FACTORS AFFECTING THE SIZE OF SALES TERRITORY
The actual size of the sales territory is affected by a set of factors that 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. The size of the 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. (MCom 2nd Year Advertising Sales Management Study Material Notes)
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 opportunities. Such potential should be comparable to other territories to give an equal opportunity for earning. Markets with vast sales potentialities have a small sales territory while the markets with fewer 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 increased and the size of the sales territory should accordingly be reduced. On the 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 the product and the rate of consumption of the product.
4. Demand for the Product. The demand for the product in a territory affects the size of the sales territory covered by a salesman When there is little demand for the product, the salesman will take more time to make sales, and the number of contacts with the consumers is reduced and therefore a larger territory is needed. On the contrary, when there is a large demand for the product, he has to contact the user of the product more times, and therefore the size of the territory is to be small.
5. Ability of the Salesman. An efficient salesman can handle more work effectively and efficiently. Therefore, the efficient salesmen should have larger territory than the inefficient ones. The trained salesman is to be assigned smaller territories, younger salesmen backed with greater energy enjoy larger territories while the slow-moving one is getting smaller territories.
6. Methods of Distribution. The method of distribution also affects the size of the sales territory. When a product is sold through wholesalers and chain stores the number of buyers to be contacted is limited and 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 of the sales territory would be small. On the contrary, if the area is sparsely populated, the size of the 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 is needed. In case it wants to have intensive 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 economic conditions justify through coverage and a small territory. Adverse economic conditions warrant the 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 territory should produce enough sales volume to justify the expense of the coverage. (MCom 2nd Year Advertising Sales Management Study Material Notes)
MEANING AND DEFINITION OF SALES ORGANISATION
The term ‘Sales Organisation’ is the combination of two words-Sales and Organisation. Sales mean the transfer of ownership of some goods or services from one party to another for a given consideration. Organization means the group of persons working for the achievement of some predetermined objectives. Thus, a Sales Organisation means a group of persons who are organized to perform the selling activities of an organization or 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 organization 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 person of the sales force.”
C.L Boiling, “Sales organization 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 an analytical study of the above definitions, it can be concluded that “sales organization, as a vital department of the enterprise, is a group of persons which is established to plan, coordinate and control the activities of the sales force leading to the distribution of goods and services to the consumers at a profit.