BM Module 7

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 sales/marketing manager is responsible to achieve the short-term objective of
achieving sales target/goal and a long-term objective of developing an effective sales
organization that maximizes the opportunities for profitable sales growth over a long period. The
sales manager is required 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. Once the industrial marketer decides the target market segments, the
sales force is deployed to meet the needs of these segments. In other words, 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 extent,
communicated by the sales people. The sales person, with the help of technical persons, offers
not just a physical product but also technical assistance, ideas, and suggestions to solve the
industrial customer's problems.
Thus, there are two major roles of personal selling: (i) As a part of problem solving capabilities,
and (ii) As a part of communication mix.
Major Roles of Personal Selling
Sales Rep as a Part of Problem-Solving 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. First, the sales rep has an important job to help customer to define the buying problem. He
must show the customer how the purchase of particular products or services will help in solving
the problem or achieving customer's objectives. If products are highly technical, the sales person
should have good product or technical knowledge. If products are less technical oriented, the
sales person acts as a business consultant to show the customer economic advantages of various
purchase alternatives.
This document is authorized for use only in RNSIT MBA 'Business Marketing' 1
Subject by Mr. I G Srikanth during August to December 2015
The second important responsibility of a sales rep is to give an effective customer service. This
may consist of drawing product specifications, application engineering, value analysis,
installation, maintenance or repairs. Some 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.
The third responsibility is to "represent the customer at the factory or head office, marketing".
Sometimes, a sales person has to "fight" for his customer with his factory or planning department
so as to ensure timely delivery, or reasonable credit terms, or solving quality problems, and so
on.
In solving the problem of customer, a sales person needs to have human relation skills (i.e. interpersonal skills) in managing pressures and relationships in customer organizations and in his own
organization. In this role, a sales rep may be disliked by some persons in his own organization
who resist change in operations and procedures. However, these changes are asked for by the
sales rep based on customer demand or competitive situations. It is, therefore, important that
organization should be geared up to respond and operate as an effective team to the customers'
needs and competitive situations.
What Makes a Successful Salesman?
The most successful salesman
has greater product knowledge
makes a more enthusiastic presentation
has more ability to clinch the order
pays closer attention to ensuring customers receive good service
asks questions and listens more carefully
has a superior branch/regional organization
has better contacts/friendships within the industry
answers objections better
makes a better initial impression
can attain more interviews
Sales Force Organization and Management:

