Management of SalesTerritory 265

CASESTUDY 7.1 _

The Territorial Design of German Remedies

MrRamachandran is the General Manager of German people for adequate service, while territory II represents
Remedies.He is evaluating two sales territories, each more sales potential but requires 265 salespeople for
composedof five trading areas with different market service. Both the territories should be adjusted to
potential(see Table 7.2). Territory 1 requires 60 sales- make the potential more uniform. If they are not ad-
justed, this may cause a significant problem for Mr
TABLE 7.2 Trading Area Analysis
Ramachandran. For example, salespeople in territory I
Trading Present per Recommended will be more frustrated at the lack of opportunity.
area cent of time per cent 0/ The company is also at a loss because too much of a
(TA) spent serving time to spend selling effort is spent in territory 1. The salesperson in
the TA serving the TA territory II maybe able to make his quota by calling on
Territory I 1 40 10 a limited number of customers in each trading area. As
2 10 25 a result, the company is also losing sales, while at the
3 15 5 same time the salespeople have little incentive to develop
4 30 10 marginal customers, search for new customers, or seek
5 15 10 out new product applications. Mr Ramachandran has
Total 100 60 only few options to adjust the territories: give equal
Territory II 6 20 70
assignments to the salespeople, reassign trading areas
into more equal areas, and realign the level of service
7 15 50
expectations.
8 20 85
9 20 35 Question
10 25 25 What should Mr Ramachandran do?
Total 100 265

CASESTUDY 7.2 _

Maruti Udyog Limited: Sales and Spares

MrRaghuvir Singh, Divisional Sales Manager, Car Parts

Territory Sales- Sales- Sales- Sales-
andAccessory Sales Division, Maruti Udyog Limted, is
potential person person person person
considering the reassignment of new sales territories to (units) A B C 0
his salespeople. He has received the following market
North 160,000 0.7 1.1 0.85 1
information from the corporate sales department about
territorypotential and sales performance. South 250,000 1.5 1.25 1.3 1
Question East 200,000 1 1.3 0.68 1
Which salesperson should be assigned to which sales
West 130,000 0.8 1 1.32 0.75
territoryand why?
266 Sales and Distribution Management
Blow Plast India Limited: Eastern Zone Sales
Blow Plast India Limited, the market leader in the
moulded luggage category in India, has a wide network
covering major cities and state capitals in India. Its sales
network is well supported by a strong dealer network. It
faces competition from few national and multinational
players in the Indian market. Blow Plast was also selling
moulded plastic to manufacturers who in turn were
making consumer products such as buckets, toys, and
other household accessories and selling to the final con-
sumers. This arrangement was done in order to utilize
thy company's plant to the optimum level. Blow Plast
has traditionally been a strong brand in Indian market
selling finished goods through franchising retail outlets
for exclusive products such as trolleys, luggage carriers,
and make-up boxes.
Mr Reetinder Wadhwani, vice president (sales),
Blow Plast India Limited, was considering how to reor-
ganize his east zone sales (see Table 7.3). This area was
divided into two sales territories with one sales man-
ager, Saumyaranjan, covering the southern half of
the territory and another sales manager, Subhomaya,
covering the northern territory. The southern territory
covers Andhra Pradesh, Orissa, and a part of south
Bihar, whereas the northern territory covers the states
of West Bengal, north Bihar, Assam, Tripura, and all
other north-eastern states.
However, market growth suggested that they needed
four salespeople. Company policy stated that when
sales in one area exceeded ~2,5,OO,OOO per territory,
the territory needed to be divided into smaller seg-
ments. Sales in this territory was currently running at
~7,5,OO,OOO per year.
Blow Plast started its business as a manufacturer of
moulded plastic for household usage and subsequently
shifted to the moulded luggage segment. However, they
now manufacture moulded briefcases, beauty cases,
and furniture and luggage carriers for large families
and executives. The sales force was paid a salary plus an
annual bonus based on the performance of the territory
and the achievement of the sales quota for that territory.
Travel expenses according to the company norms were
reimbursed to the sale staff and each sales officer was
supplied a company car for travel.
Mr Reetinder wanted to create four compact terri-
tories in this part of the country that would be similar in
terms of sales potential and workload. He felt that equal
opportunity territories will boost morale and make it
easier to compare the performance of every salesperson
in a given period of time. Travelling expenses would be
lowered if the territories were designed to minimize the
distance from the salesperson's location to the various
parts of the market.
But the problem of locating the salespeople at the
home state would make things complex as the majority
of the sales happened in few selected cities of the area.
The north-east was well spread with lesser market po-
tential in certain states of this region. States seemed
to be the most logical control unit for building new
territories but the size and market potential of the states
in the territory were very diverse. Mr Reetinder could
pull out some statistics for the area from secondary
sources supplied to him from the corporate office. He
obtained the location of each major city centre from
maps.
As Mr Reetinder looked over the available figures he
wondered what factors would make the best allocation
criteria. He had recently procured a database ex-
plaining the territorial design programme of Marico
Industries in the same area. Perhaps it was time to
run the programme on which this particular database
was designed for his area. He had only a few weeks
to decide on the four new territories before presenting
this plan to the sales officer's conference to be held in
Puri, Orrisa.
Question
Mr Reetinder Wadhwani has to decide about the
territories that he would have to allocate to two sales
managers, Saumyaranjan and Subhomaya. How would
he go about this task? Discuss.
 Management of Sales Territory 267

