Chapter 04 - Organizing the Sales Effort

Chapter 04
Organizing the Sales Effort
 

True / False Questions

 

1. The starting point in organizing a sales force is determining the goals to be accomplished,
as specified in the firm's overall marketing plan. 
True    False

2. Division and specialization of labor increase productivity. 

True    False

3. The primary function of the vertical structure of a firm's sales organization is to identify the
subordinates of those in leadership roles. 
True    False

4. Manufacturers' representatives are intermediaries who take neither ownership nor physical
possession of the goods they sell, but concentrate instead on the selling function. 
True    False

5. One of the criteria for selecting a sales representative is finding someone with compatible
product lines. 
True    False

6. Large firms typically rely on external agents rather than creating their own sales force. 
True    False

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7. The theory of transaction cost analysis (TCA) states that when substantial transaction-
specific assets are necessary to sell a manufacturer's product, the costs of using and
administering the independent agents are likely to be lower than the costs of hiring and
managing a sales force. 
True    False

8. The simplest and most common method of organizing a company's sales force is to assign
individual salespeople to separate geographic territories. 
True    False

9. The major disadvantage of geographic sales organization is its emphasis on specialization

of labor. 
True    False

10. The major disadvantage of a sales force organized by product type is duplication of

effort. 
True    False

11. A manufacturer of security systems that organized its sales force by home owner, store
owner, warehouse owner and manufacturing facility would be organizing by product type. 
True    False

12. A company that has organized its sales force into telemarketers and outside field
salespeople has organized by selling function. 
True    False

13. Because major or key accounts tend to be sellers with which the company has built a long-
term relationship, these large accounts require no different treatment than smaller accounts. 
True    False

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14. The most troubling problems with a separate sales force for key accounts concern a prima
donna attitude among members. 
True    False

15. The key to developing successful team selling lies in the ability of the sales manager to
identify the needs of the customer. 
True    False

16. An account executive with a global team of salespeople and support of functional
resources creates multi level selling. 
True    False

17. Multilevel selling is a variation of team selling. 

True    False

18. Co-marketing alliances are often used by suppliers of components in technology

industries. 
True    False

19. Logistical alliances involve the development of computerized information and ordering

systems. 
True    False

20. How many people each sales manager supervises' is called a manager's spam of control. 
True    False

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21. When the sales task is complex, the span of control should be larger and the number of
levels of management should be smaller. 
True    False

22. The most common functions performed by staff specialists in sales organizations are
recruitment, training and sales analysis. 
True    False

23. Activities that do not rely directly on the firm's core competencies or transaction-specific
assets can often be performed more effectively and efficiently through outsourcing. 
True    False

24. The first guideline to starting a sales force should be to appoint an expansion team. 
True    False

 
 

Multiple Choice Questions

 

25. Which of the following statements about organizing the sales effort is true? 
A. Organizing the activities and management of the sales force is a major part of strategic
sales planning
B. Sales managers need to be more reactive in restructuring sales organizations
C. The starting point in organizing a sales force is the organizational culture
D. Once a firm has a sales organizational structure in place, it should not change it
E. All of the above statements about organizing the sales effort are true

26. A company's organizational structure for sales should: 

A. Have a wide span of control
B. Allow the firm to benefit from specialization of labor
C. Include line, but not staff, personnel
D. Organize it around people, not activities
E. Be either vertical or horizontal, but not both

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27. The most common form of vertical organization structure in medium and large-sized firms
is: 
A. Organization by customer type
B. Geographic organization
C. Organization by selling function
D. A line and staff organization
E. Organization by product type

28. In Valerie's company, she manages the sales force but hiring, training and company
relations with distributors are managed by other company specialists. Valerie is in a(an) 
A. Organization by customer type
B. Line and staff organization
C. Organization by selling function
D. Geographic organization
E. Organization by product type

29. What coordination and integration issue needs to be addressed by sales managers

regardless of the sales force structure? 
A. The activities of the sales force must be integrated with the needs and concerns of
customers
B. The firm's selling activities must be coordinated with those of other departments
C. If the firm's selling tasks are divided among specialized units, all those tasks must be
integrated
D. All of the above
E. None of the above

30. Which of the following questions that must be answered as an organization determines its
sales force organization? 
A. Who should be responsible for selling to senior management within the organization?
B. Should the company employ its own sales force or use manufacturers' representatives?
C. What is the appropriate span of control for each production manager?
D. How should the accounting department be integrated into sales?
E. Should senior salespeople only sell to seniors?