Only with a sound organization an effective selling strategy can be executed. The management of
an industrial firm must recognize the vital importance of the sales organization. It should devote
the necessary attention and money for the development of the sales organization and its people.
A careful analysis is needed for the development of the sales organization, sales persons, and
supporting people. We shall now discuss about the types of sales organizations, hierarchy of
selling and managerial positions.
Types of Sales Organization:
There are four types of sales organizations:
(i)
(ii)
(iii)
(iv)
Geographical,
Product,
Market (customer), and
In large industrial firms, a combination of the above three types.
Which type of sales organization is best for a company will depend upon (a) the size 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
knowledge of people employed in the organization, and (f) responsibilities assigned to
middlemen or intermediaries.
Geographical Organizations These are most common in industrial marketing. In this
organization 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 organization 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 organization is suited to a
small or medium-size company with less number of products.
For instance, the marketing manager of a company manufacturing aluminum extruded products
decided to plan the sales organization based on the geographical type. The marketing manager
had analyzed that initially the company size was small, the financial resources were limited, and
the product sold was one, although the applications and market segments were many. As the
company was located in southern India, in the first phase the selling efforts were concentrated in
southern and western parts of India, and subsequently, after two years, in the second phase, it
was planned to expand its sales activities to northern and eastern parts of India. As a
consequence, branch managers and sales engineers were recruited for field selling function,
along with support staff.
The sales organization structure in the first phase Fig. shows "Executive marketing services"
position at the marketing head office, with responsibilities of coordination with factory, planning
customer orders, communicating with branches on delivery status and quality complaints (if
any), and so on. Branch managers and executive marketing services were to report to the
marketing manager.
However, if a firm has a large number of products manufactured by product divisions, one sales
person assigned to a particular geographic area will find it extremely difficult to master
knowledge of products, customers, and marketing policies for all the products. Besides, the
product division heads of various divisions may have doubts that the salesperson is not paying
adequate attention to their products.
Product Organization: In this organization salespersons are assigned a few products out of the
various products of a company. Thus, different salespersons specialize in selling different group
of products. This type of sales organization is suited to a large organization having several
products or technically complex product groups. It can permit product specialization because
different products need different types of product knowledge, application knowledge, and selling
skills. Besides, the customers' buying behavior for various products may be different.
The major advantage of product oriented sales organization is that it gives a competitive advantage
due to the greater product knowledge permitted by product specialization, which in turn improves the
value of the total offer to the customers.
The disadvantages of product organization is that the selling expenses are higher and customers
may have difficulties in dealing with more number of sales persons dealing with different
product groups for the same organization. However, 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
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 window air-conditioners, water coolers, refrigerators and
cold storage plants:
ii) Testing and weighing machines division, consisting of material testing equipments and
weighing machines; and
iii) Computer hardware and software division consisting of personal computers (PCs), printers,
floppy drives, and computer programming. Since all the three divisions had distinct products
and services, which needed specialized application knowledge and selling skills, the
company decided to have a combination of geographic and product specialization as shown
in the Fig.
There were four regional offices located at Delhi, Kolkata, Mumbai and Chennai, respectively, each
headed by a regional manager. Each regional manager was supported by three product-sales groups
consisting of a regional sales manager (for each product group or division) along with sales
executives, and sales engineers or sales officers--depending upon the sales volume. The regional
sales manager was reporting to the concerned regional manager in administrative matters (i.e. for
sanctioning leave, approval of tour expenses, etc.), and functionally i.e. for target setting, pricing,
product development, delivery adherence from factory, product/service quality, etc.), reporting to
the divisional marketing manager. The sales organization in a matrix form combines geographic
and product group specializations.
In the sales organization as shown in Fig. the structure shown for northern region is repeated for
the east, west, and south. The sales executives, sales engineers, sales officers and supporting staff
reporting to each regional sales manager are not shown in Fig.
Combination of Geographic and Product Specialization Sales Organization

