Sales and Distribution Management

Q 1 What is a sales territory? What are the reasons for establishing a sales territory? What
factors do firms consider while designing a sales territory?

A sales territory is a geographical area containing present and potential customers who can be
effectively and economically served by a single salesman, branch dealer or distributor. A sales
territory is a composed of a group of customers or a geographic area assigned to a salesperson.
The objectives could be one or many of the following: To facilitate effective sales planning, to
cover & manage the entire market, to assign salesman responsibility, to reduce the selling costs
etc.

Reasons for such an exercise:

• To obtain thorough coverage of the market: Many companies do not consider sales
territory synchronization an important part of the sales activity. All efforts boil down to
a wasted attempt to sell. Thus for proper market coverage, an intelligent sales manager
should match up the workforce and efforts in direct relation to the sales capacity in a
particular area in order to keep up with the competition.

• To establish a salesperson’s responsibility: Once the strengths and weaknesses of a

company in varying territories are exposed, the company could now pinpoint the
responsibility of individual sales personnel, or team for ineffective or effective results.

• Synergetic use of personal selling and advertising: Specific customers are handed as a
responsibility to specific salesmen, thus they are well versed with what techniques and
tantrums to be used on what areas. Also the ad-expenses are well looked after if the
efforts are directed on more effect-inducing areas.

• To reduce sales expense: Cost of travelling, lodging, real cost of efforts and time used,
time spent on travelling etc minimizes if the sales people know what they are doing.
Blindfolded action will, more often than not, end up as a wasted effort.

• To benefit salespeople’s morale and the company: The chances of conflict, which is a
permanent feature where sales territories aren’t used, do not surface as frequently.
Sales people are more divergent towards results, when they know what to expect and
also what is expected of others with respect to their performance. Of course, some
regions are high sales areas and others are not. That should not diverge on the morale
of the sales team. Thus all sales activity is just, and more importantly effective on action.
Factors to be kept in mind while Designing/Allocating sales territories

Even distribution coverage/ uniform coverage: Such an effort saves itself from getting
shredded in the end, by taking care that the essential activity of designing the territories
in an intelligent and unobtrusive way of doing things in effect. Each territory should
have an exclusive reason for existence which is valid and intelligently driven to, not on
basis of emotions and intuitions of the manager.

Elimination of duplication of activities: Unobtrusive sales territory that doesn’t duplicate

the efforts of salesmen finally ending in conflict rather than solving them, becomes not
just a logical step but also an important one.

Equal opportunity: Without giving a just and equitable allocation of territory to

salesmen, the whole purpose gets defeated. Personal bias, conflict can raise hell over
the whole purpose of raising the morale and confidence of the team.

Flexibility in allocation: The territories should of course, be flexible and tolerant of

change in shifts and experimentation. Sales people being a dynamic force, has and
needs to be changes and experimented to deliver the right setting.

Controllable: The activity once put into place, should be capable and worthy of being
controlled.

Capable of comparative study: Territories cannot be gauged if could not be subjected to

comparison. Such comparison can make the manager optimize performance, raise
employee morale and set standards.

Q 2 What are the sources of power and conflict in a distribution channel? How can these
conflicts be resolved?

Q 3 What are the factors which determine the allocation of specific sales and distribution task
between company’s sales organization and channels of distribution taking the example of
shampoo which is set for a national launch by an established market leader. Illustrate your
answer.

Q 4 What do you understand by logistics management? What are the key decision areas?
Study the logistics system of any Indian company.