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31. Manufacturers' representatives: 
A. Take ownership of the merchandise they sell for manufacturers
B. Are a source of fixed costs on their principals' income statements
C. Do not specialize in the type of products they handle
D. Often carry competing lines of merchandise
E. Have no authority to modify their principals' instructions concerning price or terms of sale

32. Selling agents: 
A. Are compensated solely by commissions from their principals
B. Act as their principals' representative in a specific and limited territory and specialize in a
limited range of products
C. Take ownership of the merchandise they sell for manufacturers
D. Have no authority to modify their principals' instructions concerning price or terms of sale
E. Perform the same functions as manufacturers' reps for their principals

33. Robin is looking for sales reps to sell her line of clothing. In searching for a sales rep,
Robin will most likely look for someone 
A. Who sells distinctly different product lines
B. Who does not sell in her targeted territories
C. Who is already selling in her industry
D. Who is selling many product lines
E. Who is not yet established in the industry

34. Which of the following statements about the economic criteria used to decide between
using an independent agent or an internal sales force is true? 
A. The fixed costs of using independent agents are lower than those of using a company sales
force
B. The variable costs of using independent agents do not change over time
C. The variable costs of using independent agents are equal to the variable costs expended on
an internal sales force
D. In terms of cost efficiency, an internal sales force is always more expensive than
independent agents
E. The costs of using independent agents tend to level off as sales volumes increase

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35. Why do most sales and marketing managers believe company salespeople are more likely
to produce a higher volume of total sales than agents? 
A. Company salespeople concentrate entirely on the firm's products
B. They are better trained
C. They tend to be more aggressive since their future depends on the company's success
D. Customers prefer to deal directly with a supplier
E. All of the above

36. Which of the following statements about the control and strategic criteria used to decide
between using independent agents or an internal sales force is true? 
A. Independent agents are especially good at cultivating and servicing new accounts
B. Customer loyalty to the independent agent can make it difficult to replace an agent with an
internal sales force
C. When sales are below manufacturer's expectations, the manufacturer immediately knows
that the blame lies with the independent agent
D. It is as easy to monitor an independent agent as it is to monitor an internal sales force
E. Independent agents are viewed as more effective over the long-run than internal sales
forces

37. Lisa inherits a sales force that does what it wants. She wants to increase her control. How
can a she control her sales force? 
A. By establishing operating procedures and policies
B. By delegating more sales responsibilities to independent representatives
C. Through assertiveness training classes
D. Through understanding the needs of her sales force
E. All of the above

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38. The theory of transaction cost analysis states that: 

A. Short-term increases in sales volume will eliminate any switching costs acquired as the
result of replacing an independent agent with an internal sales force
B. The costs of product failure will be minimized with the use of an independent agent and
maximized with an internal sales force
C. When substantial transaction-specific assets are necessary to sell a manufacturer's product,
the costs of using and administering independent agents is likely to be higher than the costs of
hiring and managing an internal sales force
D. Costs of using and administering independent agents tend to rise faster as the
manufacturer's sales volume increases
E. When substantial transaction-specific assets are necessary to sell a manufacturer's product,
the costs of using and administering independent agents is likely to be lower than the costs of
hiring and managing an internal sales force

39. Victor is considering replacing his company's independent sales representatives. He is

frustrated because the reps spend little time on the many potential small accounts and provide
almost no post-sale service to customers. Victor is struggling with what is called 
A. Core dependency
B. Transaction cost analysis
C. Division of labor specialization
D. Co-marketing alliances
E. Logistical support supervision

40. Alton's new firm operates in an uncertain and rapidly changing market with shifting
technology and short product life cycles. Alton is considering the use of independent sales
reps because they will give him greater _____________ in distribution channels. 
A. Geographic concentration
B. Team selling
C. Flexibility
D. Outsourcing of production
E. Matrix divisional dissection

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41. Most marketing executives argue it is best to use sales representatives and selling agents 
A. In stable marketing environments
B. When the company is large
C. For territories with low sales potential
D. When greater control over selling efforts is needed
E. All of the above

42. Geographic organization of the sales force: 

A. Permits beneficial division and specialization of labor
B. Is not used by large organizations like 3M and IBM
C. Allows the individual salesperson to develop familiarity with the technical attributes,
Applications and the best selling methods to use with each product
D. Requires fewer managerial levels for coordination of sales activities than other methods of
organizing the sales force
E. Is a low-cost method of vertically organizing a sales force

43. A small company that manufactures paper products might choose to use a geographic
organization for its sales force because: 
A. It wants to enjoy the benefits associated with division and specialization of labor
B. It is a low-cost method of vertically organizing a sales force
C. It is not concerned about the increased travel and expense time such an organization
produces
D. Each of its salespeople can specialize in a particular product line
E. It is simple to implement