Market (or Customer) Oriented Organization This type of organization is generally combined
with geographic specialization. It is found suitable whenever there are distinct customer groups
who are not only large in size and potential, but also have different buying behavior. It helps
sales persons to develop a detailed knowledge of a particular group of customers. With this kind
of customer/market segment specialization, 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.
For example, a large organization in private sector, manufacturing and marketing electrical
engineering products, with several product groups or divisions, decides to make a change in the
sales organization from the geographical-product group specialization to the geographicalcustomer group combination, in order to improve marketing effectiveness. The company has four
regional sales offices at Delhi, Kolkata, Mumbai and Chennai, each headed by a regional
manager. It has branch offices at each region, headed by branch managers who 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) switchgear. The
customer groups for the above mentioned products are (i) government organizations, such as
state electricity boards, railways and others; (ii) original equipment manufacturers (OEMs) and
industrial users in private sector; and (iii) authorized dealers. Instead of product group oriented
sales organization, the company decides to have customer group oriented sales organization,
keeping the geographical set-up of regional and branch offices unchanged. The sale organization
with the geographic and customer combination for selling the entire range of company products
is shown in Fig.
The regional marketing managers (RMM.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 (BMs) are responsible to sell the entire product range of the
company to all the three customer groups. The RMMs and BMs are coordinating with the five
divisional marketing managers at the divisional head offices for the marketing services, such as
pricing policies, delivery schedules, advertising, sales promotion, new product development,
product quality, and so forth. The sales organizations for east, west, and south are the same as
shown for the northern region in Fig. The sales executives, sales engineers, sales officers, and
other support staff report to RMMs and BMs (not shown in Fig.). Each regional manager has a
regional administration manager and each branch manager has an executive-accounts and
administration. The vice-president (marketing) at the corporate office has advertising (M-Adv.)
and manager-marketing research (M-M.R.), in addition to the four regional managers (RMs),
reporting to him.
However, the divisional marketing managers report to the divisional general managers at the
respective factory locations (not shown in Fig.)
The matrix organization, shown in Fig. seems to be desirable in a large, multi-product, multimarket, company. However, there are problems in terms of conflicts as to where the authority
and responsibilities reside. The conflicts can be minimized if the roles of various managers are
clearly defined
Management of Sales Force:
The management or administration of sales forceinvolves
Recruiting and selecting
Training
Supervising
Motivating
Developing
Compensating
Evaluating and
Controlling the sales force
The industrial marketer should create an organizational culture that will 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 organization can use one or more selection methods.
These are: (i) Personal interviews, (ii) Evaluation of application forms, (iii) Checking with references
mentioned in the application form, (iv) Personality tests, (v) Tests of interests, intelligence. aptitudes,
and knowledge.
Out of the above methods, based-on studies conducted, the most commonly used method in practice
are personal interviews, evaluation of application forms, and personal reference check. The
personality tests (to measure emotional, social, and motivational aspects of behavior) are least
reliable. The tests of interest, intelligence, aptitude, and knowledge arc more straightforward and are
helpful only if a company has developed a database that correlates job success with the dimensions
measured by such tests.
Application forms can be an important source of data. Many companies develop their own
application forms to suit their individual needs. It shou1d contain all relevant information,
including education, previous experience, reasons for leaving previous jobs, salaries drawn,
personal health, family background, and career objectives. It can provide a useful basis for
personal interview.
Selection Criteria
In selecting industrial sales people the criteria commonly used arc: (i) Human relation skills, (ii)
Communication skills, (iii) Technical background, (iv) Job knowledge (v) Negotiating skills.
A sales person has to maintain good interpersonal relationships with customers and also within the
sales organization of the company, and hence, human relation skills are important. As discussed
earlier in the role/responsibilities of personal selling, a sales rep is a part of company's
communication mix, and therefore, he should be a good communicator. Salespersons with good
technical background are in a better position to find out customer problems and suggest appropriate
solutions, which is an important factor in industrial selling. Negotiating skills and job knowledge are
also important as salespersons are required to negotiate with customers and get orders, which is the
primary objective of selling.
Personal Interviews: The primary method used by over 90 per cent of all industrial firms to
select salespersons is by personal interviews, Personal interviews can be conducted by a
representative of a company, or by multiple interviews, or by panel interviews. Personal
interviews conducted by one person can be biased and are less reliable as compared to multiple
or panel-type interviews. Multiple interviews consist of interviewing the candidate at different
times by various company executives. In panel interviews, a candidate appears before a group of
company executives on just one occasion. In practice, however, there is a combination of all the
three techniques.
One of the interviewing methods is the structured (or patterned) interview. This involves asking
the interviewees a set of previously prepared same questions. This technique helps interviewers
to compare the responses of the candidates. Another method is stress interview. Here, the
interviewer simulates stress situations by using psychological techniques. Trained psychologists
are required for this method to be effective. However, this method is not approved by many
interviewers.
Problem-solving questions are also used to find out a candidates' communicating and technical
abilities. These are open-ended questions (i.e. questions that cannot be answered by simple "yes"
or "no").
The objective of a personal interview is to permit a two-way communication between the
applicant and the company representative so that both can assess the other. In a good interview,
the candidate is given an opportunity to ask questions so as to learn about the company, its
products, its markets, and the nature of the job. Experienced interviewers initially ask simple
questions and later dwell on in-depth questions on the subjects the candidate is familiar with or
has specialized knowledge of.
The responsibility for recruitment and selection of salespersons depends upon the size of the
organization, its policies, and the professional environment. Generally, sales-force recruitment
and selection is a part of a local branch or regional manager's responsibility, in coordination with
the personnel department.
Training Industrial Salespersons

