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Marketing Basics - Kotler Philip

The size of the trading apparatus of the company

After setting goals for its trading apparatus and establishing its organizational structure, the company is ready to begin determining the dimensions of this apparatus. Sales agents are one of the most productive and expensive assets of the company. An increase in their number will cause both sales growth and cost growth.

When determining the size of their trading apparatus, many firms proceed from the size of the workload6. Perhaps they reason as follows:

Suppose we have one thousand “A” type customers and two thousand “B” type customers all over the country. Each client of type “A” needs to be visited 36 times a year, each client of type “B” - 12 times a year. This means that we need a trading apparatus that can provide 60 thousand visits per year. Suppose an average salesman is able to make a thousand visits per year. So we need 60 full-time salespeople.

Payroll system for sales staff

To attract the required number of sales agents, the company should develop an attractive pay plan for them. The level of payment should be linked to the "current market prices" for a specific type of trading work and for specialists of appropriate qualifications. For example, in 1981 the average salary of an experienced seller was $ 30,444. 7

The total amount of compensation is composed of several elements: fixed payments, variable payments, reimbursement of expenses and additional payments. Fixed payments in the form of a salary or an open account are designed to provide the sales agent with a certain stable income. Variable payments in the form of commissions, bonuses, participation in profits are designed to stimulate and compensate for the more intense efforts of the salesman. Reimbursement of expenses allows the salesman to make commercial efforts that he considers necessary or desirable. And additional payments in the form of payment of holidays, sickness benefits or in connection with accidents, pensions and life insurance are designed to provide a sense of confidence and job satisfaction.