44. Which of the following is NOT one of the advantages of geographic sales organization? 
A. Lower cost
B. Fewer managerial levels
C. Reduced customer confusion
D. Specialization of labor
E. Greater customer responsibility

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45. Organization of the sales force by product: 

A. Is not advisable for companies selling highly technical products
B. Is best used when cost is the deciding factor on which organizationally structure to use
C. Requires fewer sales management personnel and lower administrative costs than a
geographic organization
D. Can result in duplication of sales effort
E. Is most commonly used by firms that manufacture only one product line

46. The major reason why a firm with many different products based on widely differing
technologies would organize its sales force by product is: 
A. A commitment to the marketing concept
B. Because it allows salespeople to develop highly specialized knowledge about one product
or a few similar products
C. The simplicity inherent in implementing and using such a system
D. To take advantage of the benefits of specialization of labor inherent in this vertical
organization form
E. Because it eliminates any duplication of sales efforts

47. Organization of the sales force by customer type: 

A. Has the same disadvantages as those associated with organization by product
B. Allows the use of different selling approaches for different types of customers
C. Is a natural extension of the market concept
D. Should be used when a company wants to implement a market penetration strategy
E. Is accurately described by all of the above

48. Organization of the sales force by customer type: 

A. Produces lower administrative costs than organizations with a product orientation
B. Can cause customers to become frustrated and/or confused
C. Eliminates any duplication of sales effort
D. Would indicate that the individual members of the sales force would sell different products
even if operating in neighboring communities
E. Is declining in popularity because of cost disadvantages

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49. Some authorities recommend firms have one sales force that specializes in prospecting for
new accounts and another sales force to call on existing customers. Which of the following
statements about this recommendation is true? 
A. This form of specialization is a form of customer specialization
B. This form of specialization is typically referred to as a networked organization
C. This form of specialization is most suitable for companies that are implementing a
maintenance strategy instead of a growth strategy
D. This form of specialization can be difficult to implement since new customers might object
to being turned over to an unfamiliar salesperson
E. This form of specialization eliminates the tendency of salespeople to view other
salespeople working in the same company as rivals

50. Organizing the sales force along functional lines: 

A. Allows salespeople with different talents and abilities to perform different selling tasks
B. Is easy to implement
C. Eliminates any rivalry that might exist in a company's sales force
D. Makes it easy for the manager to coordinate all sales activities
E. Is accurately described by all of the above

51. As a developmental salesperson, Allen: 

A. Sells for a company that organizes its products around its products
B. Sells for a company that organizes its products around selling functions
C. Sells for a company that has a limited product line of non-technical products
D. Uses a telemarketer to locate sales leads
E. Is a salesperson for a manufacturers' representative

52. Telemarketing in business-to-business markets: 

A. Is used to increase the productivity of a firm's sales efforts
B. Is typically despised by customers
C. Is a form of organization by customer
D. Is not an appropriate tool for repeat purchases
E. Uses the problem-solving approach to selling

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53. Telemarketing has proven to be useful in performing all of the following activities

EXCEPT: 
A. Prospecting
B. Providing technical assistance
C. Negotiation
D. Repeat purchases
E. Speeding up marketing communications

54. From the seller's point of view, a combination of inside and outside sales force offers a
way to improve the overall efficiency of sales effort by: 
A. Requiring separate policies and procedures for each sales force
B. Reducing overall personnel costs
C. Reducing the costs expended to reach small customers
D. Reducing the amount of contact between buyer and seller
E. Doing none of the above

55. Which of the following statements about national and key accounts is true? 
A. National accounts often require more detailed and sophisticated treatment than smaller
customers
B. Salespeople who handle national accounts typically receive the same or lower commission
rates than salespeople who handle smaller accounts
C. Having national accounts greatly complicates the coordination of selling activities
D. The trend toward decentralized purchasing has accelerated the development of national and
key accounts
E. All of the above statements about national and key accounts are true

56. Why would a small firm most likely assign key accounts to top sales executives rather
than set up a separate department for key accounts? 
A. Customer delight
B. Limited financial resources
C. Centralized production quality control
D. Selling center satisfaction
E. To remind executives what it is like to sell

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57. Which of the following statements about the use of a separate sales force to handle key
accounts is true? 
A. This is a relatively low cost approach for making sure someone services the company's
largest customers high in the organizational hierarchy
B. National sales force members are always treated as equal to the company's regular sales
force
C. The national sales force typically consists of the company's most experienced and talented
salespeople
D. The national sales force is typically overworked because of the demands placed on it by its
major accounts
E. In many companies, the regular sales force serves as a motivator to the national sales force