Many industrial firms spend a considerable amount of time and money to train the salespersons.
This is particularly applicable in today's competitive environment where 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, called ACMEE-Aims, Contents, Method,
Execution, and Evaluation.
Aims (or Objectives) of Sales Training The broad aims of training are to improve the
performance of a company and that of sales people, or to increase customers' satisfaction level.
However, specific aims will vary, depending on training needs of newly recruited and
experienced salespersons, type of products and markets, and job description. For example,
initial training for newly recruited salespersons, selling capital items like textile machinery to
textile mills, will have specific aims of imparting product and application knowledge, and
customer knowledge. For experienced salespersons the specific aims should be determined on
the basis of individual needs, after studying their performance, and sales reports.
Contents of Training Programme The contents of training vary for initial training (for newly
recruited salespersons) from the continuing training (for experienced salespersons). The contents
in initial training are:
Company Information Sales representatives should be informed about the company history,
objectives, organization structure, key executives, major operations and products, past
performance on sales, profits, and so forth.
Product Information Sales trainees are shown how the products are produced and used for
various applications.
Market Information This includes information on customers and competitors, such as types of
customers, their needs, and buying behavior; competitors' strengths, weaknesses, strategies, and
tactics.
Sales Policies and Procedures Sales 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 expenses.
Selling Techniques: For sales trainees it is important to learn about selling styles, sales
presentation, negotiation skills, team selling, and relationship marketing.
For experienced sale persons, the contents depend on the deficiencies or needs of the individual
persons. Experienced sales persons, for instance, need training in communicating skills, or in
sales forecasting techniques, or human relation skills.
Methods of Training There are broadly two types of training methods as shown in Table
The selection of training methods for a particular training programme depends upon whichever
method that effectively conveys the contents of training.
Supervision and Motivation
Through supervision the sales force is directed to perform the selling job in accordance with
marketing objectives and sales policies of the company. Each sales supervisor or manager has a
supervisory responsibility for the people who report directly to him or her. The responsibilities of the
sales supervisor includes (a) communicating and implementing company policies and strategies; (b)
counseling on problems and deficiencies of sales force; (c) establishing standards of performance,
both through formal setting of goals or targets and setting as example for others to follow; (d)
creating a favorable work environment and working relationship with salesperson; (e) continuous
training and development of sales reps: and (f) clarifying the responsibilities or expectations clearly
to the sales people.
The unique feature with respect to field salespersons is that most of the time they are alone in
the, field, outside the presence of direct supervision. Because of their physical isolation from
supervisors and colleagues. sales reps experience fluctuations in their morale and motivation,
from low 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 Churchill, Ford and Walker on "organizational climate and jobsatisfaction of sales persons", has brought out the following important conclusions.
1 Industrial salesperson's job satisfaction improves by close supervision. This is because the sales
reps feel that through close supervision they understand their jobs and the company policies
better.
2 Industrial sales reps are motivated if they are involved while deciding their targets or goals, and
also while determining company policies and procedures.
3 The job satisfaction/motivation is also related to the extent to which the sales rep understands
clearly what is expected of him and how to satisfy those expectations.
4 Frequency of contact or communication is not important, but the quality of relationship with the
supervisor is important.
5 Industrial sales reps are willing to accept direction and authority from a number of departments
in the company. This finding is consistent with the nature of industrial selling but contrary to
a commonly accepted notion of the importance of unity in command.
The above findings are important in understanding the nature of industrial sales force
motivation. For 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 views or opinions, trust the subordinates, understand the individual differences and
peculiarities, encourage development of personal friendship in workplace, recognize and reward
good work, and set a good example for others to follow.
Developing Sales Force
Presently, the challenge for a sales manager is to balance the company's goals of sales, profits,
and receivable collections with salespersons' need of job security and financially rewarding
