Assignment D

Sales Territories
Group 1
Avik Poddar : 20BM61K06
M Omprakash : 20BM61K13
Mousumi Sarkar : 20BM61K14
 Vinod Gupta school of Management, IIT Kharagpur

Contents
Executive Summary ........................................................................................................................ 3

QUESTION: .................................................................................................................................. 4

Describe how you would go about your task. ................................................................................. 4

In the above example, the next task is to assign salespeople to territories. What major criteria

would you keep in mind in assigning salespersons to different territories? ................................... 4

References ..................................................................................................................................................... 8

Group 1: Sales Quota System

 Vinod Gupta school of Management, IIT Kharagpur

Executive Summary
In this assignment we would be going about the approach that we as head of marketing will
follow in gaining recognition in the market and generating fair amount of revenue to be
profitable at the end of the year. The case-let, as given below already lays out an appropriate plan
for us. Since the base location of the factory is in and around Bengaluru, hence the best way
forward is to target the southern part of the nation. This also helps concentrate the effort and
focus on gaining more market share and recognition in the aforesaid areas.

The four strategic states

chosen are more than
appropriate as they are
nearby, culturally related
and thus have similar ways
of livelihood leading to
similar household product
demands.
In terms of industrialization
as well these states have a
diverse market with
possibilities, and this gives
opportunity for a new player
Image source: SMSG Readiness, a report by The TAS group
to enter the market and establish a name.
We would further try to streamline, the territorial classification and see to it how best the
company can be positioned so as to gain maximum market share.

Group 1: Sales Quota System

 Vinod Gupta school of Management, IIT Kharagpur

QUESTION:
Describe how you would go about your task.

In the above example, the next task is to assign salespeople to territories. What
major criteria would you keep in mind in assigning salespersons to different
territories?

‘Time is Money’ and while going for this task our foremost task should be to design the
territories to reduce travel time of the salesforce. This can often be achieved with mapping
software.
A balance must be struck, and hence carefully use of the drivers such as account revenue, overall
market potential and travelling time must be taken into account with usage of territory
balancing indices.
It is also necessary to have an account selection model acknowledging the fact that it is not just
tedious but not feasible to try to cover all accounts. Effective use of time and focus on growth
opportunity can lead to better growth.

Propose a design that appropriately maps sales territories to the four southern states:
The best and recommended way to design a sales territory is to evaluate the potential market and
its existing and forecasted customers. In turn, it is these set of customers that are assigned to a
salesperson. The territory mayor may not have geographic boundaries means it is the
regional/industry/account type assigned to a specific salesperson/sales team.
In the above question, it is beneficial to allot salespeople to geographic territories, consisting of
present and potential customers. It will help to increase market (customer coverage), control
selling expenses and time, enable better evaluation of salesforce performance, improve customer
relationships, increase salesforce effectiveness and to improve sales and profit performance. It is
the proper establishment of the sales territory that in a way guarantees the companies bright
prospect in the aforesaid market and also aids in planning and controlling the sales operations. A
well designed sales territory will help us to increase not only the sales volume and market
coverage but also will provide better services to the customers.

Group 1: Sales Quota System

 Vinod Gupta school of Management, IIT Kharagpur

Procedure for Designing Sales Territories:

Step 1: Select a Control Unit

The sales manager has to select the smallest control unit as the control units' market potential and
the company sales potential should be possible to calculate and the adjustments (additions,
modifications or deletions) of control unit structure must be flexible unless territories move
through the initial stages of decision and are finalized.

Step 2: Find Location and Potential of Customers

Information on prospective customers can be obtained from the company's salespeople,
telephone directories and market research studies. After the present and potential customers are
identified, we will estimate the total sales potential for all customers in each geographical control
unit. To achieve this, we should first estimate the market potential or market forecast and then
will classify the customers based on their sales and profit potentials using ABC Analysis “(‘A'
customers are those whose sales/profit potential add up to the majority or 70 per cent of the
total; next customers whose business potential add up to 20 per cent are classified as 'B'
customers and the remaining section i.e. 10 per cent is classified as 'C' class customers.) ”

Step 3: Decide Basic Territories

As we have discussed with our CEO and our aim is to initially focus sales and distribution efforts
in southern region, consisting of Karnataka, Tamil Nadu, Andhra Pradesh, and Kerala, we will
use Buildup method to decide the basic territories. This method equalizes the workload of

Group 1: Sales Quota System

 Vinod Gupta school of Management, IIT Kharagpur

salespeople and is commonly used by manufacturers of consumer products and services or by the
companies that want intensive distribution strategy.