58. Team selling: 
A. Is appropriate for small, innovative customers who need customized products
B. Only allows members from marketing, production and sales department to participate in
the process
C. Is easy to coordinate
D. Is appropriate for the largest customers, where the potential purchase represents enough
dollars and involves enough functions to justify the high cost
E. Is only used to win new accounts and not for maintenance selling

59. One of the benefits of team selling is 

A. Higher commissions
B. Questions can be answered faster
C. Reduced costs
D. Lowered role ambiguity
E. All of the above

60. The key to successful team selling lies in: 

A. Developing the right product
B. Creating a sustainable competitive advantage
C. The ease with which repeat purchases can be made
D. The size of the buying center
E. Understanding the needs of the customer

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61. A sales manager who develops a team selling approach will 

A. Hire salespeople motivated by personal achievement
B. Organize the team into silos to encourage competition
C. Compensate team members based on their individual performance
D. Develop communication links among all team members
E. All of the above

62. _____ selling, a variation of team selling, uses an ad hoc arrangement where individuals at
different organizational levels are responsible for maintaining a key relationship with the
customer but not as part of an established team. 
A. Functional
B. Key account
C. Co-marketing
D. Multilevel
E. Logistical alliance

63. In some high tech industries, where customers buy systems made up of components
manufactured by several suppliers, many suppliers are forming _________________ to
develop and jointly market and sell integrated systems. 
A. Matrix organizations
B. Co-marketing alliances
C. Multilevel systems
D. Leveraged buyouts
E. Span of control documentation systems

64. Which of the following statements about logistical alliances is true? 

A. Logistical alliances are a variation of team selling
B. From a customer's point of view, logistical alliances are less convenient than placing orders
through salespeople
C. Logistical alliances could potentially make salespeople redundant
D. From the customer's point of view, logistical alliances are more time consuming than
placing orders through salespeople
E. All of the above statements about logistical alliances are true

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65. Why would buyers agree to a logistical alliance? 

A. To reduce the number of people they have to keep track of
B. It is convenient and flexible
C. Alliances result in lower prices
D. Alliances commit the seller to selling more to the customer
E. They prefer to interact with salespeople

66. The span of control should be smaller and the number of levels of management should be
larger when: 
A. The salespeople in the company are well paid and professional
B. The salespeople in the company are new inexperienced recruits
C. The sales task is relatively simple
D. The profit impact for the performance of each individual salesperson is low
E. The sales job is defined as easy by the people hired to sell

67. The span of control should usually be smaller at higher levels in the sales organization
because: 
A. Of a need to control variable expenses
B. Top-level managers should have more time for analysis and decision making
C. The lower-level people who report to them need an authoritative work environment
D. Most sales organizations are decentralized
E. Field selling is viewed as a training ground for future sales or marketing managers

68. Which of the following statements about decision making within the sales organization is
true? 
A. The significance of the decision has no effect on the level at which the decision will be
made
B. Firms that have many low-paid salespeople who perform relatively routine sales tasks
usually place the decision-making authority in the hands of its top sales executives
C. As a general rule of organization, the more important a decision is for the success of the
firm, the higher the level of management that should make the decision
D. As a rule, field-line sales managers are responsible for seeing that sales tasks are
completed, but have no decision-making authority
E. Firms that have professional salespeople who perform complex sales tasks typically place
all decision-making authority in the hands of its salespeople

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69. Which of the following statements about the selling responsibilities of the sales manager
is true? 
A. Sales managers often prefer to remain active in selling activities
B. Sales managers are usually not qualified to sell
C. Once a salesperson is promoted to management, he or she should not remain active in
selling activities
D. It is more important for sales managers in larger firms to remain active in selling, than
those in smaller firms
E. Most sales managers devote the largest percentage of their time to face-to-face selling

70. Which of the following sales-related function is the least visible but most important? 
A. Installation and delivery
B. Special product design and engineering
C. Repair and maintenance
D. Information gathering
E. Order processing and expediting

71. Span of control and management responsibility decisions are constantly changing

primarily due to changes in 
A. Government regulation
B. Sales force attitudes
C. Technology
D. Integrative institutional supply chains
E. Transaction cost analysis

72. Sales staff executives are commonly used to: 

A. Recruit new salespeople
B. Analyze sales trends and make forecasts
C. Train new salespeople
D. Collect and gather environmental information which line managers may need for decision
making
E. Do all of the above

