Page 107 - DMGT507_SALES AND PROMOTIONS MANAGEMENT

Unit 5: Organising Sales Effort

Notes
Territory Sales Salesman’s Ability Expected Expected Profit
Potential name Index Sales (Say 25%)
1 30,000 x 1.0 30000 7500
2 18,000 y 0.6 10800 2700
3 12,000 z 0.4 4800 1200
Total 60,000 45600 11400

Profit is increased in second situation where we have made an assumption that the ability index
of the sales person remains the same irrespective of the territory which may not be true; sales
persons have different effectiveness in different territories. If this is also taken into consideration
then the relocation task will become more complex.
Market changes are taking place very frequently so the territories once formed do not hold good
forever. The dynamics of market place necessitates the changes in territories as well.

Reasons for Revising Sales Territories

When a company first forms territories, it is not in a position to know everything. As it gets to
know the customers, the types of accounts and the dynamics of business activity it has to bring
about some changes. Revision of territories takes place due to following reasons:
1. Customer Related Reasons: Revision of a territory may take place due to shift in customers
business which may be geographic or technical in nature or which may be related to the
firm’s product policies. More aggressive domestic or international competition may also
necessitate change.
2. Salesperson Related Reasons: Revisions can start with physical or psychological changes.
Sales person with advanced age may not have the energy to cope with the pressure required.
Family problems of a sales person may necessitate changes. A sales person may also be
frustrated due to inadequate challenges or due to monetary reasons. A change may be
required due to any of these factors.

3. Management Misjudgement: These could be the underestimating of a sales potential of a
territory. Underestimating the territory is more common than overestimating the territory.
If the territory is large then a sales person just skims the territory rather than working
thoroughly. If the sales are overestimated then territories formed are small or undersized.
Realignment also becomes necessary when new product lines are introduced as company’s
product mix may become too large or the product may reach the maturity stage. All these factors
lead to change in territories.

5.3 Alignment of Sales Personnel to Territories and Routing

Routing refers to the setting up of a pattern for a salesperson to use when making sales calls. It
is a tool for effective time and territory management.
Some salespeople can handle large territories and the travel associated with them, some territories
require experienced salespeople, and some are best suited to new people. There are a few factors
a manager needs to consider when assigning both new and experienced people to territories.
In today’s complex selling situation, the presence of a well-thought-out daily and weekly route
plan is required for effective management. The following may be considered basic route patterns
of a territory.

LOVELY PROFESSIONAL UNIVERSITY 101