Sales Territories Ppt

WHAT IS A SALES TERRITORY?

A sales territory is composed of a group of customers or a geographic area assigned to a salesperson.

WHO IS RESPONSIBLE FOR

TERRITORIAL DEVELOPMENT?

Development of sales territories is usually the responsibility of the sales manager overseeing the larger sales units within the organization.

WHY ESTABLISH SALES

TERRITORIES?

• To obtain thorough coverage of the market.

• To establish a salesperson’s responsibility.

• To evaluate performance.

• To improve customer relations.

• To reduce sales expense.

• To allow better matching of salesperson to customer.

• To benefit salespeople and the company.

Why sales territories may not be developed:

• Salespeople may be more motivated if they are not restricted.

• The company may be too small.

• Management may not want to take the time, or have the know-how.

• Personal friendship may be the basis for attracting customers.

FACTORS TO CONSIDER WHEN

DESIGNING SALES TERRITORIES

Sales force objectives may be based on factors such as contribution to profits, return on assets, sales/cost ratios, market share, or customer satisfaction.

DESIGNING SALES TERRITORIES

1. Selecting a basic geographical control unit.

Commonly used units are postal code numbers, areas, towns or cities. Sales territories are put together as consolidations of basic geographical control units.

2. Determining the sales potential present in each

unit.

Sales potential : • Maximum possible sales opportunities open to a

specific company selling a good or service during a stated future period to particular market segment.

• Identify the present and prospective buyers precisely in a unit and ascertain the unit’s total market potential that the company has an opportunity to obtain i.e. Sales Potential.

3. Combining control units into tentative territories.

Assumption : • No significant differences exist in the

physical and other characteristics of the control units.

• Contiguous control units are combined into tentative territories having approx. same sales potential.

Planner decides the number of territories.

4. Adjusting for differences in coverage difficulty.

• Removal of unrealistic assumption that no differences in the characteristics of geographical control units exist. Certain large cities, for instance, have greater sales potential than some states but time required to contact the customers in city is less as compared to the state.

• The optimum arrangement is reached when incremental sales per dollar of selling expenditures are equated among all territories.

• Differences in coverage difficulty represent differences in work loads. When final adjustments for coverage difficulties are made, sales territories have varying sales potential and different sized work loads, but none exceeds the maximum desirable work load depending upon the capacity of the sales

person.

There are two basic approaches commonly used for designing sales territories are:

1. Market build-up approach.

2. The workload approach.

MARKET BUILD-UP APPROACH

• In this approach, an estimation of the present and potential products/services demand by looking at how the market is built up, who are its present/potential users, how much do they consume and at what frequency.

• In this approach, information from trade directories, state publications, etc., is consolidated and then aggregated to understand an all India market potential for the product.

WORKLOAD APPROACH

This approach is designed by WJ Talley on the basis of the workload performed by sales persons. The following steps should be considered important when using this approach:

• Customers are grouped into class size according to sales volume.

• Optimum call frequencies for each class of customers are estimated.

Steps Continued…• Present and potential customers are then

located geographically and arranged volume-wise and value-wise.

• The number of present and potential customers in each volume/value group is then multiplied by the desired call frequency to get the total number of planned calls required for each geographical control unit.

ASSIGN TO TERRITORIES :

Some salespeople can handle large territories and the travel associated with them; some can’t. Some territories require experienced salespeople; some are best for new people. Some people want to live in metropolitan areas; others prefer territories with smaller cities.

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