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73. Generally, the employment of staff specialists is justified only when: 

A. The organization has a large turnover
B. Such staff can be used to improve employee morale and working conditions
C. Line managers are unable to collect any useful data
D. The sales organization is large enough to provide staff specialists with enough work to
keep them busy
E. The sales organization is introducing a new product

74. Which of the following is NOT one of the key building blocks to starting a sales force? 
A. Define the sales force's mission
B. Leverage existing organizational strengths
C. Allows sales people to go find out what works
D. Provide support
E. Develop compensation plans that motivate

75. Fiona is creating a new sales force. To develop an effective sales force she will 
A. Start with an annual sales target
B. Avoid existing sales efforts
C. Allow new salespeople independence
D. Avoid compensation snafus
E. Develop her sales force secretly

 
 

Short Answer Questions

 

76. What guidelines should a sales manager use in choosing an independent manufacturing

sales rep? 

 
 

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77. What four sets of factors will sales managers consider when deciding whether to use
independent agents or a company sales force? 

 
 

78. What is transaction cost analysis? What does it imply for sales managers? 

 
 

79. What are the advantages of geographic sales organization? 

 
 

80. What is the primary advantage of organizing a sales force by product? 

 
 

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81. How does telemarketing fit within a sales strategy? 

 
 

82. What are some of the problems associated with team selling? 

 
 

83. What are the benefits of a computerized ordering system? 

 
 

84. What two key questions must be answered in designing an effective vertical structure for a
sales organization? 

 
 

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85. What is the first key building block in starting a new sales force? 

 
 

86. What coordination and integration issues need to be addressed by sales managers

regardless of the sales force structure? 

 
 

87. Why do most sales and marketing managers believe company salespeople are more likely
to produce a higher volume of total sales than agents? 

 
 

88. Compare the four common bases for structuring sales efforts in an organization. What are
the advantages and disadvantages of each? 

 
 

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89. What issues and questions need to be addressed in vertical sales organizations? 

 
 

90. What are the six key building blocks for starting a sales force? 

 
 

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Chapter 04 Organizing the Sales Effort Answer Key

 

True / False Questions

 

1. (p. 99) The starting point in organizing a sales force is determining the goals to be

accomplished, as specified in the firm's overall marketing plan. 
TRUE

2. (p. 99) Division and specialization of labor increase productivity. 

TRUE

3. (p. 100) The primary function of the vertical structure of a firm's sales organization is to

identify the subordinates of those in leadership roles. 
FALSE

4. (p. 101) Manufacturers' representatives are intermediaries who take neither ownership nor

physical possession of the goods they sell, but concentrate instead on the selling function. 
TRUE

5. (p. 102) One of the criteria for selecting a sales representative is finding someone with
compatible product lines. 
TRUE

6. (p. 103) Large firms typically rely on external agents rather than creating their own sales
force. 
FALSE

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7. (p. 104) The theory of transaction cost analysis (TCA) states that when substantial
transaction-specific assets are necessary to sell a manufacturer's product, the costs of using
and administering the independent agents are likely to be lower than the costs of hiring and
managing a sales force. 
FALSE

8. (p. 105) The simplest and most common method of organizing a company's sales force is to
assign individual salespeople to separate geographic territories. 
TRUE

9. (p. 106) The major disadvantage of geographic sales organization is its emphasis on

specialization of labor. 
FALSE

10. (p. 107) The major disadvantage of a sales force organized by product type is duplication of

effort. 
TRUE

11. (p. 108) A manufacturer of security systems that organized its sales force by home owner,
store owner, warehouse owner and manufacturing facility would be organizing by product
type. 
FALSE

12. (p. 109) A company that has organized its sales force into telemarketers and outside field
salespeople has organized by selling function. 
TRUE

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13. (p. 112) Because major or key accounts tend to be sellers with which the company has built
a long-term relationship, these large accounts require no different treatment than smaller
accounts. 
FALSE

14. (p. 113) The most troubling problems with a separate sales force for key accounts concern a
prima donna attitude among members. 
FALSE

15. (p. 113) The key to developing successful team selling lies in the ability of the sales manager
to identify the needs of the customer. 
TRUE

16. (p. 114) An account executive with a global team of salespeople and support of functional
resources creates multi level selling. 
FALSE

17. (p. 114) Multilevel selling is a variation of team selling. 

