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Module 7

Introduction: In industrial marketing, personal selling through company's sales persons (sales

force) is a major tool of communication as compared to consumer marketing's focus on

advertising and sales promotion. The reason for this is seen in the nature of customer's buying

decision process and also the buyer seller relationship.

An industrial salesmarketing manager is responsible to achieve the short!term objective of

achieving sales targetgoal and a long!term objective of developing an effective sales

organi"ation that ma#imi"es the opportunities for profitable sales gro$th over a long period. The

sales manager is re%uired to make important decisions for developing and managing the

industrial sales force.

Role/Characteristics/B2B/ Personal Selling:

In industrial marketing, personal selling through the company's sales people plays a greater role

than consumer marketing. &nce the industrial marketer decides the target market segments, the

sales force is deployed to meet the needs of these segments. In other $ords, industrial marketing

strategy is implemented mainly through the personal selling function.

The ability of the selling firm to meet the needs of the buying firm is, to a large e#tent,

communicated by the sales people. The sales person, $ith the help of technical persons, offers

not just a physical product but also technical assistance, ideas, and suggestions to solve theindustrial customer's problems.

Thus, there are t$o major roles of personal selling (i) As a part of problem solving capabilities,

and (ii) As a part of communication mi#.

Major Roles of Personal Selling

Sales Rep as a Part of ProblemSol!ing Capabilities A field sales person is considered as a

part of a company's problem!solving abilities. There are several dimensions or elements of this

role. "irst#the sales rep has an important job to help customer to define the buying problem. emust sho$ the customer ho$ the purchase of particular products or services $ill help in solving

the problem or achieving customer's objectives. If products are highly technical, the sales person

should have good product or technical kno$ledge. If products are less technical oriented, the

sales person acts as a business consultant to sho$ the customer economic advantages of various

purchase alternatives.

This document is authori"ed for use only in *+IT -A '-usiness arketing'+ubject by r. I +rikanth during August to /ecember 0123

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$he second importantresponsibility of a sales rep is to give an effective customer service. This

may consist of dra$ing product specifications, application engineering, value analysis,

installation, maintenance or repairs. +ome companies have separate service engineers, but it is

the responsibility of the sales person to ensure that prompt and effective service is given to

customers.

$he third responsibilit%is to 4represent the customer at the factory or head office, marketing4.

+ometimes, a sales person has to 4fight4 for his customer $ith his factory or planning department

so as to ensure timely delivery, or reasonable credit terms, or solving %uality problems, and so

on.

In solving the problem of customer, a sales person needs to have human relation skills (i.e. inter!

personal skills) in managing pressures and relationships in customer organi"ations and in his o$n

organi"ation. In this role, a sales rep may be disliked by some persons in his o$n organi"ation

$ho resist change in operations and procedures. o$ever, these changes are asked for by the

sales rep based on customer demand or competitive situations. It is, therefore, important that

organi"ation should be geared up to respond and operate as an effective team to the customers'needs and competitive situations.

&hat Ma'es a Successful Salesman(

$he most successful salesman

has greater product kno$ledge

makes a more enthusiastic presentation

has more ability to clinch the order

pays closer attention to ensuring customers receive good service

asks %uestions and listens more carefully

has a superior branchregional organi"ation

has better contactsfriendships $ithin the industry

ans$ers objections better

makes a better initial impression

can attain more intervie$s

Sales "orce )rgani*ation and Management:


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&nly $ith a sound organi"ation an effective selling strategy can be e#ecuted. The management of

an industrial firm must recogni"e the vital importance of the sales organi"ation. It should devote

the necessary attention and money for the development of the sales organi"ation and its people.

A careful analysis is needed for the development of the sales organi"ation, sales persons, and

supporting people. 5e shall no$ discuss about the types of sales organi"ations, hierarchy of

selling and managerial positions.

$%pes of Sales )rgani*ation:

There are four types of sales organi"ations

(i) eographical,

(ii) 6roduct,

(iii) arket (customer), and

(iv) In large industrial firms, a combination of the above three types.

5hich type of sales organi"ation is best for a company $ill depend upon (a) the si"e of the firm,(b) the resources available (particularly, funds), (c) the nature and the breadth of products sold,

(d) the nature of market, including market segments and buying patterns, (e) skills, abilities, and

kno$ledge of people employed in the organi"ation, and (f) responsibilities assigned to

middlemen or intermediaries.

