Evaluate Marquette’s method of designing the sales territories – strengths and weaknesses. Should the company reduce the size of its territories
Evaluate Marquette’s method of designing the sales territories – strengths and weaknesses. Should the company reduce the size of its territories
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Sales Management
CASE 3: Marquette Frozen Foods Company
The Marquette Frozen Foods Company manufactured a wide line of frozen foods sold directly to all types of food stores. The company’s 100 salespeople worked out of thirty-five district sales offices located throughout the United States. Annual sales were nearly $50 million. Although the sales picture was quite favorable, certain recent developments indicated a possible need for redesign of sales territories.
Sales territories were established using population as the base and were composed of one or more counties, depending on each county’s population. The aim was to assign each salesperson to a territory containing about 1 percent of the country’s total population. Since the total population was approximately 205 million (exclusive of Alaska and Hawaii), an attempt was made to assign each person a territory consisting of about 2,050,000 people. Population statistics were obtained from the U.S. Bureau of the Census and were modified according to local area statistics.
The method of territory design was illustrated by the Northeast I sales territory, including Maine, New Hampshire, and part of Massachusetts. The Northeast I territory included the following Maine counties, along with their populations; Aroostook, 95,000; Piscataquis, 16,000; Penobscot, 125,000; Androscoggin, 91,000; Cumberland, 193,000; Franklin, 22,000; Hancock, 35,000; Kennebec, 95,000; Knox, 29,000; Lincoln, 21,000; Oxford, 43,000; Sagadahoc, 23,000; Somerset, 41,000; Waldo, 23,000; Washington, 30,000; and York, 112,000. Maine population: 994,000.
The following New Hampshire counties and their population were included: Belknap, 32,000; Carroll, 19,000; Cheshire, 52,000; Coos, 34,000; Grafton, 55,000; Hillsborough, 224,000; Merrimack, 81,000; Rockingham, 139,000; Stratford, 70,000; and Sullivan, 31,000. New Hampshire population: 737,000.
Finally, the following Massachusetts towns were included to increase the sales territory population to the desired figure (the first six towns listed were in Essex County, while the last two were in Middlesex County); Amesbury, 13,000; Newburyport, 18,000; Haverhill, 46,000; Lawrence, 67,000; Salem, 41,000; Marblehead, 21,000; Tewksbury, 23,000; and Lowell, 95,000. Massachusetts population: 321,000. Total population in Maine, New Hampshire, and parts of Essex and Middlesex counties in Massachusetts: 2,055,000.
Analyses of population statistics were made every three years. When warranted by population changes, sales territories were redesigned: however, most changes were minor. The company supplied each salesperson with a detailed map showing the counties in his or her territory, the cities and towns, population, and the exact territorial assignments and to ensure a salesperson’s exclusive rights to a given territory.
The Marquette sales manager had proposed and received acceptance of this method of determining sales territories several years ago. He favored this procedure because it guaranteed equal territories and similar sales opportunities for all company sales personnel and therefore eliminated an important cause for poor morale. With total population divided evenly, it was easy to compare relative performances of the sales force. Total population divided was an accurate estimate of potential demand, according to the sales manager, because everyone was a potential customer for frozen foods. In addition, he said that the simplicity and economy of this approach made it even more desirable.
Careful analysis of a number of call reports, however, confirmed the sales manager’s suspicions that many salespeople were “skimming the cream” or concentrating on the larger and easier-to-sell accounts, neglecting altogether a substantial number of prospects. Consequently, he concluded that territorial coverage was unsatisfactory. He believed that this situation could be remedied by reducing the size of the territories, permitting more intensive coverage.
The sales managers was aware that there were many reasons why reduction of the size of sales territories was difficult to implement. First, the sales personnel would feel that something was being taken away from them; in some cases they would lose accounts they had cultivated over a long period. The result was a possible morale problem. Second, high costs were involved in redesigning sales territories. Third, there would be a need to hire additional salespeople to cover the new sales territories. Fourth, someone would have to convince the sales force that the changes were in the best interests of the sales staff, the company, and the customers. It would be essential to secure the sales force’s acceptance of the new plan.
Since substantial problems were associated with reducing the sizes of the sales territories, the Marquette sales manager was still undecided whether to redesign the present sales territories.
Case 3 Questions: Evaluate Marquette’s method of designing the sales territories – strengths and weaknesses. Should the company reduce the size of its territories?
