While dividing the size of sales territories, the sales manager has to take into consideration certain factors which influence the size of the sales territories. Following are some of the important factors:
Nature of the product:
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The nature of the product is of utmost importance to ascertain the size of sales territories. There are certain consumer products which have constant demand in the market. These are generally high turnover goods and need little selling efforts.
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Thus, for such products a large sales territory can be assigned. For luxury, large and durable articles, which need high selling efforts and less turnover, small sales territory can be assigned.
Demand for product:
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While allocating sales territories to the salesmen, the demand for a particular product should be taken into account. If the demand for a particular product is constant and frequent, then the whole sales field can be divided into small sales territories. However, in case of low demand and infrequently purchased articles, the size of the sales territory should be large.
Transport facilities:
The marketing of a particular product depends to a large extent, on the availability of transport facilities in the region. If the transport facilities like roadways, railways, airways, etc. are satisfactory in the region, then the sales territories allotted to the salesman can be large.
However, sales fields having poor transport facilities should be divided into very small sales territories. In case the company has provisions for providing vehicles for its sales force, larger territories can be assigned as transport bottleneck is avoided. –
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Competition and frequency of contact:
Competition cuts the size of the sales territory and increases the frequency of contact. In other words, the salesman has to meet dealers and customers more frequently in highly competitive sales territories. This is highly essential to maintain the market for the product. Therefore, where the competition is intense, the sales field should be divided into small territories.
On the other hand, limited competition or near monopoly situation lengthens the frequency of contacts between the salesman and the dealer and customer. In such situations, the salesman can be assigned larger sales territories.
Population:
The density of population in a particular area also determines the size of its sales territories. In case the company sells through middle men like wholesalers, dealers, retailers etc., larger sales territories can be allocated to the sales force. On the other hand, if the product is sold directly to the consumers or if a very few middlemen are used, small sales territories can be assigned to salesmen.
Advertising and sales promotion activities:
Advertising and sales promotion activities make the salesman’s task comparatively easy. Companies which have widespread advertising and intensive sales promotion activities, can assign large sales territories to its salesmen. This enables them to sell extensively in their respective areas. On the other hand, low advertised products need small sales territories for each salesman.
Ability and experience of salesman:
The size of the sales territory also depends on the ability and experience of the sales force. Experienced and talented salesmen are able to sell more. Therefore, they can easily be allotted with large territories. On the other hand, new and inexperienced salesmen are usually allocated small sales territories as their ability to sell is limited as compared to experienced salesmen.
A salesman is expected to create maximum sales turnover from his area with the minimum amount of time and effort. The commonly used divisions are states, districts, cities and trading areas.