+eographical )rgani*ations These are most common in industrial marketing. In this

organi"ation a sales person is assigned a particular territory, branch, or region for promoting all

the products of the company to all the customers located in that geographical area. This type of

sales organi"ation is most economical and it ensures that all the customers in the territory are

covered. It is beneficial to customers because one sales person selling all the products of the

company is responsible for efficient service and communication. This organi"ation is suited to a

small or medium!si"e company $ith less number of products.

"or instance#the marketing manager of a company manufacturing aluminum e#truded products

decided to plan the sales organi"ation based on the geographical type. The marketing manager

had analy"ed that initially the company si"e $as small, the financial resources $ere limited, and

the product sold $as one, although the applications and market segments $ere many. As the

company $as located in southern India, in the first phase the selling efforts $ere concentrated in

southern and $estern parts of India, and subse%uently, after t$o years, in the second phase, it

$as planned to e#pand its sales activities to northern and eastern parts of India. As a

conse%uence, branch managers and sales engineers $ere recruited for field selling function,

along $ith support staff.

The sales organi"ation structure in the first phase 7ig. sho$s 48#ecutive marketing services4

position at the marketing head office, $ith responsibilities of coordination $ith factory, planning


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customer orders, communicating $ith branches on delivery status and %uality complaints (if

any), and so on. -ranch managers and e#ecutive marketing services $ere to report to the

marketing manager.

o$ever, if a firm has a large number of products manufactured by product divisions, one sales

person assigned to a particular geographic area $ill find it e#tremely difficult to master

kno$ledge of products, customers, and marketing policies for all the products. -esides, the

product division heads of various divisions may have doubts that the salesperson is not payingade%uate attention to their products.

Product )rgani*ation:In this organi"ation salespersons are assigned a fe$ products out of the

various products of a company. Thus, different salespersons speciali"e in selling different group

of products. This type of sales organi"ation is suited to a large organi"ation having several

products or technically comple# product groups. It can permit product speciali"ation because

different products need different types of product kno$ledge, application kno$ledge, and selling

skills. -esides, the customers' buying behavior for various products may be different.

The major advantage of product oriented sales organi"ation is that it gives a competitive advantage

due to the greater product kno$ledge permitted by product speciali"ation, $hich in turn improves the

value of the total offer to the customers.

The disadvantages of product organi"ation is that the selling e#penses are higher and customers

may have difficulties in dealing $ith more number of sales persons dealing $ith different

product groups for the same organi"ation. o$ever, if the higher cost of selling is off!set by

higher volume of sales, it can result in reasonable profit margins for each product group.

Combination of Geographic and Product Specialization


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A large public limited company had three different product groups or divisions

i) Air!conditioning and refrigeration division, consisting of central air!conditioning plants,

packaged air!conditioners, room or $indo$ air!conditioners, $ater coolers, refrigerators and

cold storage plants

ii) Testing and $eighing machines division, consisting of material testing e%uipments and

$eighing machines9 andiii) :omputer hard$are and soft$are division consisting of personal computers (6:s), printers,

floppy drives, and computer programming. +ince all the three divisions had distinct products

and services, $hich needed speciali"ed application kno$ledge and selling skills, the

company decided to have a combination of geographic and product speciali"ation as sho$n

in the 7ig.

There $ere four regional offices located at /elhi, ;olkata, umbai and :hennai, respectively, each

headed by a regional manager. 8ach regional manager $as supported by three product!sales groups

consisting of a regional sales manager (for each product group or division) along $ith sales

e#ecutives, and sales engineers or sales officers!!depending upon the sales volume. The regional

sales manager $as reporting to the concerned regional manager in administrative matters (i.e. for

sanctioning leave, approval of tour e#penses, etc.), and functionally i.e. for target setting, pricing,

product development, delivery adherence from factory, productservice %uality, etc.), reporting to

the divisional marketing manager. The sales organi"ation in a matri# form combines geographic

and product group speciali"ations.

In the sales organi"ation as sho$n in 7ig. the structure sho$n for northern region is repeated for

the east, $est, and south. The sales e#ecutives, sales engineers, sales officers and supporting staff

reporting to each regional sales manager are not sho$n in 7ig.