TRUE

18. (p. 115) Co-marketing alliances are often used by suppliers of components in technology

industries. 
TRUE

19. (p. 115) Logistical alliances involve the development of computerized information and

ordering systems. 
TRUE

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20. (p. 116) How many people each sales manager supervises' is called a manager's spam of
control. 
FALSE

21. (p. 116) When the sales task is complex, the span of control should be larger and the number
of levels of management should be smaller. 
FALSE

22. (p. 118) The most common functions performed by staff specialists in sales organizations are
recruitment, training and sales analysis. 
TRUE

23. (p. 119) Activities that do not rely directly on the firm's core competencies or transaction-
specific assets can often be performed more effectively and efficiently through outsourcing. 
TRUE

24. (p. 119) The first guideline to starting a sales force should be to appoint an expansion team. 
FALSE

 
 

Multiple Choice Questions

 

25. (p. 98) Which of the following statements about organizing the sales effort is true? 
A. Organizing the activities and management of the sales force is a major part of strategic
sales planning
B. Sales managers need to be more reactive in restructuring sales organizations
C. The starting point in organizing a sales force is the organizational culture
D. Once a firm has a sales organizational structure in place, it should not change it
E. All of the above statements about organizing the sales effort are true

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26. (p. 99) A company's organizational structure for sales should: 

A. Have a wide span of control
B. Allow the firm to benefit from specialization of labor
C. Include line, but not staff, personnel
D. Organize it around people, not activities
E. Be either vertical or horizontal, but not both

27. (p. 100) The most common form of vertical organization structure in medium and large-
sized firms is: 
A. Organization by customer type
B. Geographic organization
C. Organization by selling function
D. A line and staff organization
E. Organization by product type

28. (p. 100) In Valerie's company, she manages the sales force but hiring, training and company
relations with distributors are managed by other company specialists. Valerie is in a(an) 
A. Organization by customer type
B. Line and staff organization
C. Organization by selling function
D. Geographic organization
E. Organization by product type

29. (p. 100) What coordination and integration issue needs to be addressed by sales managers

regardless of the sales force structure? 
A. The activities of the sales force must be integrated with the needs and concerns of
customers
B. The firm's selling activities must be coordinated with those of other departments
C. If the firm's selling tasks are divided among specialized units, all those tasks must be
integrated
D. All of the above
E. None of the above

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30. (p. 101) Which of the following questions that must be answered as an organization

determines its sales force organization? 
A. Who should be responsible for selling to senior management within the organization?
B. Should the company employ its own sales force or use manufacturers' representatives?
C. What is the appropriate span of control for each production manager?
D. How should the accounting department be integrated into sales?
E. Should senior salespeople only sell to seniors?

31. (p. 102) Manufacturers' representatives: 
A. Take ownership of the merchandise they sell for manufacturers
B. Are a source of fixed costs on their principals' income statements
C. Do not specialize in the type of products they handle
D. Often carry competing lines of merchandise
E. Have no authority to modify their principals' instructions concerning price or terms of sale

32. (p. 102) Selling agents: 
A. Are compensated solely by commissions from their principals
B. Act as their principals' representative in a specific and limited territory and specialize in a
limited range of products
C. Take ownership of the merchandise they sell for manufacturers
D. Have no authority to modify their principals' instructions concerning price or terms of sale
E. Perform the same functions as manufacturers' reps for their principals

33. (p. 102) Robin is looking for sales reps to sell her line of clothing. In searching for a sales
rep, Robin will most likely look for someone 
A. Who sells distinctly different product lines
B. Who does not sell in her targeted territories
C. Who is already selling in her industry
D. Who is selling many product lines
E. Who is not yet established in the industry

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34. (p. 103) Which of the following statements about the economic criteria used to decide
between using an independent agent or an internal sales force is true? 
A. The fixed costs of using independent agents are lower than those of using a company sales
force
B. The variable costs of using independent agents do not change over time
C. The variable costs of using independent agents are equal to the variable costs expended on
an internal sales force
D. In terms of cost efficiency, an internal sales force is always more expensive than
independent agents
E. The costs of using independent agents tend to level off as sales volumes increase

35. (p. 103) Why do most sales and marketing managers believe company salespeople are more
likely to produce a higher volume of total sales than agents? 
A. Company salespeople concentrate entirely on the firm's products
B. They are better trained
C. They tend to be more aggressive since their future depends on the company's success
D. Customers prefer to deal directly with a supplier
E. All of the above

36. (p. 104) Which of the following statements about the control and strategic criteria used to
decide between using independent agents or an internal sales force is true? 
A. Independent agents are especially good at cultivating and servicing new accounts
B. Customer loyalty to the independent agent can make it difficult to replace an agent with an
internal sales force
C. When sales are below manufacturer's expectations, the manufacturer immediately knows
that the blame lies with the independent agent
D. It is as easy to monitor an independent agent as it is to monitor an internal sales force
E. Independent agents are viewed as more effective over the long-run than internal sales
forces

