M Com 2nd Year Advertising Sales Management Study Material Notes

FACTORS AFFECTING THE SIZE OF SALES TERRITORY

The actual size of the sales territory is affected by a set of factors which should be kept in mind by the sales management. Consideration of these factors will help the sales management to expand or contract or readjust the size of sales territories. The following factors affect the size of sales territories :

1. Size of Business. Size of business is a vital factor that significantly affects the establishment of the sales territory. If the enterprise or manufacturer produces or manufactures or markets on a large scale, it will require a bigger sales force along with a large number of sales territories of smaller size.

2. Potential Volume of Sales. While determining the size of the sales territory, the potential sales volume of such an area should be

ascertained to ensure that the salesman has adequate sales opportunity. Such a potential should be comparable to other territories to give an equal opportunity of earning. Markets with vast sales potentialities have a small sales territory while the markets with less sale potentialities have comparatively a large sales territory

3. Level of Competition in a Sales Territory. The extent al competition also affects the size of a sales territory. Increase of kom and cut-throat competition, the sales call frequency should be increase and the size of the sales territory should accordingly be reduced. On thi contrary, if the competition is not sharp, the salesman can cover a larger! area and the size of the territory would be large. The degree o competition depends upon the nature of product and the rat consumption of the product.

4. Demand for the Product. The demand for the product in territory affects the size of the sales territory covered by a salesman When there is a little demand for the product, the salesman will takı more time to make sales, the number of contacts with the consumers i reduced and therefore a larger territory is needed. On the contrary when there is large demand for the product, he has to contact the user of the product for more times and therefore the size of the territory is ti be small

5. Ability of the Salesman. An efficient salesman can handle mori work effectively and efficiently. Therefore, the efficient salesmen they a should have larger territory than the inefficient ones. The trained salesman are to be assigned smaller territories, younger salesmen backed with greater energy enjoy larger territories while the slow moving one is get smaller territories.

6. Methods of Distribution. The method of distribution also affects the size of sales territory. When a product is sold through wholesaler p and chain stores the number of buyers to be contacted is limited any so the size of the territory may be larger than if a product is sold direct it a. the consumers. Thus, the fewer the middlemen-the smaller the territories

7. Density of Population. If the area is thickly populated, the size for of sales territory would be small. On the contrary if the area is sparsely the populated, the size of sales territory would be large.

8. The Sales Policy. The sales policy of an enterprise has a Dee co bearing on the size of the sales territory. If the sales policy relates tar broad and notional distribution coverage, a larger, sales territory i al needed. In case it wants to have an intensive through coverage of loci & and regional areas, the sales territory would be smaller.

9. Economic Conditions. The economic conditions of the sale territory also decide the size of the territory. Favorable economy

conditions justify through coverage and a small territory. Adverse economic conditions warrant a creation of large sales territories, so that salesmen may secure a profitable sales volume!

10. Transport Facilities. The areas with good transport and communication facilities expand trade. Therefore it would encourage small sales territory. On the other hand, transport bottlenecks will lead to stagnation of the trade, resulting in a large sales territory.

11. Cost of Sales Territory. Each company has a standard ratio of sales cost to net sales. To maintain this ratio, the size of the territory needs adjustments making it larger or smaller. If the cost of sales territory is high, it would have a large sales territory and vice-versa too. The important point to be kept in consideration is that a territory should produce enough sales volume to justify the expense of the coverage.

MEANING AND DEFINITION OF SALES ORGANISATION

The term ‘Sales Organisation’ is combination of two words-Sales and Organisation. Sales means the transfer of ownership of some goods or services from one party to another for a given consideration. Organisation means the group of persons working for the achievement of some predetermined objectives. Thus, Sales Organisation means a group of persons which is organized to perform the selling activities of an organisation of an enterprise. The term ‘Sales Organisation’ has been defined by some eminent authors as follows:

Caniff and Still, “A Sales organisation, like any other organisation is a group of individuals striving jointly to reach some common goals, and bearing informal as well as certain formal relations to each other.”

American Marketing Association, “Sales organisation is the planning, direction and control of personal selling, including recruiting, selecting, training, equipping, assigning, routing, supervising, paying and motivating, as these tasks apply to the personal of sales force.”

C.L Boiling, “Sales organisation is a full fledged department empowered to represent its business before customers and which is liable for the performance of all those activities which are essential for delivering the goods into the hands of consumers.”

On the basis of analytical study of above definitions, it can be concluded that, “sales organisation, as a vital department of the enterprise, is a group of persons which is established to plan, co-ordinate and control the activities of the sales force leading to the distribution of goods and services to the consumers at a profit.

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