TABLE 7.3 Selected Statistics for the Eastern Zone Market

Number Number Value added Power Number of Eastern Square

of retail offirms by firms (in index eastern zone zone sales miles
City stores lakhs) (BPI) customers (000'5)

Andhra Pradesh
Hyderabad 2180 426 76 0.15 47 1230 876
Secunderabad 2359 570 43 0.176 54 245 998
Cuddapah 275 54 12 0.034 32 23 342
Guntur 305 46 21 0.029 24 21 236
Vijaywada 560 71 34 0.006 54 59 341
Vishakhapatnam 642 45 43 0.009 34 123 236
Nellore 298 45 34 0.004 10 98 245
Raichur 236 85 12 0.002 5 59 325
Mehboobnagar 327 34 34 0.004 10 87 431
, Khamam 342 65 41 0.0034 5 67 328
Orissa
Bhubaneswar 1786 673 69 0.11 97 760 450
Cuttack 678 98 54 0.09 43 435 345
Puri 321 43 37 0.005 23 46 351
Balasore 343 54 51 0.004 31 35 342
Bhadrak 254 24 19 0.003 10 43 237
Sambalpur 323 28 20 0.005 12 41 126
Bolangir 210 19 16 0.006 7 84 126
Rourkella 320 51 52 0.004 40 57 132
Berhampur 375 54 34 0.003 32 49 143
Koraput Jaipur 287 43 21 0.005 21 34 147
Bihar
Patna 1485 421 67 0.012 85 980 396
Gaya 567 76 43 0.005 32 657 282
Muzzafarpur 653 69 34 0.007 21 34 143
Kisanganj 453 54 52 0.006 32 48 154
Darbhanga 546 53 18 0.005 21 71 134
Samastipur 387 34 14 0.004 23 45 231
Bhagalpur 290 26 23 0.005 12 34 301
Munger 267 53 31 0.003 21 29 231
Biharsarif 321 41 16 0.002 9 28 127
Nawada 129 19 23 0.003 4 24 234
West Bengal
Kolkata 3752 689 179 0.179 85 1256 985
Burdwan 498 34 43 0.004 12 67 342
Haldia 459 76 61 0.005 32 65 321
Bankura 248 54 45 0.004 22 34 236
Barhampur 543 46 39 0.004 21 54 267