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37. (p. 104) Lisa inherits a sales force that does what it wants. She wants to increase her control.
How can a she control her sales force? 
A. By establishing operating procedures and policies
B. By delegating more sales responsibilities to independent representatives
C. Through assertiveness training classes
D. Through understanding the needs of her sales force
E. All of the above

38. (p. 104) The theory of transaction cost analysis states that: 

A. Short-term increases in sales volume will eliminate any switching costs acquired as the
result of replacing an independent agent with an internal sales force
B. The costs of product failure will be minimized with the use of an independent agent and
maximized with an internal sales force
C. When substantial transaction-specific assets are necessary to sell a manufacturer's product,
the costs of using and administering independent agents is likely to be higher than the costs of
hiring and managing an internal sales force
D. Costs of using and administering independent agents tend to rise faster as the
manufacturer's sales volume increases
E. When substantial transaction-specific assets are necessary to sell a manufacturer's product,
the costs of using and administering independent agents is likely to be lower than the costs of
hiring and managing an internal sales force

39. (p. 104) Victor is considering replacing his company's independent sales representatives. He

is frustrated because the reps spend little time on the many potential small accounts and
provide almost no post-sale service to customers. Victor is struggling with what is called 
A. Core dependency
B. Transaction cost analysis
C. Division of labor specialization
D. Co-marketing alliances
E. Logistical support supervision

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40. (p. 105) Alton's new firm operates in an uncertain and rapidly changing market with shifting
technology and short product life cycles. Alton is considering the use of independent sales
reps because they will give him greater _____________ in distribution channels. 
A. Geographic concentration
B. Team selling
C. Flexibility
D. Outsourcing of production
E. Matrix divisional dissection

41. (p. 105) Most marketing executives argue it is best to use sales representatives and selling
agents 
A. In stable marketing environments
B. When the company is large
C. For territories with low sales potential
D. When greater control over selling efforts is needed
E. All of the above

42. (p. 106) Geographic organization of the sales force: 

A. Permits beneficial division and specialization of labor
B. Is not used by large organizations like 3M and IBM
C. Allows the individual salesperson to develop familiarity with the technical attributes,
Applications and the best selling methods to use with each product
D. Requires fewer managerial levels for coordination of sales activities than other methods of
organizing the sales force
E. Is a low-cost method of vertically organizing a sales force

43. (p. 106) A small company that manufactures paper products might choose to use a
geographic organization for its sales force because: 
A. It wants to enjoy the benefits associated with division and specialization of labor
B. It is a low-cost method of vertically organizing a sales force
C. It is not concerned about the increased travel and expense time such an organization
produces
D. Each of its salespeople can specialize in a particular product line
E. It is simple to implement

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44. (p. 106) Which of the following is NOT one of the advantages of geographic sales

organization? 
A. Lower cost
B. Fewer managerial levels
C. Reduced customer confusion
D. Specialization of labor
E. Greater customer responsibility

45. (p. 107) Organization of the sales force by product: 

A. Is not advisable for companies selling highly technical products
B. Is best used when cost is the deciding factor on which organizationally structure to use
C. Requires fewer sales management personnel and lower administrative costs than a
geographic organization
D. Can result in duplication of sales effort
E. Is most commonly used by firms that manufacture only one product line

46. (p. 107) The major reason why a firm with many different products based on widely
differing technologies would organize its sales force by product is: 
A. A commitment to the marketing concept
B. Because it allows salespeople to develop highly specialized knowledge about one product
or a few similar products
C. The simplicity inherent in implementing and using such a system
D. To take advantage of the benefits of specialization of labor inherent in this vertical
organization form
E. Because it eliminates any duplication of sales efforts

47. (p. 108-109) Organization of the sales force by customer type: 

A. Has the same disadvantages as those associated with organization by product
B. Allows the use of different selling approaches for different types of customers
C. Is a natural extension of the market concept
D. Should be used when a company wants to implement a market penetration strategy
E. Is accurately described by all of the above

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48. (p. 109) Organization of the sales force by customer type: 

A. Produces lower administrative costs than organizations with a product orientation
B. Can cause customers to become frustrated and/or confused
C. Eliminates any duplication of sales effort
D. Would indicate that the individual members of the sales force would sell different products
even if operating in neighboring communities
E. Is declining in popularity because of cost disadvantages