work. The sales manager must be skilled in human relations (or be people oriented) and also be
task-oriented. The task-oriented sales manager shows concern for achievement of sales, profits,
payment collection, and other goals of the organization. The people-oriented sales manager
shows concern for sales people and develops them.
Blake and Mouton Grid for Managerial Styles There are various styles of day-to-day functioning
of managers, one among them being the Blake and Mouton grid for managerial style, which was
developed in early 1980s
1. Impoverished Management: The first style (1, 1) is the impoverished management. This type
of manager likes to keep the sales people in dark. He/she does not communicate to sales
people the expectation of the management, what tasks are to be performed, and how to
achieve the goals. The manager does not show any concern for the sales people or make any
efforts to develop them.
2. Country club Management: The country club management as shown in grid at 1.9 is one in
which the managerial style shows a great concern for the sales people by talking and building
a good rapport with them, and keeping them well informed about the goals to be achieved.
However this style is not task-oriented.
3. Task Management (9, 1): This manager has an authoritarian style. The manager is a real
task-master, asking salespersons to perform a lot of sales activities and paper work. However,
he or she does not show any concern for the needs of sales people.
4. Team Management (9,9): This is the ideal style where manager shows not only a strong
concern for the sales people but also is task oriented. This managerial style involves sales
people in goal setting and allows them to plan their sales activities. Here, the manager
communicates with sales people about the company's goals, the tasks to be performed, and
how to perform the tasks. The manager balances the company's goals and the needs of the
sales people.
5. Middle of the Road: Adequate organization performance is possible through balancing the
necessity to get out work while maintaining morale of people at a satisfactory level. This has
been shown in the grid at 5.5. The leaders of this style have medium concern for both people
and task and try to maintain a balance in the two.
The managerial grid implies that the most desirable leader behavior is team management (9.9) in
which the leader has high concern for production as well as task oriented. The managerial grid is
useful for identifying various combinations of leadership styles. But it is unable to point out the
factors which lead the manager to such a style.
Task Oriented
Sales force Compensation:
A sales compensation plan has the following four 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 tax at higher salary levels.
Expense allowances 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 expenses
incurred by the salesperson.
The types of compensation plans available to a company are: (i) Straight salary, ii) Straight
commission, (iii) Combination of salary and perks, (iv) Combination of salary and commission,
and (v) Combination of salary, perks, and commission.
Evaluation and Control
One 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 (weekly,
monthly, quarterly, and yearly), (b) evaluating or examining the actual performances with the
goals or targets, and(c) determining if the goals are being achieved. Controlling includes
identifying the problems (if goals are not being achieved) and taking corrective actions to
achieve the goals. Thus evaluation is backward-looking but control is forward-looking.
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 analysis (i.e.
computerized statements on actual sales against goals by salespersons, branches, regions, and
national levels); sales call reports (i.e. giving information about customer-calls planned, outcome
of actual visits, and progress on various activities); customers' letters or complaints; market
surveys, and so on.
Types of Evaluation The sales managers use two types of evaluation to measure the
performance of sales force. These are: (i) Quantitative (or outcome-based), and (ii) Qualitative
(or behavior-based). While determining quantitative measures, the sales management should
focus on important performance variables and ignore other non-important parameters. Some of
the important variables are: (a) comparison of actual sales performance (product-wise) with sales
quotas or goals; (b) sales expenses to total sales in per cent, number of new customers developed,
and an increase in market share. The selection of the important variables should depend on the
marketing objectives of a company. The qualitative (or behavior-based) measures include
customer satisfaction, product knowledge, sales presentations, negotiating skills, and team
orientation. Each company should decide which variables or measures are most useful to it.
Recent studies have indicated that companies should have a balanced approach by emphasizing
both quantitative and qualitative evaluation, to achieve desired sales or marketing results. Once a
company decides on the most-useful evaluation variables, it should communicate the same to the
sales people through job description or separately, in writing. The salespersons can then make
efforts to improve their performance.
Ex: Management by Objectives (MBO) is an effective control tool
SALES FORCE DEPLOYMENT:

While discussing the management of sales force, one important task of deployment of sales force
remained to be discussed. Planning for sales force deployment involves the following decisions:
1. Setting up or revising sales territories.
2. Determining size of sales force.
3. Allocating sales force to the sales territories and customers.
Setting up Sales Territories
This includes the following steps. The sales manager should first select a basic geographic
control unit, such as an industrial city or town (e.g. Mumbai, Ahmedabad, Chennai, Bangalore,
Delhi, Kolkata).
The second step is to determine the sales potential of each geographic control unit by conducting
a market survey. The sales manager should then combine the geographic control units into
approximate sales territories. The last step is to make adjustments for coverage difficulty and
then finalize the sales territories.
For example, Hosur industrial town is nearer to Bangalore (and hence can be easily covered
from Bangalore) compared to Chennai, although Hosur is a part of Tamil Nadu. Hosur, therefore,
gets included in Bangalore sales territory.
Determining Size of Sales Force

This is an important decision because increasing the number of sales reps will increase the
company sales and costs. The method used for determining sales force size is the workload
approach, consisting of the following steps.
1. Based on the sales potential of customers, classify them into A, B, and C classes.
2. Decide how many sales calls are desirable for each class of customer per year.
3. Calculate the total sales calls per year by multiplying number of customers in each class (step
1) by corresponding (desirable) sales calls (step 2).
4. Estimate the average number of calls a salesperson can make per year.
5. Number of salespersons required is determined by dividing the total sales calls per year
(step3) by the average number of calls a salesperson can make per year (step 4).
Example:
An industrial firm estimates that there are 50 'A' class, 100 'B' class, and 350 C' class customers
on all India basis, inclusive of all the 15 sales territories.
The company decides that desired level of sales calls for Class 'A' customers should be 48 per
year, for 'B' customers 24 per year, and for class C' customers 12 per year. The total sales calls
per year is (50x 48 + 100x 24 + 350 x 12) equal to 9000. The sales manager estimates that
average sales rep can make 450 calls a year. The number of sales persons (i.e. size of sales force)
is (9000 divided by 450) equal to 20.
Allocating Sales Force to the Sales Territories and Customers
One of the approaches followed in allocating or assigning salespersons to specific customers (or
sales territories) is to use the judgment. The other approach is to consider two factors: (i) Relate
abilities of sales persons to sales potential of territories, and customers, and (ii) Relate sales rep's
education, experience and training to customer characteristics, language, and ethnic influences.
Sales Resource Opportunity Grid:
This is another useful approach or method used for allocation of sales force to various customers
or sales territories. Here, customers or sales territories are represented by planning and control
units (PCUs), which are served by the industrial firm. Sales resources include sales calls, number
of salespersons, and percentage of salesperson's time.
Sales Resource Opportunity Grid

PCU opportunity is the total sales potential of each PCU for all suppliers, and sales resource
strength is the competitive advantage or strength of the company within the PCU. By positioning
all PCUs on the grid, the sales manager can allocate or assign high level of opportunity and
moderate or low levels of sales resources to moderate or low level of PCU opportunity. The grid
helps the sales manager to revise the size of the sales force, sales territories, and allocation of
sales calls, depending on the opportunity of the PCUs, and sales resources strength of the firm.
Another simple and practical approach to allocation of sales force to industrial customers with
differing sales potential is ABC Analysis of industrial customers. A real life example will help in
understanding the usefulness and result-oriented nature of this approach.
ABC Analysis of Industrial Customers-An Example
An area sales manager, western region, in a large private sector organisation was transferred
from Mumbai (western) regional office to Kolkata (eastern) regional office with a short brief-"to
set right eastern region sales performance". He was promoted as regional marketing managereast and was responsible for the field selling operations in the eastern region, to industrial
customers consisting of OEMs and users of five product-groups of electrical engineering.
Since the regional marketing manager was new to the customers and the sales force of the
eastern region consisting of branch managers, marketing executives and sales engineers, he
decided to apply the technique of ABC analysis to the industrial customers. The main objective
was to improve the sales performance by optimizing the resources of manpower, time, and
money. The methodology adopted was as follows:
1. Each sales engineer was assigned the responsibility to contact about 10-15 industrial customers
within the specific territory of eastern region so that all the existing or known customers are
covered.
2. The sales force was asked to collect the information from the customers on what were the total
requirements (i.e. sales potential) of the company's products for the current year and the
subsequent year.
3. The quantity requirements of the customers for the various products were converted to the value
requirements by multiplying quantity with average unit selling price of the products. The total sales
potential of each customer was arrived at by adding the individual values of the products required.
4. The sales potential values of all the customers were then put in descending order, starting with the highest
potential on the top of the list. A total was then made by adding the potential of all the customers.
5. The top few customers (typically 10 percent of the total number of customers), whose sales
potential values together accounted for 70 per cent of the total sales potential were called "A"
customers. The next group of customers (generally, 20percentofthe total number of customers),
whose sales potential values together accounted for 20 per cent of the total sales potential, were
called "B" customers. The balance group of customers (generally 70 per cent of the total number
of customers) whose sales potential values together was 10 percent of the total potential, were
called "C customers
6. Each member of the sales team was asked to prepare a customer visit plan at the beginning of
every month with the following guidelines. "A" customer to be visited at least four times a
month (if the customer was in the same city where the salesperson was located) or at least two
times a month (if the customer was located outstation); "B" customer was to be visited at least
two times a month (if the customer was located in the same city) or once a month (for outstation
customer); "C" customer was to be visited once a month (if in the same city) or once in two
months (for outstation customer).
7. The regional marketing manager, branch manager, and marketing executives also periodically
visited the "A" and "B" customers along with the sales engineers, based on the visit plans.
The result of applying this simple technique was dramatic. In the first year of eastern region
operations, the growth in sales was 113 per cent over the previous year; in the second year, the
growth was 69 per cent; in the third year the growth was 47 per cent, and in the fourth year the
growth was 33 per cent, against the overall company's growth (of all regions) of between 15 per
cent and 20 per cent per year.
THE SELLING PROCESS:

An industrial sales process has distinct characteristics. The following are the major steps
involved in the selling process. .
Prospecting It means identifying or searching new or potential customers. Industrial marketers
look for new customers to achieve the objectives of growth in sales and market share. There are
many sources used in industrial selling for identifying prospects. These include (a)
telemarketing, (b) references from the existing customers, (c) direct mail, (d) trade shows, (e)
print media advertisements, and (f) electronic media.
Qualifying The potential customers need to be screened through certain qualifying criteria.
Some of the criteria used include volume of expected business (or sales), location, special
requirements, regularity of business, and financial strength. Recently, specialized software
packages are developed to qualify or classify prospective customers. Some of these software
packages are capable of identifying market trends, locating and developing profitable markets,
and improving the accuracy of sales forecasting.
Preparation Before making a sales presentation, the industrial sales person should obtain a lot of
information about the prospective company. Information, such as the buying firms needs,
problems, buying process, key members of buying centre and their personal characteristics, will
help to plan the sales strategy for the potential customer. Industrial sales people make several
preliminary personal visits on prospective customers to obtain the required information. In
industrial selling, cumulative efforts of several calls result in securing orders and developing
contacts or rapport with key buying-centre members.
Presentation There are different methods or approaches followed for sales presentations. The
old method is the canned presentation, which is a memorized sales talk covering the main points,
used for telephone selling or door-to-door selling. The need-satisfaction method starts with
finding out the real needs or problems of the buying firm. The sales person tries to solve the
problems or meets the customer needs by using his/her company's products and services. The
focus in successful sales presentations should be customer benefits, (such as cost or time saving,
more profit for the buyer rather than product features which are indicated as evidence of the
benefits). It is likely that several sales presentations are to be made to the different members of
the buying centre before a sale can be made. Negotiating skills are required by sales persons in
areas like pricing, payment terms, delivery dates, and product specifications before orders are
finalized.
Closing Some sales people lack confidence or feel uncomfortable to close the sales (i.e. ask for
the order). Sales people should recognize closing signs from the customers, such as comments,
questions, or physical actions. Sales people can use one of the several closing techniques. They
can ask for the order, ask the buyer to make a choice between several models or sizes, or indicate
what the customer will lose if the order is not placed now. The sales rep may also offer a special
discount, price, or credit terms as specific inducements to close the sale. Some sales people do
not use any techniques to close the sales. They believe that the customer should be allowed to
make the final decision to buy or not to buy. "If all the previous steps in selling process are done
effectively, the customer will buy the product or the service," as per the customer focused
approach followed by some sales people.
Post-Sales Service Even after the sale is closed and the purchase order is released, the industrial
salesperson continues to work with the customer in areas such as delivery of products,
installation, training, after sales service, rejections or returns, payments, and concessional salestax forms. This gives an opportunity to the salesperson to develop more personal relationships
with key buying-centre members.
B2B OF E-COMMERCE
We have defined business-to-business (82B) marketing in Chapter I as marketing of products and
services to business organisations. Business-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). E-commerce is generally divided into three
segments: business-to-consumer (B2C), consumer-to-consumer (C2C), and business-to-business
(B2B). Here we focus on conducting business-to-business marketing through e-commerce.
What is E-Commerce?
E-commerce or electronic commerce is broadly defined as a modern business methodology that
addresses the needs of organizations and consumers to cut costs, improve the quality of goods
and services, and increase the speed of service. It is also defined as the process of using digital
technology for transmitting information between organizations. The term e-commerce is more
commonly associated with information on buying and selling of products and services via
computer networks.
Conducting business-to-business marketing through e-commerce represents a basic shift or
change in the manner firms are interacting with buyers and suppliers.
IMPORTANT PARTS OF E-COMMERCE
The Internet, World Wide Web (WWW), Intranets, and Extranets are the important elements or
component parts' of e-commerce.