Contd
 268 Salesand Distribution Management

Table 7.3 Contd

Number Number Value added Power Number of Eastern Square

of retail offirms by firms (in index eastern zone zone sales miles
City stores lakhs) (BPI) customers (ODD's)
Darjeeling 231 43 34 0.003 12 45 311
Krishnanagar 654 71 76 0.006 25 43 452
Medinapur 659 85 51 0.006 32 56 341
Khadagpur 569 73 54 0.004 34 59 328
Balurghat 348 39 53 0.003 12 37 186
Assam
Guwahati 679 76 34 0.001 34 34 432
Dispur 562 82 24 0.001 32 45 231
Tezpur 342 48 27 0.001 16 27 195
Bangaigaon 187 19 19 0.001 5 18 184
Dibrugarh 438 \I 43 17 0.001 23 34 165
Kokrajhar 237 34 23 0.001 13 19 149
North-eastern states
Agartala 123 24 21 0.002 10 32 127
Aizwal 321 45 12 0.001 5 21 98
(
Imphal 541 38 11 0.001 2 23 76
Kohima 342 42 13 0.001 12 27 65
Itanagar 127 19 11 0.001 8 19 93

,'.

CASE STUDY 7.4 El::!!ii!:::Z::::::~~Z;:;::Z::l2!!!3!:i:~=~===~======::::!!::::!

Geometric Software

Geometric Software Solutions is a CMMI Level 5
company and the leading PLM services provider with
over 19 years of experience in CAD/CAM/CAE,
PDM, and MPM technologies. With creative people,
innovative technologies, and strong relationships with
market leaders, and its customers, Geometric realizes
product business value in a cost-effective manner. Pro-
viding PLM services through its global network of
partners such as Dassault Systernes, EDS, Matrixone,
and IBM. Geometric focuses on delivering customer
success by leveraging mutual strengths in local markets
worldwide.
Geometric offers services based on CATIA~,
ENOVIA~, DELMIATM,elvlatrix'", Team-center Enter-
prise (Metaphase)", Windchill'", and other leading
CAD/CAM/CAE/PDM software platforms. Expertise
in the best-of-breed PLM solutions, innovative deli-
very models, and a cost-effective services portfolio
makes Geometric the preferred partner for PLM. The
company is headquartered in Mumbai and has wholly
owned subsidiaries in the USA and Singapore. The
company also has a branch office in Germany. The
Singapore subsidiary, Geometric Software Solutions
Pvt. Ltd, has a branch office in Japan. The Geometric
scrip is traded on both the Bombay Stock Exchange
and the National Stock Exchange in India.
Geometric is known to be servicing some major
manufacturers (through partners) and a large number
of software original equipment manufacturers (OEMs)
and system integrators in the PLM industry. The com-
pany helps its customers to compete better and enables
them to offer a comprehensive and cost-effective PLM
service solution. Together they strive to realize true
product business value for the manufacturing enter-
prises. The industry vertical used by the firm for the
global business is discussed next.