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Combination of +eographic and Product Speciali*ation Sales )rgani*ation

arket (or :ustomer) &riented &rgani"ation This type of organi"ation is generally combined

$ith geographic speciali"ation. It is found suitable $henever there are distinct customer groups

$ho are not only large in si"e and potential, but also have different buying behavior. It helps

sales persons to develop a detailed kno$ledge of a particular group of customers. 5ith this kind

of customermarket segment speciali"ation, different salespersons sell the same products of the

company but their strategies of selling, customer service, and buyer!seller relationships are

different to different market segments.

"or e,ample# a large organi"ation in private sector, manufacturing and marketing electrical

engineering products, $ith several product groups or divisions, decides to make a change in the

sales organi"ation from the geographical!product group speciali"ation to the geographical!

customer group combination, in order to improve marketing effectiveness. The company has four

regional sales offices at /elhi, ;olkata, umbai and :hennai, each headed by a regional

manager. It has branch offices at each region, headed by branch managers $ho report to the

respective regional manger. Its product groups or divisions are -a.electric motors, -b. fans, -c.

transformers, -d. lighting products like lamps, tubes and luminaires, -e. s$itchgear. The

customer groups for the above mentioned products are -i.government organi"ations, such as

state electricity boards, rail$ays and others9 -ii.original e%uipment manufacturers (&8s) andindustrial users in private sector9 and -iii.authori"ed dealers. Instead of product group oriented

sales organi"ation, the company decides to have customer group oriented sales organi"ation,

keeping the geographical set!up of regional and branch offices unchanged. The sale organi"ation

$ith the geographic and customer combination for selling the entire range of company products

is sho$n in 7ig.


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The regional marketing managers (.s) for the three customer groups are responsible to sell

the entire product range of the company in the respective regions to the assigned customer

groups. The branch managers (-s) are responsible to sell the entire product range of the

company to all the three customer groups. The s and -s are coordinating $ith the five

divisional marketing managers at the divisional head offices for the marketing services, such as

pricing policies, delivery schedules, advertising, sales promotion, ne$ product development,product %uality, and so forth. The sales organi"ations for east, $est, and south are the same as

sho$n for the northern region in 7ig. The sales e#ecutives, sales engineers, sales officers, and

other support staff report to s and -s (not sho$n in 7ig.). 8ach regional manager has a

regional administration manager and each branch manager has an e#ecutive!accounts and

administration. The vice!president (marketing) at the corporate office has advertising (!Adv.)

and manager!marketing research (!..), in addition to the four regional managers (s),

reporting to him.

o$ever, the divisional marketing managers report to the divisional general managers at the

respective factory locations (not sho$n in 7ig.)

The matri# organi"ation, sho$n in 7ig. seems to be desirable in a large, multi!product, multi!

market, company. o$ever, there are problems in terms of conflicts as to $here the authorityand responsibilities reside. The conflicts can be minimi"ed if the roles of various managers are

clearly defined

Management of Sales "orce:

The management or administration of sales forceinvolves


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ecruiting and selecting

Training

+upervising

otivating

/eveloping

:ompensating

8valuating and

:ontrolling the sales force

The industrial marketer should create an organi"ational culture that $ill have positive effects on sales

performance and job satisfaction of the salespersons.

Recruitment and Selection of Industrial Salespersons

In selecting and recruiting sales people, an organi"ation can use one or more selection methods.

These are (i) 6ersonal intervie$s, (ii) 8valuation of application forms, (iii) :hecking $ith references

mentioned in the application form, (iv) 6ersonality tests, (v) Tests of interests, intelligence. aptitudes,

and kno$ledge.

&ut of the above methods, based!on studies conducted, the most commonly used method in practice

are personal intervie$s, evaluation of application forms, and personal reference check. Thepersonality tests (to measure emotional, social, and motivational aspects of behavior) are least

reliable. The tests of interest, intelligence, aptitude, and kno$ledge arc more straightfor$ard and are

helpful only if a company has developed a database that correlates job success $ith the dimensions

measured by such tests.

Application forms can be an important source of data. any companies develop their o$n

application forms to suit their individual needs. It shou2d contain all relevant information,

including education, previous e#perience, reasons for leaving previous jobs, salaries dra$n,

personal health, family background, and career objectives. It can provide a useful basis for

personal intervie$.

