Sales organization is a
department in company within logistics that designs the company as per the
sales requirements. Sales organization is held responsible for the sales and
distribution of goods and services.
The selling unit is
represented as a legal unit. The salesperson plays a crucial role in the sales
company because he/she is answerable for many activities in the company. Some
of those activities can be listed below.
● Setting selling and profit
objectives − The salesperson is involved in setting
the objectives of selling the product and generating the profit.
● Marketing policies − The salesperson has to set the
marketing policies and plan accordingly.
● Designing personal selling
strategies − They also
have to set up their own strategy to generate sales and to target and retain
the customers.
They co-ordinate with other
departments as well, for example, advertising, sales promotion and
distribution, to chalk out a sales programme, which helps in generating sales.
It also helps to find any loop holes and fix the issues.
Let us now understand the characteristics of a sales organization −
● A sales organization subsists of a group
of people who handle different activities like distribution, advertising
selling etc.
● It works to achieve the sales objectives,
like increasing sales volume and maximizing profit and market share of the
company.
● It specifies the responsibilities and
duties of the salesperson and also co-ordinates their activities with other
departments.
● It helps to develop a relationship with
the other personnel in the organization by setting up a sales programme.
● General Sales Manager is the head of the
sales organization.
Thus, sales organizations help
the company in achieving targets and building coordination with sales
personnel. Now we shall see the importance of sales organization.
Let us now understand the
significance of sales
organization.
The sales of the company
depend on the sales anticipation. The sales will increase only when the
consumer purchases the goods or services. Therefore, the company has to plan
the sales according to the consumer need and want, meaning where they want the
product, what they want etc. The planning and development is done accordingly
to satisfy the need of consumer.
The demand of the product is
created to lead to sell in the market. When a product is manufactured in the
factory, it is not sold automatically. Salespersons push the product to
consumers. But even they cannot force the consumer to buy the product. The sale
depends on the consumer’s need and perception. This need is created by the
selling skills, promotions through advertisements, etc., which in turn help in
creating demand in market.
This is an important step
where the salesperson has to answer the calls and queries of the customers,
receive orders and make the product ready as per the demand of consumers.
Finally, the products are
packed and dispatched as per the expectation of consumer; all these are
imperative and effective tasks.
Sales cannot always be done
for cash. Bulk sales are made on credit. It’s very difficult for an
organization to perform only on the basis of cash sales; in this competitive
market, credit sales play a crucial role.
After the credit sales have
been done, the organization has to collect dues. It is a very challenging task
as the salesperson has to retain the business and still get the task done.
Every organization wants best
sales personnel to enhance the sales. This depends on training. The
organization has to select, train, motivate, monitor and control its sales
personnel. Here the company has to make an investment in sales personal.
In summary, we can conclude
that there is an immense impact of sales organization on a company.
An organization is designed in a manner where we can identify the work or activity performed by an individual or group. The roles and responsibilities are defined, which helps in building relationships to enable people to work effectively and efficiently. This helps in achieving the goals of the organization. The following are the four types of sales organizations −
Functional type of
organization is divided and classified on the basis of the functions performed.
The following illustration shows a functional type organization.
This depicts the functional
type organization. We will now discuss the advantages and disadvantages of this
type.
The following are the advantages of a functional type of organization −
● Specialization − In the figure, we can see the division
has been made according to the functions. By this, we can expect each function
is specialized in its activity.
● Flexibility − The number of departments can be added
or removed as per the requirements.
● Decision making − Decisions can be made quickly as the
person would be an expert in his department and will be aware of the impact of
his decision.
● Co-ordination − The co-ordination between functions can
be done easily
Let us now understand the disadvantages associated with functional type of organization −
● Due Attention − Each department is only specialized in
their own activity; hence there is no attention focused on the product.
● Delay − There is delay in making decisions
because of co-ordination between all the departments.
● Co-ordination − From the figure, we can see that all
departments report to the General Manager. Therefore, .in peak times, it may
become difficult for the General Manager to maintain co-ordination between the
departments.
● Conflicts − There is always conflict between
departments due to being specialized only in one core area and lack of cross
training.
In general, functional type of
organization is suitable where the organization structure is small
having limited products.
This type of division is made
according to the products. The organization divides the departments based on
the products.
The following illustration
shows the layout of the product type.
● Due Attention − Due to the division according to the
product, each product gets required attention.
● Specialization − The salesperson is specialized in
specific products; hence he/she has an advantage in handling the department.
● Responsibility − The responsibility can be easily
assigned to a salesperson because all the salespersons are specialized in their
product/ department and are well acquainted with the product, which helps them
to handle customers smoothly.
● Co-ordination − There would be problem of co-ordination
between two product departments.
● Selling Cost − The selling cost of product may
increase due to the division according to the products.
● Operational Cost − Operational cost may also increase due to
each product being treated differently.
● Freedom − There is no cap on the freedom enjoyed by
employees because the salesperson is specialized only on his/her
product/department and will not be able to handle other product/department.
Product type is suitable in the following cases −
● Where the organization has many products
and it can divide the departments according to the products.
● For organizations selling highly priced
products.
● When the products of an organization are
more technical oriented, the organization can divide the departments according
to the products as the salesperson will be efficient and effective to discuss
the product with the customer in an effective way.
According to consumer
specialization, the departments are divided on the basis of the costumers to
whom the products are offered. Most of the time, market appearance plays an
important role in knowing the consumer needs and to divide the departments
accordingly.
The following illustration
shows the layout of the consumer specialization type.
● Consumer − Here the division is according to
consumers, so each consumer gets due attention.
● Consumer satisfaction − Consumer satisfaction is the first
priority; as maximum services are provided to the consumer.
● Planning and policies − The sales planning is done in a proper
way and policies are designed keeping each category in focus to achieve the
goal.
● Brand − The organization is able to fulfil
consumer needs and wants and create its own brand to gain market share.
● Expenses − The expenses for the company to build
and plan according to consumer and develop the market are huge.
● Sales activities − It becomes difficult for the sales
manager to co-ordinate the sales activities of salesperson.
● Investments − In this case of specialization, the
investments are high and sometimes repeated, which in turn, is loss to the
company.
Consumer type is suitable in the following cases −
● When there is a large number of consumers
who are looking out for special services.
● The costumer is ready to pay for the
services offered. Here, the target is mostly premier customers.
In this type of organization,
departments are divided accord ing to the
attributes of areas. They can also be divided geographically. The following
illustration shows the layout of the area type organization.
● Products − Customers can be served with the latest
products and customized products.
● Transport cost − Transport cost can be reduced because the
division has been made according to areas.
● Customer service − Company can provide better customer
services as the division is made according to area. Thus, the company can
understand the customer psychology and perception better.
● Sales performance − The sales performance can be compared
according to zones and steps can be taken to improve.
● Costly − It is costly as compared to other types
and increases expenses of the company.
● Markets − It becomes difficult for co-ordination
for the General Manager for different markets.
● Conflicts − There may be conflicts regarding resource
allocation between zones.
The area type of organization is suitable in the following cases −
● When the area or the territory for market
is very large.
● Where the market is different based on
zone.
● Where the product is differentiated
depending on zone.
● Where the sales volumes are high and
generate more revenues.