Consumer
Automotive Aeronautical
durables
Product data Product life
management management
Geometric is unique in many ways. It aligns PLM
solutions from Geometric with the solutions offered by
the partners and effectively supports the partners in the
salesprocess. It jointly markets the solutions so as to
increase the sales by providing committed resources,
and technical and infrastructure support for the cost-
effectivedelivery of solutions to their customers. Geo-
metric specializes in various areas of customer service
and software marketing (software testing, software
document preparation, software development, custo-
mization, engineering services, and delivery models).
Geometric Software Solutions provides a total service
solution that offers onsite, offshore and customer
site capabilities, and flexible service solution that can
support both regular, continuous, and project-based
work.
It offers a global delivery model integrating the cost
and quality of doing work in India with customer site
support whenever necessary. The best way to initiate
an engagement with Geometric is to start a small pilot
project that can be reasonably defined. Geometric of-
fersspecial pricing to encourage the starting of pilot
project.A pilot project allows the customers to gauge a
company'sexpertise and build an open communication
channel,which is so important in such an outsourcing
relationship.The pilot project is usually a good starting
point to evaluate and build a long-term relationship.
The pilot project varies from one customer to another
customer,but the company can assist in defining such
aproject,if needed. Once the pilot project is completed
to customer satisfaction, there are various engagement
modelsthat Geometric Software Solutions supports.
The Offshore Development Centre (ODC) of
Geometric leverages the global development models
availablein different countries. Geometric Software
Solutions set up offshore development team for
Management of Sales Territory 269
companies seeking to leverage the global development
models to accelerate product development and reduce
costs. The ODC seamlessly works as an extension of
the company's own development/engineering organi-
zation. Geometric's state-of-art infrastructure, under-
standing of several industry domain, and proactive
project management processes ensure that the cust-
omers derive a long-term sustainable business. Further,
the working on a real time basis ensures that the ODC
provides 24 X 7 supports to the customers.
Geometric Software Solutions supports a fixed bid
model for projects with specifications available up-
front or from small pilot projects done to test and
initiate· relationships. In this model, the company
will look at project specifications and provide a fixed
quote and time estimate to execute the project. Geo-
metric Software Solutions engineers can work out of
customer's premises if required, especially during the
project planning or integration/delivery phase. In the
case of large-scale outsourcing projects or when the
ODC recommends a person as a single point contact
for all customer needs, the person selected can be either
from the customers organization or the company. The
company also recommends customer visits to its office
in India whenever possible for increased interaction.
The build-operate-transfer (BOT) model is ideal
for companies which wish to eventually set up their
own development or engineering centres in India.
The client can start the Indian development facilities
by working with Geometric Software Solutions in the
ODC mode and subsequently take over the team and
resources when the team size reaches a critical mass in
terms of the size and delivery capacity. As compared
to setting up a subsidiary upfronr, the customer can
save significant costs and mitigate risks by adopting the
BOT model.
Question
The company is evaluating the option to design terri-
tories and assign responsibilities to salespeople across the
globe to cater to the growing information technology
and services market. What kind of territorial design
should they have? What factors will you take into con-
sideration while designing territories for Geometric
Software?
270 Sales and Distribution Management
___________ REFERENCES l:SiliE:m::E~~~~~ml_
Clark, Shawn 1990, 'Sales Force Automation Pays Off', Mar-
keting News, 24, p. 9.
Cranfield, B.R. 1987, Strategic Sales Management, McGraw
Hill.
Despande, Rohit 1987, 'A Comparison of Factors Affecting
the Use of Marketing Information in Consumer and
Industrial Firms', Journal of Marketing Research, 24(1),
pp. 114-19.
Drucker, Peter 1985, Innovations andEntrepreneurship: Practice
and Principles, Harper and Row, New York, pp. 77-9l.
Fiocca, Renato 1982, 'Account Portfolio Analysis for Stra-
tegy Development', Industrial Marketing Management
Development, 11, pp. 53-62.
Futrell, Charles. M. 2002, SalesManagement, Harcourt Brace
College Publishers, Orlando, pp. 118-29.
Hughes, George David, Daryl O. McKee, and Charles H.
Singler 1999, Sales Management: A Career Path Approach,
South-Western College Publishing, Ohio, pp. 34-47.
La Forge, Raymond and David. W. Cravens 1982, 'Steps is
Selling Effort Deployment,' Industrial Marketing Man-
agement, 11, pp. 183-94.
La Forge, Raymond and Clifford. E. Young 1985, 'Improving
Sales Force Productivity', Business Horizon, 28, pp. 50-51.
Maynard, Harold H. and James Henry Davis 1957, Sales
Management, Ronald Press Co., New York.
Ryans, Adrian. B. and Charles. B. Weinberg 1987 , 'Territory
Sales Response Model: Stability Over Time', Journal of
Marketing Research, 24(2), pp. 229-33.
Still, Richard R. and Edward W. Cundiff 2004, Sales Man-
agement, Decision, Strategy and Cases, Prentice-Hall of
India Pvt. Lrd., New Delhi.