Selection Criteria

In selecting industrial sales people the criteria commonly used arc (i) uman relation skills, (ii)

:ommunication skills, (iii) Technical background, (iv)

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A sales person has to maintain good interpersonal relationships $ith customers and also $ithin the

sales organi"ation of the company, and hence, human relation skills are important. As discussed

earlier in the roleresponsibilities of personal selling, a sales rep is a part of company's

communication mi#, and therefore, he should be a good communicator. +alespersons $ith good

technical background are in a better position to find out customer problems and suggest appropriate

solutions, $hich is an important factor in industrial selling. *egotiating skills and job kno$ledge are

also important as salespersons are re%uired to negotiate $ith customers and get orders, $hich is theprimary objective of selling.

Personal Inter!ies:The primary method used by over =1 per cent of all industrial firms to

select salespersons is by personal intervie$s, 6ersonal intervie$s can be conducted by a

representative of a company, or by multiple intervie$s, or by panel intervie$s. 6ersonal

intervie$s conducted by one person can be biased and are less reliable as compared to multiple

or panel!type intervie$s. ultiple intervie$s consist of intervie$ing the candidate at different

times by various company e#ecutives. In panel intervie$s, a candidate appears before a group of

company e#ecutives on just one occasion. In practice, ho$ever, there is a combination of all thethree techni%ues.

&ne of the intervie$ing methods is thestructured (or patterned) interview. This involves asking

the intervie$ees a set of previously prepared same %uestions. This techni%ue helps intervie$ers

to compare the responses of the candidates. Another method is stress interview. ere, the

intervie$er simulates stress situations by using psychological techni%ues. Trained psychologists

are re%uired for this method to be effective. o$ever, this method is not approved by many

intervie$ers.

6roblem!solving %uestions are also used to find out a candidates' communicating and technical

abilities. These are open!ended %uestions (i.e. %uestions that cannot be ans$ered by simple 4yes4

or 4no4).

The objective of a personal intervie$ is to permit a t$o!$ay communication bet$een the

applicant and the company representative so that both can assess the other. Ina good intervie$,

the candidate is given an opportunity to ask %uestions so as to learn about the company, its

products, its markets, and the nature of the job. 8#perienced intervie$ers initially ask simple

%uestions and later d$ell on in!depth %uestions on the subjects the candidate is familiar $ith or

has speciali"ed kno$ledge of.

The responsibility for recruitment and selection of salespersons depends upon the si"e of the

organi"ation, its policies, and the professional environment. enerally, sales!force recruitment

and selection is a part of a local branch or regional manager's responsibility, in coordination $ith

the personnel department.


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$raining Industrial Salespersons

any industrial firms spend a considerable amount of time and money to train the salespersons.

This is particularly applicable in today's competitive environment $here salespersons need to be

effective. The training programmes for salespersons should be carefully planned. There are five

steps involved in planning a sales training programme, calledACMEE-Aims, Contents, Method,

Execution, andEvaluation.

0ims -or )bjecti!es. of Sales $raining The broad aims of training are to improve the

performance of a company and that of sales people, or to increase customers' satisfaction level.

o$ever, specific aims $ill vary, depending on training needs of ne$ly recruited and

e#perienced salespersons, type of products and markets, and job description. "or e,ample#

initial training for ne$ly recruited salespersons, selling capital items like te#tile machinery to

te#tile mills, $ill have specific aims of imparting product and application kno$ledge, and

customer kno$ledge. 7or e#perienced salespersons the specific aims should be determined on

the basis of individual needs, after studying their performance, and sales reports.

Contents of $raining Programme The contents of training vary for initial training (for ne$ly

recruited salespersons) from the continuing training (for e#perienced salespersons). The contents

in initial training are

Company Information +ales representatives should be informed about the company history,

objectives, organi"ation structure, key e#ecutives, major operations and products, past

performance on sales, profits, and so forth.

Product Information +ales trainees are sho$n ho$ the products are produced and used for

various applications.

Market InformationThis includes information on customers and competitors, such as types of

customers, their needs, and buying behavior9 competitors' strengths, $eaknesses, strategies, and

tactics.

Sales Policies and Procedures+ales trainees learn about sales policies, such as discounts,

payment terms, and deliveries. They are also informed about sales procedures like sales reports,travelling, lodging and boarding e#penses.

Selling $echni1ues: 7or sales trainees it is important to learn about selling styles, sales

presentation, negotiation skills, team selling, and relationship marketing.


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7or e#perienced sale persons, the contents depend on the deficiencies or needs of the individual

persons. 8#perienced sales persons, for instance, need training in communicating skills, or in

sales forecasting techni%ues, or human relation skills.

Methods of $rainingThere are broadly t$o types of training methods as sho$n in Table

The selection of training methods for a particular training programme depends upon $hichever

method that effectively conveys the contents of training.