Internet The most important element that supports e-commerce is the Internet. The system of
"interconnected networks of computers is called the internet. It started in '1960, in a US
Department of Defense project, by linking together mainframe computers to create a network for
transmission of data between military computers at different sites. Later, other government
networks were also connected to the original network, and the system became the Internet.
World Wide Web (WWW) It is the most popular Internet "navigation tool" for finding and
getting information in a multimedia forrnat, including video, audio, and colour graphics. Many
organisations, who have decided to move into e-commerce, have setup their own websites. The
important factors that should be kept mind while setting up a web site is that the site should be
attractive on first viewing and interesting enough for repeat visits.
Intranets: These are the internal internets of companies. A firm creates intranet for company
employees to communicate with one another, short databases, view restricted information and
conduct training programs for company employees.
Extranets: These are links that allow business partners like customers, distributors and suppliers
to connect to a companys internal networks (or intranets). Business partners are given a unique
password to access the firms intranet. The purpose is to allow information exchange so as to
improve business processes.
The e-commerce revolution is taking place in India too with e-business paper, educational portal
for youth (www.edurite.com) and many business firms adopting e-commerce for business-tobusiness marketing. One such example from Indian business situation is Tata BP which adopted
e-commerce to market their solar products by establishing a web site. The company's marketing
executives felt that marketing solar products to industrial customers through the Internet was
easier, less time consuming, and less costly, compared to the traditional methods of conducting
business.
Let us compare the traditional (old) order-taking process and the new (web-based online) ordertaking process:
Traditional Order Taking Process This typically involves the following steps
The company's industrial (or business) customer sends the purchase order by fax. The
order 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
explain the problems. With great difficulty he makes the customer issue an amendment to
the purchase order indicating change in product specifications, prices, and delivery
period.
The sales clerk types the work order for the production department as a part of order
processing system. He makes mistakes!
Mistakes made in the work order show up at the final inspection before dispatch. The
sales rep again spends time with the customer requesting amendment to delivery time.
The frustrated customer decides to cancel the order.
New (Web-based online) Order-taking Process: This involves the following steps
The customer accesses the company's web site at any convenient time.
The customer looks at the product specifications, prices, and availability from the
company's current online catalogue and selects the product. If complex technical
specifications are involved, the supplier company presents a simple interface that offers
valid combinations of components.
The purchase order is checked online by the supplier company including a credit
approval before the customer releases it. Once the order is released by the customer, the
order confirmation from the supplier company is immediate.
After the placement of the order, the customer can monitor the delivery status of the order
on the computer.
Compared to the traditional method, the customer in the new process spends only half the time in
placing the order. The customer enjoys ordering through e-commerce because it is easier and
faster. The supplier firm likes the new method because the order processing costs are 50 to 75 per
cent less than those orders processed through traditional method.

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has greater product knowledge

makes a more enthusiastic presentation

has more ability to clinch the order

pays closer attention to ensuring customers receive good service

asks questions and listens more carefully

has a superior branch/regional organization

has better contacts/friendships within the industry

answers objections better

makes a better initial impression

can attain more interviews

Sales Force Organization and Management:

Combination of Geographic and Product Specialization Sales Organization

Recruiting and selecting

Controlling the sales force

Recruitment and Selection of Industrial Salespersons

Training Industrial Salespersons

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

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

Expense allowances or reimbursements include travelling, lodging, boarding, and

Ex: Management by Objectives (MBO) is an effective control tool

SALES FORCE DEPLOYMENT:

Determining Size of Sales Force

Sales Resource Opportunity Grid

THE SELLING PROCESS:

component parts' of e-commerce.

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