H.S.

2nd Year
Sub: Salesmanship and Advertising
Unit-1, Sales Organization
Introduction and Meaning
Whenever two or more persons join together to do activities for
achieving some common objectives, the necessity of work distribution among them is felt and
coordination among different activities is to be made. Organization originates from this
necessity. Organization is the process of identifying and grouping the work, defining and
delegating responsibility and establishing relationship for the purpose of enabling people to work
together most efficiently in attaining objectives.
Sales orgaanisation consists of persons working together for the
purpose of selling objectives to increase sales, maximizing profits, expanding market share etc. It
establishes coordination among various selling activities necessary for the achievement of selling
objectives. Sales organization is concerned with the careful planning, effective coordination and
efficient supervision of the various departments and functions essential for the marketing of
products manufactured by the firm.
Definition:
According to American Marketing Association, “sales organization is the planning, directing
and coordinating the activities of sales force for increasing organizational efficiency.”
According to Still and Cundiff, “ A sales organization is group of individual striving jointly to
reach certain goals and bearing formal as well as informal relations to each other.”
According to H.R. Tosdal, “ A sales organization consists of human beings working together for
the marketing of products manufactured by the firm or marketing of commodities which have
been purchased for resale.”

Characteristics of sales organization:

Following are the major features/characteristics of sales organization.

1. Sales organisation is a part of the total enterprise dealing with sales activities.
2. It consists of a group of people engaged in selling activities.:
3. It works for the attainment of common objectives of selling.
4. There exist formal and informal relationships between persons engaged in selling activities.
5. It defines the duties, responsibilities and rights of people in the selling jobs.
6. It establishes departmentalization of selling activities separately.
7. It is a means to the efficient execution of the sales functions and accumulation of resources to
perform those functions.
8. The success of sales organisation depends on the unified and coordinated efforts of
salespersons.
9. The selling organisation acts under the direct control the sales manager.

10. It accumulates resources to perform selling functions.

Objectives of Sales Organisation

In the ideally organized sales department, duplication of effort would be eliminated, friction
would be minimized and cooperation maximized. When sufficient attention is given to sales
organization, personal selling efforts increase productivity.
The basic purposes of sales organization as laid down by Cundfiff and Stiff are as follows:

1. To Permit the Development of Specialists:

As a business expands, it becomes difficult to fix responsibility for performance of all activities
on certain executives alone. At this stage re-organization of sales department is necessary to
facilitate assignment of responsibility and delegation of authority by reshaping the structure of
the sales organization. This includes fixing responsibility for specific tasks with specific
individuals or groups. This is conducive to the improvement of specialists.

2. To Ensure that All Necessary Activities are Performed:

When the sales organization grows and specialization increases, it becomes necessary to perform
all activities according to schedule. As a company grows, its marketing channels lengthen
marketing area expands geographically and the executives begin to lose their informal contacts
with customers. If such contacts are essential, the responsibility for maintaining them should be
assigned to any person specialized in customer relations.

3. To Achieve Coordination:
Good sales organization achieves coordination smoothly. Total accomplishments of tasks are
greater advantage when the sum of a combination of effort exceeds the efforts of individual
effort. By getting people to pull together as a team rather than as an assortment of individuals;
organization accomplishes more collectively than individual members could achieve. Motivating
individuals to work together for achieving common objectives is important for coordination.

4. To Define Authorities:
Sales managers should know whether their authority is line, staff or operation. Line authority
carries the power to require execution of orders by those lower in the organizational hierarchy.
Staff authority is the power to suggest to those holding line authorities the method of
implementation of an order. Functional or operational authority enables specialists in particular
areas, to enforce their directives within a specified and limited field.
All executives should understand the nature of authority with respect to each aspect of the
operation, otherwise friction develops. A smoothly operating sales organization has built in ways
of achieving harmony, through free flowing communication system.

5. To Economize on Executive Time:

As the operations of sales department increases in complexity and number, additional
subordinates are appointed. This facilitates the higher ranking executives to delegate more
authority. It also allows for more effective use of specialization so that higher executives are
relieved from devoting more time to operative functions. They can devote more time in planning
and less time to operative functions.