Procedures:
1. Decide customer call frequencies: It measures how many times a customer should be
visited by the company's salesperson per year.
2. Calculate total customer calls in each control unit.
Karnataka Tamil Nadu Andhra Pradesh Kerala
Customer Type Call frequency/month No of customers No of calls/year No of customers No of calls/year No of customers No of calls/year No of customers No of calls/year
A 4 5 240 4 192 5 240 6 288
B 2 11 264 12 288 13 312 13 312
C 1 25 300 20 240 19 228 21 252
41 804 36 720 37 780 40 852

3. Estimate workload capacity of a salesperson: It can be measured by multiplying

average number of calls a salesperson can make in a working day by number of working
days in a year.
4. Make tentative territories: Here company will group adjoining control units (which
share their borders) until yearly number of calls needed in those control units equals the
total number of sales calls made by an salesforce individual ( this also defines his/her
workload and available bandwidth ).
5. Develop Final Territories: In cases where workloads of salespersons are not equalised,
adjustments of tentative territories are made by adding or removing certain control units.

Major criteria in assigning salespersons to different territories:

As a head of marketing of Saragam Aluminum Company, I should set some major criteria and
rank the salespersons accordingly before assigning salespersons to different territories. My goal
would be to assign the geographical area to the salesperson so that it will maximize the territory
sales and our valuable customers will be more comfortable with that salesperson.

Group 1: Sales Quota System

 Vinod Gupta school of Management, IIT Kharagpur

The main two criteria would be:

(A) Relative ability of salespeople based on key evaluation factors (ability, knowledge,
communication)
 Product and Market knowledge
 Past sales performance in achieving Quota
 Communication (Verbal and written)
 Selling skills

By assigning equal/different weightage (may vary from company to company) on each

salespeople will help me to decide the ability index of that particular salespeople. These abilities
will be linked with to business potentials of different territories. These factors depend on
product and customer characteristics.

Evaluation Factors Weightage (A) Evaluation (B) Salesperson score:

(A) *(B)
Product Knowledge 0.15 0.8 0.12
Market knowledge 0.3 0.9 0.27
Past sales performance 0.2 1 0.2
Communication 0.15 0.8 0.12
Selling skills 0.2 0.9 0.18
1 0.89

For an example (as above table), ability index can be maximum 1. And here this sales person’s
ability index is 0.89. I have to just keep in mind that this score is based on relative evaluation,
not an absolute evaluation.

(B) Salesperson’s Effectiveness in a Territory (cultural characteristics of the salespersons)

 The decision on efficiency and performance is always taken in reference to social,
cultural and physical characteristics of the individual salesforce personnel with those of
the territorial standards:

Group 1: Sales Quota System

 Vinod Gupta school of Management, IIT Kharagpur

For an example, if a salesperson is from urban area of a metropolitan city, he/she might
feel difficulties to deal with the customers from rural area. Speaking same language and
coming from same culture would help the customer to be more comfortable very easily.
 Idea is to achieve best fit in terms of salesperson and territorial assignment:
This criterion will help to maximize the sales profit of that territory. If the sales person is
comfortable with the customers, then this objective can be easily achieved. Salespeople
consideration is the best way to assign salespeople into different territories, that includes
personal relationship with the customers, other salespeople and sales manager.

Finally, to conclude it can be said that no design is perfect and there is always scope of
improvement and this can be achieved by generating and maintaining sales reports. In
analyzing and evaluating the market at regular intervals, modifications can be done to optimize
the territorial performance. The same evaluation can also be used to develop better sales
capacity models as the company grows manifold.

References
Class Slides

Group 1: Sales Quota System