Super!ision and Moti!ation

Through supervision the sales force is directed to perform the selling job in accordance $ith

marketing objectives and sales policies of the company. 8ach sales supervisor or manager has a

supervisory responsibility for the people $ho report directly to him or her. The responsibilities of the

sales supervisor includes (a) communicating and implementing company policies and strategies9 (b)

counseling on problems and deficiencies of sales force9 (c) establishing standards of performance,


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both through formal setting of goals or targets and setting as e#ample for others to follo$9 (d)

creating a favorable $ork environment and $orking relationship $ith salesperson9 (e) continuous

training and development of sales reps and (f) clarifying the responsibilities or e#pectations clearly

to the sales people.

The uni%ue feature $ith respect to field salespersons is that most of the time they are alone in

the, field, outside the presence of direct supervision. -ecause of their physical isolation fromsupervisors and colleagues. sales reps e#perience fluctuations in their morale and motivation,

from lo$ levels (because of negative responses from customers and frustrations of selling

process) to the high levels (on account of getting a major order or breakthroughs in solving

customer problems).

A study carried out by :hurchill, 7ord and 5alker on 4organi"ational climate and job!

satisfaction of sales persons4, has brought out the follo$ing important conclusions.

2 Industrial salesperson's job satisfaction improves by close supervision. This is because the salesreps feel that through close supervision they understand their jobs and the company policies

better.

0 Industrial sales reps are motivated if they are involved $hile deciding their targets or goals, and

also $hile determining company policies and procedures.> The job satisfactionmotivation is also related to the e#tent to $hich the sales rep understands

clearly $hat is e#pected of him and ho$ to satisfy those e#pectations.

? 7re%uency of contact or communication is not important, but the %uality of relationship $ith thesupervisor is important.

3 Industrial sales reps are $illing to accept direction and authority from a number of departments

in the company. This finding is consistent $ith the nature of industrial selling but contrary toa commonly accepted notion of the importance of unity in command.

The above findings are important in understanding the nature of industrial sales force

motivation. 7or motivating salespersons, a sales manager should involve his people in decision

making (or get their suggestions and opinions), clarify their responsibilities more clearly, help in

solving their problems by first listening to the problems and then making suggestions, respect

their vie$s or opinions, trust the subordinates, understand the individual differences and

peculiarities, encourage development of personal friendship in $orkplace, recogni"e and re$ard

good $ork, and set a good e#ample for others to follo$.

e!eloping Sales "orce

6resently, the challenge for a sales manager is to balance the company's goals of sales, profits,

and receivable collections $ith salespersons' need of job security and financially re$arding


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$ork. The sales manager must be skilled in human relations (or be people oriented) and also be

task!oriented. The task!oriented sales manager sho$s concern for achievement of sales, profits,

payment collection, and other goals of the organi"ation. The people!oriented sales manager

sho$s concern for sales people and develops them.

-lake and outon rid for anagerial +tyles There are various styles of day!to!day functioning

of managers, one among them being the Blake and Mouton grid for managerial style, $hich $as

developed in early 2=@1s

34 Impo!erished Management The first style (2, 2) is the impoverished management. This type

of manager likes to keep the sales people in dark. eshe does not communicate to sales

people the e#pectation of the management, $hat tasks are to be performed, and ho$ to

achieve the goals. The manager does not sho$ any concern for the sales people or make any

efforts to develop them.

24 Countr% club Management: The country club management as sho$n in grid at 2.= is one in$hich the managerial style sho$s a great concern for the sales people by talking and building

a good rapport $ith them, and keeping them $ell informed about the goals to be achieved.

o$ever this style is not task!oriented.

54 $as' Management -6# 3.: This manager has an authoritarian style. The manager is a real

task!master, asking salespersons to perform a lot of sales activities and paper $ork. o$ever,

he or she does not sho$ any concern for the needs of sales people.

4 $eam Management -6#6. This is the ideal style $here manager sho$s not only a strong

concern for the sales people but also is task oriented. This managerial style involves sales

people in goal setting and allo$s them to plan their sales activities. ere, the manager

communicates $ith sales people about the company's goals, the tasks to be performed, and

ho$ to perform the tasks. The manager balances the company's goals and the needs of the

sales people.

