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Basics of Marketing - Kotler Philip

Organizational structure of the company's sales office

The basic principles of the work of the commercial apparatus include the problems of its structure, designed to ensure maximum effectiveness of its activity in the market. This structure is evident in cases when the firm sells one assortment of goods of one branch of activity and customers are scattered geographically. In this case, the firm will organize its sales office on a territorial basis. If the firm sells a lot of different goods to a multitude of different customers, it may build its sales device on a commodity basis or by customer breakdown. Features of all these organizational structures are described below.

TRADING APPARATUS, BUILT-UP BY A TERRITORIAL PRINCIPLE. This is the simplest kind of organizational structure. Each sales agent is assigned a sales territory with the rights of exceptional service, within the boundaries of which he trades with the entire range of goods of the firm. Such a structure has several advantages. First, the duties of a sales agent are clearly defined. Being the only sales representative of the company in this territory, he is fully responsible for all the successes and shortcomings of marketing on it. Secondly, this responsibility encourages the sales agent to multiply and strengthen business and personal ties with local market leaders. These connections contribute both to the increase in the efficiency of the work of the sales agent, and to his personal enrichment. Thirdly, travel expenses are small, since the traveling salesman travels around a relatively small geographical area.

The territorial organization of the sales office is supported by the corresponding hierarchical sales management system. The work in several sales territories is managed by the regional sales manager, the work of several sales areas - the regional sales manager, and the work in several sales regions - the national manager or vice president of sales.

TRADING MACHINERY BUILT WITH A TRADITIONAL PRINCIPLE. Trading agents should know their products well, especially if the goods are technically complex, completely heterogeneous or numerous. This circumstance, coupled with the appearance of isolated commodity productions and the establishment of systems for managing the production of goods, led to the fact that many firms began to build their sales apparatus on a commodity basis.

However, such an organizational structure can lead to duplication of efforts. For example, the American Hospital Supply Corporation has several product branches, each with its own sales office. And it may happen that on the same day several salesmen of the corporation appear in the same hospital at the same time. And this means that several sales representatives of the company go on the same routes and each spends time waiting for reception of the client firms from the purchasing agents. The expediency of the additional costs associated with this should be weighed against the background of the benefits of a more competent presentation of the goods.

TRADING MACHINE BUILT IN THE CLIENTS. Often, firms organize their sales office by customer. This can be broken down by industry, by large and regular customers, by existing and newly emerging customers. The most obvious advantage of specialization in clients is that each individual group of salespeople can better understand the specific needs of their clients. At one time, commercial agents of the corporation "General Electric" specialized in goods (motors for fans, switches, etc.). Then they were specialized in markets, such as the market for air conditioning equipment and the automotive market, as consumers considered the problems of motors for fans, switches and other products precisely from this angle.

The main drawback of a sales vehicle built by customer is evident when it comes to customers of a wide variety of types scattered throughout the country. This will mean that each group of tradesmen will have to travel very much.