6. Other Objectives:
(i) To organize activities related with recruitment, selection, placement of salesman, and to
implement policies relating to their promotions, wages and salaries, welfare, etc.
(ii) To accumulate resources to meet with the objectives of sales department.
(iii) To motivate the sales persons and to boost their morale.
(iv) To impart training to sales persons to up-to-date their knowledge.
(v) To maintain free flow of communication system between sales employees.
(vi) To create peaceful and cordial atmosphere of work within the sales department.
(vii) To organize sales forecasting and allotment of sales quotas to every salesman.
(viii) To limit the sales expenses and costs at a minimum.

Steps in Setting Up Sales Organisation

There are five main steps in setting up of sales organization.

These steps include the following:
1. Defining the objectives
2. Determination of activities
3. Grouping activities into job positions.
4. Assignment of personnel to positions.
5. Providing for coordination and control.
Step # 1. Defining Objectives:
The first step in setting up a sales organization is to define objectives. The top management
defines the long-term objectives for the company and from these, the long-term objectives for the
sales department are derived. The top management sets the objectives keeping in view of long-
run survival of business and to achieve industry leadership, through the use of outstanding
technology, diversification of product lines, providing excellent service to customers, and so on.
From such composite objectives, sales management determines its objectives such as personal
selling objectives (qualitatively and quantitatively) to realize long-term growth in sales and
profits.

Step # 2. Determination of Activities:

A sound organizational design requires that all activities are being organized in a systematic
manner. Along with determining necessary activities, estimation of volume of performance is
also done so as to ascertain the requirement of executive positions. Executive positions
determine their relationships to other positions, their duties and responsibilities, etc.
Determination of necessary activities and their volume of performance are made by analyzing
the qualitative and quantitative objectives of the sales department.

Step # 3. Grouping Activities into Job Positions:

Next step in the process of organizational set up is to allocate different positions identified
according to activities. It should be kept in mind that activities are aimed at achieving the set
objectives for the sales organization. Activities should be suitably classified and grouped so that
closely related tasks are assigned to the specific position.
Each position should contain not only a sufficient number of tasks, but sufficient variations to
provide for challenge, involvement and interest. In a highly competitive field, product
development and pricing etc. should be arranged to positions high up in the organizational
structure. Activities of lesser importance should be assigned to lower level jobs.
When a large number of positions is being set-up, groups or related activities are brought
together to form departmental sub-divisions. In such cases, a number of middle-level positions
would have to be coordinated by top sales executives.

Step # 4. Assignment of Personal to Positions:

The next step in this process is to assign personnel to positions. This requires recruitment of
special individuals to fill the positions or to see the personnel fit into the capabilities among the
organization. Assignment of personal to positions should be done carefully keeping in view of
unique talents and abilities of the person concerned.

Step # 5. Providing for Coordination and Control:

Sales executives with line authority require means to control their subordinates and to coordinate
their efforts. They should not be so overburdened with detailed and undelegated responsibilities
that they have insufficient time for coordination. Nor should they have too many subordinates
reporting directly to them. This weakness the quality and control, and prevents the discharge of
other duties.
Importance of the sales organization
The need and importance of sales organization can be described under the following points:
1. Increase Efficiency: In the sales organization, jobs are properly distributed, duties are
defined direction and control are properly provided. This helps to avoid duplication of
work and to increase work efficiency.
2. Promotes Specialization: The sales organization divides and subdivides various sales
functions. Suitable persons are appointed to handle their respective activities. Thus, the
right person performs the right job.
3. Facilitates Co-ordination: A sound sales organization coordinates the efforts of different
departments and sub departments, offices and employees for the attainment of sales goals
and common objectives.
4. Delegation of Authority: A sales organization defines the rights and responsibilities of
every individual. This helps in the delegation of power to discharge their job and
responsibilities.
5. Timely Contacts with Customer: By assigning proper duties and by structuring the roles
of employees, it is quite possible to make regular contact with customers. This also helps
in obtaining valuable information relating to customers’ problems and suggestions.
6. Contributes to Success of Business: A good sales organization achieves goals at the
minimum costs. It helps achieve the desired success in selling as well as the other areas
of business. The salesman can work at the optimum level. This contributes to the overall
progress of the Enterprise.
7. Promotes Innovations: A good sales organization can contribute to the development of
new ideas and innovations. It encourages salespeople to bring new changes in products
by gathering information from salesmen. It promotes sales research, consumer survey,
and market analysis. This helps to innovate products.
 8. Increase Morale: A good sales organisation helps in building the morale of sales
employees. Every person engaged in the selling activities has a clear knowledge about his
position, rights and responsibilities.
9.

