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Sales Territory

Sales territories are defined as groups of present and potential customers assigned to salespeople or organizations. They ensure better market coverage and allow for performance evaluation. The size and design of territories is based on factors like the product, transportation, population density, and market potential. Territories are allocated by selecting basic geographical units, choosing a starting point, combining adjacent units, and balancing workload potential between territories. The boundaries may then be modified for optimal assignments.

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Baishali Das
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9 views

Sales Territory

Sales territories are defined as groups of present and potential customers assigned to salespeople or organizations. They ensure better market coverage and allow for performance evaluation. The size and design of territories is based on factors like the product, transportation, population density, and market potential. Territories are allocated by selecting basic geographical units, choosing a starting point, combining adjacent units, and balancing workload potential between territories. The boundaries may then be modified for optimal assignments.

Uploaded by

Baishali Das
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Sales Territory

• A sales territory is defined as a group of present


and potential customers assigned to an individual
salesperson, a group of salesperson, a branch, a
dealer, a distributor, or a marketing organisation
at a given period of time.
• For a firm profitable sales territory is one which
has a number of potential customers that are
willing to buy the category of products sold under
the firm’s brand name.
Advantages
• It ensures better market coverage, effective
utilisation of sales force and efficient distribution
of workload among salespeople.
• It offers convenient way to evaluate the
performance of salespeople, control over the
direct and indirect costs of the sales function and
optimum utilisation of the sales time by
salespeople.
• The designing of sales territory enhances
employee’s morale and helps manager control and
monitor sales and evaluate programs.
Size of Sales Territory
• Nature & Demand of the product, mode of
physical distribution, the selling process,
transportation & communication facilities in
the overall market and territory.
• Other factors: Govt. regulations, Density of
population and population spread within the
territory, market potential and growth rates.
Allocation of Sales Territories
• A sales manager has to be very careful while selecting
the size of the territory and deciding upon the design.
• The optimum size of the territory should be allocated
to every sales person and there should be a uniform
distribution pattern in the form of market coverage.
• There should be an attempt to avoid duplication of
efforts by a salesperson in the territory.
• The allocation should be made in such a way that the
performance evaluation is made on the basis of
opportunities provided.
Designing a Sales Territory
• Various factors such as
• size of the organisation,
• level of competition in each product category,
• number and quality level of the products in
the portfolio,
• type and quality of the service and customer
support,
• quality of salesperson serving in the territory.
Select the basic geographical
control units
Factors influencing the
modifications of
territory Decide on the criteria for
• Mergers allocation
• Market
consolidation
• Split in division Decide on the starting point
• Sales force
Turnover
• Customer
relocations Combine control units
• PLC change adjacent to starting point Modify territorial
• Product line change boundaries to
balance workload
Compare territories on potential
allocation criteria and
conduct workload analysis

Assign sales force to new


territories
Basic Geographical Control Units
• Selection of appropriate control units that can be
combined to form sales territories.
• The units so selected should be homogenous and of
reasonable size to achieve economies of scale.
• These basic units can be a country, state, district,
division or block with clear boundaries.
• The selection of GCU will be effective when it is based
on trading area.
• A trading area is a geographical area concentrated
near a city where there are many retailers and
wholesalers that furnish a high level of sale.
Criteria for selection of GCU
• The task is to analyse the consumer
characteristics, buying patterns, market share
data and the competitive position of the firm
in order to identify sales potential of each
control unit.
• Three key factors: Current customers,
potential customers’ size, geographic size in
square miles to be covered by salespeople.
Starting Point
• After ascertaining the sales potential in
control units, a sales manger should form
tentative sales territories as the starting point
by selecting geographical locations.
• A common choice is the location point (often
the residence of salesperson).
• Another starting point is the trading area.
Control units adjacent to starting point
• Once the decision about the starting point is
taken, the sales manager then combine
control units to build up the market.
Allocation criteria & workload analysis
• To compare the territories on other relevant
criteria such as customers per sq mile and
support retail outlets per sq mile.
• The next is to determine how much work is
required to cover each territory on the basis of
sales potential and workload.
New Territories

• Suitable salespeople are appointed for each


territory and the exact responsibilities are
assigned.

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