84 Middle of the Road: Ade%uate organi"ation performance is possible through balancing the

necessity to get out $ork $hile maintaining morale of people at a satisfactory level.B This has

been sho$n in the grid at 3.3. The leaders of this style have medium concern for both people

and task and try to maintain a balance in the t$o.

The managerial grid implies that the most desirable leader behavior is team management (=.=) in

$hich the leader has high concern for production as $ell as task oriented. The managerial grid is


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useful for identifying various combinations of leadership styles. -ut it is unable to point out the

factors $hich lead the manager to such a style.

Sales force Compensation:

A sales compensation plan has the follo$ingfour components.

Fixed amount is the salary that is paid to satisfy the salesperson's need for stable

income.

Variable amount may include commission, profit!sharing, or financial incentive that

is paid to motivate sales people for greater efforts, leading to higher performance.

Fringe benefits or perks such as medical reimbursement, personal or group insurance

scheme, pension or superannuation scheme, are given to satisfy the salesperson's

needs for security and savings in income ta# at higher salary levels.


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Task Oriented

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xpense allo!ances or reimbursements include travelling, lodging, boarding, and

customer entertainment, as per company rules. This may not be considered strictly

under the sales compensation, as it is generally paid based on actual e#penses

incurred by the salesperson.

The types of compensation plans available to a company are (i) +traight salary, ii) +traight

commission, (iii) :ombination of salary and perks, (iv) :ombination of salary and commission,

and (v) :ombination of salary, perks, and commission.

9!aluation and Control

&ne of the responsibilities of sales!force management is to evaluate and control the industrial

sales force at various levels, like individual, branch, regional, and national levels. An evaluation

includes (a) obtaining information about salespersons' performances at regular intervals ($eekly,

monthly, %uarterly, and yearly), (b) evaluating or e#amining the actual performances $ith the

goals or targets, and(c) determining if the goals are being achieved. :ontrolling includes

identifying the problems (if goals are not being achieved) and taking corrective actions toachieve the goals. Thus evaluation is bac'ardloo'ing but control is forardloo'ing4

Sources of Information The first step in evaluation is to obtain information about salespersons'

performances on regular basis. The sources of such information are sales analsis (i.e.

computeri"ed statements on actual sales against goals by salespersons, branches, regions, and

national levels)9sales call reports (i.e. giving information about customer!calls planned, outcome

of actual visits, and progress on various activities)9 customers! letters or complaints" market

surves, and so on.

$%pes of 9!aluation The sales managers use t$o types of evaluation to measure the

performance of sales force. These are (i) Cuantitative (or outcome!based), and (ii) Cualitative

(or behavior!based). 5hile determining %uantitative measures, the sales management should

focus on important performance variables and ignore other non!important parameters. +ome of

the important variables are (a) comparison of actual sales performance (product!$ise) $ith sales

%uotas or goals9 (b) sales e#penses to total sales in per cent, number of ne$ customers developed,

and an increase in market share. The selection of the important variables should depend on the

marketing objectives of a company. The %ualitative (or behavior!based) measures include

customer satisfaction, product kno$ledge, sales presentations, negotiating skills, and team

orientation. 8ach company should decide $hich variables or measures are most useful to it.ecent studies have indicated that companies should have a balanced approach by emphasi"ing

both %uantitative and %ualitative evaluation, to achieve desired sales or marketing results. &nce a

company decides on the most!useful evaluation variables, it should communicate the same to the

sales people through job description or separately, in $riting. The salespersons can then make

efforts to improve their performance.


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9,:anagement by &bjectives (-&) is an effective control tool

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3. *umber of salespersons re%uired is determined by dividing the total sales calls per year

(step>) by the average number of calls a salesperson can make per year (step ?).

9,ample:

An industrial firm estimates that there are 31 'A' class, 211 '-' class, and >31 D:' class customers

on all India basis, inclusive of all the 23 sales territories.

The company decides that desired level of sales calls for :lass 'A' customers should be ?@ per

year, for '-' customers 0? per year, and for class D:' customers 20 per year. The total sales calls

per year is (31# ?@ E 211# 0? E >31 # 20) e%ual to =111. The sales manager estimates that

average sales rep can make ?31 calls a year. The number of sales persons (i.e. si"e of sales force)

is (=111 divided by ?31) e%ual to 01.

0llocating Sales "orce to the Sales $erritories and Customers

&ne of the approaches follo$ed in allocating or assigning salespersons to specific customers (or

sales territories) is to use the judgment. The other approach is to consider t$o factors (i) elate

abilities of sales persons to sales potential of territories, and customers, and (ii) elate sales rep's

education, e#perience and training to customer characteristics, language, and ethnic influences.