Factors Affecting the Size/ Structure of Sales Organisation

1. Nature of the product: Nature of the product plays an important role in determining the
structure of sales organization. For example, in the case of consumption goods like soaps,
oil, rice, cosmetics etc., the size of sales organization may be bigger to handle a large
number of consumers.
2. Scale of production: The volume of production and the quantities involved in each sale
will also affect the structure of the sales organization. If the scale of production is big
and the number of products and the quantity involved is too many, the size of the sales
organization will be large and complex.
3. Market Area: Market area is also considered as an important factor in determining the
size of sales organization. If the product is sold locally, sales organization will be small.
On the other hand, if the product is sold nationally or internationally, the size of sales
organization will be big.
4. Size of Business: Size of business has direct relationship with the structure of sales
organization. Large businesses have large sales organisation, and small businesses have
small sales orgsnisation. For example, Reliance telecom has large sales organisation.
5. Number of Products: If the enterprise is dealing with large number of products, it needs
large sales organisation. For example, Hindustan Unilever selling many products like
Surf Excel, Lux Soap, Sunsilk Shampoo, Vaseline etc., will have large sales organisation,
while company which is selling few products will have small sales organisation.
6. Level of Competition: High level of competition leads to large sales organisation. If the
level of competition is high in the market, many salesmen have to be appointed to attract
the customers so the size of the sales organisation become large.
7. Distribution Policy: Different companies follows different distribution policies for their
products directly to the customers by opening their own shop or through their personal
selling.
8. Sales Policy: Every business has its own sales policy, if the business unit adopts the
aggressive sales policy, then it will require more salesmen for achieving higher sales
level. The business unit who sales goods on credit, installment system, hire purchase
system will have to hire more salesman for collecting dues and installment from
customers.

Departments in Sales Organisation

Sales organisation may have following departments:

1. Physical Distribution Department: This department performs the functions of storage,
packing, dispatching and transportation. This department has various sections like
storage section, packing section, transportation section etc., and each section is
headed by persons having specialization in his field.
2. Advertising Department: All the activities related to advertisements are perform by
advertising department. The department has to plan advertising campaign, to select
media of advertising keeping in mind nature of products, nature of customers,
availability of funds, media cost, media circulation; and to implement advertising
programmes etc. It helps in increasing sales volume by informing people about the
goods and services, and convincing them to buy the same.
3. Personnel Department: This department performs the function of recruitment and
selection. After selection a proper training is given to the salesmen and motivating
them to give their best effort in the workplace. And if they go in a wrong direction,
some corrective measures are taken to bring back to the right direction. Hence, this
department solves the problem related to human element in the sales organisation.
4. Public Relation Department: This department performs the function of knowing
public opinion about the firm. It establishes contacts with customers, suppliers,
employees, bankers, political leaders, social organisation, other competing and non-
competing organisations. For the success of business in the long run, good public
relations are must, hence, this department works to create and maintain a good public
relations.
5. Sales Department: Sales department is very important part of sales organisation. Sales
manager is the head of sales department. All the activities in sales department are
headed by sales manager. In a big organisation, he is considered as next to the top
authority in the chain of command. The main function of this department is to
manage and control the selling activities.
6. Market Research Department: The main task of this department is to conduct research
about consumer behaviour, to measure the level of consumer satisfaction and
dissatisfaction, to measure the existing demand and supply in the market, to explore
new markets and to find the products which are mostly purchased by customers.
7. Debt Collection Department: The main function of debt collection department is to
collect dues and installment in time to time so as to avoid risk of bad debts. This
department see the transactions which are made on credit basis, it also tries to reduce
debt collection period without disrupting relations with customers.
8. Statics and Record Department: this department is divided into two section:
(i) Statistic section: Statistic section collects data and information from
present consumers, intermediaries, suppliers etc., It collects information
about the sales, quantity demanded, sales of competitive firms, percentage
change in market share etc.,
(ii) Record Section: This section maintains and preserves the collected data
and information in such a way that it can be made available at the time of
decision making and sales forecasting. The data is store in the form of
papers, files and other electronic devices.