a number of firms is a much flatter organization with fewer levels of management.

In most medium- and large-sized companies, the sales forces are divided on some basis of sales specialization. The most frequently used bases are (1) geographical territories, (2) type of product sold, (3) classes of customer, or (4) some combination of these categories.

Giving each sales representative the responsibility for his or her own geographical territory is probably the most widely used form of sales force specialization. Specializing a sales force by type of product sold is often used when a company sells unrelated products, highly technical products, or several thousands of products. Product specialization may also involve the organizational concept of a product manager. Specialization by markets may be done on a channel-of-distribution basis or on an industry basis.

In the organization of an outside sales force, the use of the following four organizational strategies is increasing: strategic account management, team selling, independent sales forces, and e-commerce and telemarketing. For strategic account management, firms may use a separate sales force or executives, or they may establish a separate division. Selling teams comprised of people from several departments are being used to match the needs of customer buying centers. Sometimes a firm cannot afford or does not want to have its own sales force; in that case it will use some type of independent agent. Telemarketing is sometimes used as the primary selling method, but often it is used only to assist the sales force.

Organizing for international sales also presents some difficult challenges for sales management. Companies must decide whether to use independent selling organizations in the home country or in the foreign country, or to employ their own salespeople. Even if the company decides to use its own salespeople, it must still determine whether it will hire reps from its own country or foreign nationals.