Sales Resource )pportunit% +rid:

This is another useful approach or method used for allocation of sales force to various customers

or sales territories. ere, customers or sales territories are represented by planning and control

units (6:Fs), $hich are served by the industrial firm. +ales resources include sales calls, number

of salespersons, and percentage of salesperson's time.


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Sales Resource )pportunit% +rid

6:F opportunity is the total sales potential of each 6:F for all suppliers, and sales resource

strength is the competitive advantage or strength of the company $ithin the 6:F. -y positioning

all 6:Fs on the grid, the sales manager can allocate or assign high level of opportunity and

moderate or lo$ levels of sales resources to moderate or lo$ level of 6:F opportunity. The grid

helps the sales manager to revise the si"e of the sales force, sales territories, and allocation of

sales calls, depending on the opportunity of the 6:Fs, and sales resources strength of the firm.

Another simple and practical approach to allocation of sales force to industrial customers $ith

differing sales potential isABC Analsis of industrial customers. A real life e#ample $ill help in

understanding the usefulness and result!oriented nature of this approach.

0BC 0nal%sis of Industrial Customers0n 9,ample

An area sales manager, $estern region, in a large private sector organisation $as transferred

from umbai ($estern) regional office to ;olkata (eastern) regional office $ith a short brief!4to

set right eastern region sales performance4. e $as promoted as regional marketing manager!east and $as responsible for the field selling operations in the eastern region, to industrial

customers consisting of &8s and users of five product!groups of electrical engineering.

+ince the regional marketing manager $as ne$ to the customers and the sales force of the

eastern region consisting of branch managers, marketing e#ecutives and sales engineers, he

decided to apply the techni%ue of A-: analysis to the industrial customers. The main objective


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$as to improve the sales performance by optimi"ing the resources of manpo$er, time, and

money. The methodology adopted $as as follo$s

34 8ach sales engineer $as assigned the responsibility to contact about 21!23 industrial customers

$ithin the specific territory of eastern region so that all the e#isting or kno$n customers are

covered.

24 The sales force $as asked to collect the information from the customers on $hat $ere the total

re%uirements (i.e. sales potential) of the company's products for the current year and the

subse%uent year.

54 The %uantity re%uirements of the customers for the various products $ere converted to the value

re%uirements by multiplying %uantity $ith average unit selling price of the products. The total sales

potential of each customer $as arrived at by adding the individual values of the products re%uired.

4 The sales potential values of all the customers $ere then put in descending order, starting $ith the highest

potential on the top of the list. A total $as then made by adding the potential of all the customers.

84 The top fe$ customers (typically 21 percent of the total number of customers), $hose salespotential values together accounted for G1 per cent of the total sales potential $ere called =0=

customers. The ne#t group of customers (generally, 01percentofthe total number of customers),

$hose sales potential values together accounted for 01 per cent of the total sales potential, $ere

called =B=customers. The balance group of customers (generally G1 per cent of the total number

of customers) $hose sales potential values together $as 21 percent of the total potential, $ere

called =C> customers

?4 8ach member of the sales team $as asked to prepare a customer visit plan at the beginning of

every month $ith the follo$ing guidelines. =0= customer to be visited at least four times a

month (if the customer $as in the same city $here the salesperson $as located) or at least t$otimes a month (if the customer $as located outstation)9 =B=customer $as to be visited at least

t$o times a month (if the customer $as located in the same city) or once a month (for outstation

customer)9 =C=customer $as to be visited once a month (if in the same city) or once in t$o

months (for outstation customer).

74 The regional marketing manager, branch manager, and marketing e#ecutives also periodically

visited the =0=and =B=customers along $ith the sales engineers, based on the visit plans.

The result of applying this simple techni%ue $as dramatic. In the first year of eastern region

operations, the gro$th in sales $as 22> per cent over the previous year9 in the second year, the

gro$th $as H= per cent9 in the third year the gro$th $as ?G per cent, and in the fourth year the

gro$th $as >> per cent, against the overall company's gro$th (of all regions) of bet$een 23 per

cent and 01 per cent per year.


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can ask for the order, ask the buyer to make a choice bet$een several models or si"es, or indicate

$hat the customer $ill lose if the order is not placed no$. The sales rep may also offer a special

discount, price, or credit terms as specific inducements to close the sale. +ome sales people do

not use any techni%ues to close the sales. They believe that the customer should be allo$ed to

make the final decision to buy or not to buy. 4If all the previous steps in selling process are done

effectively, the customer $ill buy the product or the service,4 as per the customer focused

approach follo$ed by some sales people.

PostSales Ser!ice 8ven after the sale is closed and the purchase order is released, the industrial

salesperson continues to $ork $ith the customer in areas such as delivery of products,

installation, training, after sales service, rejections or returns, payments, and concessional sales!

ta# forms. This gives an opportunity to the salesperson to develop more personal relationships

$ith key buying!centre members.

B2B )" 9C)MM9RC9

5e have defined business!to!business (@0-) marketing in :hapter I as marketing of products and

services to business organisations. -usiness!to!business marketing is also referred to as industrial

marketing or business marketing or organisational marketing. Today the cutting edge for

business is electronic commerce (e!commerce). 8!commerce is generally divided into three

segments business!to!consumer (-0:), consumer!to!consumer (:0:), and business!to!business

(-0-). ere $e focus on conducting business!to!business marketing through e!commerce.

&hat is 9Commerce(

8!commerce or electronic commerce is broadly defined as a modern business methodology that

addresses the needs of organi"ations and consumers to cut costs, improve the %uality of goods

and services, and increase the speed of service. It is also defined as the process of using digital

technology for transmitting information bet$een organi"ations. The term De!commerce is more

commonly associated $ith information on buying and selling of products and services via

computer net$orks.

:onducting business!to!business marketing through e!commerce represents a basic shift orchange in the manner firms are interacting $ith buyers and suppliers.

IMPORTANT PARTS OF E-COMMERCE

The Internet, 5orld 5ide 5eb (555), Intranets, and 8#tranets are the important elements or


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component parts' of e!commerce.

InternetThe most important element that supports e!commerce is the Internet. The system of

4interconnected net$orks of computersB is called the internet. It started in '2=H1, in a F+

/epartment of /efense project, by linking together mainframe computers to create a net$ork for

transmission of data bet$een military computers at different sites. Jater, other government

net$orks $ere also connected to the original net$ork, and the system became the Internet.

&orld &ide &eb -&&&. It is the most popular Internet 4navigation tool4 for finding and

getting information in a multimedia forrnat, including video, audio, and colour graphics. any

organisations, $ho have decided to move into e!commerce, have setup their o$n $ebsites. The

important factors that should be kept mind $hile setting up a $eb site is that the site should be

attractive on first vie$ing and interesting enough for repeat visits.

Intranets:These are the internal internets of companies. A firm creates intranet for company

employees to communicate $ith one another, short databases, vie$ restricted information and

conduct training programs for company employees.

9,tranets:These are links that allo$ business partners like customers, distributors and suppliers

to connect to a companys internal net$orks (or intranets). -usiness partners are given a uni%uepass$ord to access the firms intranet. The purpose is to allo$ information e#change so as to

improve business processes.

The e!commerce revolution is taking place in India too $ith e!business paper, educational portal

for youth ($$$.edurite.com) and many business firms adopting e!commerce for business!to!

business marketing. &ne such e#ample from Indian business situation is Tata -6 $hich adopted

e!commerce to market their solar products by establishing a $eb site. The company's marketing

e#ecutives felt that marketing solar products to industrial customers through the Internet $as

easier, less time consuming, and less costly, compared to the traditional methods of conducting

business.

Jet us compare the traditional (old) order!taking process and the ne$ ($eb!based online) order!

taking process

$raditional )rder $a'ing Process This typically involves the follo$ing steps

The company's industrial (or business) customer sends the purchase order by fa#. Theorder mentions the price that is outdated, product's specifications do not match, and the

product is out!of!stock.

The company's sales representative contacts the customer on phone or visits personally to

e#plain the problems. 5ith great difficulty he makes the customer issue an amendment tothe purchase order indicating change in product specifications, prices, and delivery


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period.

The sales clerk types the $ork order for the production department as a part of order

processing system. e makes mistakesK

istakes made in the $ork order sho$ up at the final inspection before dispatch. The

sales rep again spends time $ith the customer re%uesting amendment to delivery time.

The frustrated customer decides to cancel the order.

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This document is authori"ed for use only in *+IT -A '-usiness arketing'+ubject by r I +rikanth during August to /ecember 0123

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bm Module 7

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