49. (p. 109) Some authorities recommend firms have one sales force that specializes in
prospecting for new accounts and another sales force to call on existing customers. Which of
the following statements about this recommendation is true? 
A. This form of specialization is a form of customer specialization
B. This form of specialization is typically referred to as a networked organization
C. This form of specialization is most suitable for companies that are implementing a
maintenance strategy instead of a growth strategy
D. This form of specialization can be difficult to implement since new customers might object
to being turned over to an unfamiliar salesperson
E. This form of specialization eliminates the tendency of salespeople to view other
salespeople working in the same company as rivals

50. (p. 109) Organizing the sales force along functional lines: 

A. Allows salespeople with different talents and abilities to perform different selling tasks
B. Is easy to implement
C. Eliminates any rivalry that might exist in a company's sales force
D. Makes it easy for the manager to coordinate all sales activities
E. Is accurately described by all of the above

51. (p. 109) As a developmental salesperson, Allen: 

A. Sells for a company that organizes its products around its products
B. Sells for a company that organizes its products around selling functions
C. Sells for a company that has a limited product line of non-technical products
D. Uses a telemarketer to locate sales leads
E. Is a salesperson for a manufacturers' representative

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52. (p. 110) Telemarketing in business-to-business markets: 

A. Is used to increase the productivity of a firm's sales efforts
B. Is typically despised by customers
C. Is a form of organization by customer
D. Is not an appropriate tool for repeat purchases
E. Uses the problem-solving approach to selling

53. (p. 110) Telemarketing has proven to be useful in performing all of the following activities

EXCEPT: 
A. Prospecting
B. Providing technical assistance
C. Negotiation
D. Repeat purchases
E. Speeding up marketing communications

54. (p. 110) From the seller's point of view, a combination of inside and outside sales force
offers a way to improve the overall efficiency of sales effort by: 
A. Requiring separate policies and procedures for each sales force
B. Reducing overall personnel costs
C. Reducing the costs expended to reach small customers
D. Reducing the amount of contact between buyer and seller
E. Doing none of the above

55. (p. 112) Which of the following statements about national and key accounts is true? 
A. National accounts often require more detailed and sophisticated treatment than smaller
customers
B. Salespeople who handle national accounts typically receive the same or lower commission
rates than salespeople who handle smaller accounts
C. Having national accounts greatly complicates the coordination of selling activities
D. The trend toward decentralized purchasing has accelerated the development of national and
key accounts
E. All of the above statements about national and key accounts are true

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56. (p. 112) Why would a small firm most likely assign key accounts to top sales executives
rather than set up a separate department for key accounts? 
A. Customer delight
B. Limited financial resources
C. Centralized production quality control
D. Selling center satisfaction
E. To remind executives what it is like to sell

57. (p. 113) Which of the following statements about the use of a separate sales force to handle
key accounts is true? 
A. This is a relatively low cost approach for making sure someone services the company's
largest customers high in the organizational hierarchy
B. National sales force members are always treated as equal to the company's regular sales
force
C. The national sales force typically consists of the company's most experienced and talented
salespeople
D. The national sales force is typically overworked because of the demands placed on it by its
major accounts
E. In many companies, the regular sales force serves as a motivator to the national sales force

58. (p. 114) Team selling: 
A. Is appropriate for small, innovative customers who need customized products
B. Only allows members from marketing, production and sales department to participate in
the process
C. Is easy to coordinate
D. Is appropriate for the largest customers, where the potential purchase represents enough
dollars and involves enough functions to justify the high cost
E. Is only used to win new accounts and not for maintenance selling

59. (p. 113) One of the benefits of team selling is 

A. Higher commissions
B. Questions can be answered faster
C. Reduced costs
D. Lowered role ambiguity
E. All of the above

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60. (p. 113) The key to successful team selling lies in: 

A. Developing the right product
B. Creating a sustainable competitive advantage
C. The ease with which repeat purchases can be made
D. The size of the buying center
E. Understanding the needs of the customer

61. (p. 113) A sales manager who develops a team selling approach will 

A. Hire salespeople motivated by personal achievement
B. Organize the team into silos to encourage competition
C. Compensate team members based on their individual performance
D. Develop communication links among all team members
E. All of the above

62. (p. 114) _____ selling, a variation of team selling, uses an ad hoc arrangement where

individuals at different organizational levels are responsible for maintaining a key relationship
with the customer but not as part of an established team. 
A. Functional
B. Key account
C. Co-marketing
D. Multilevel
E. Logistical alliance

63. (p. 114-115) In some high tech industries, where customers buy systems made up of
components manufactured by several suppliers, many suppliers are forming
_________________ to develop and jointly market and sell integrated systems. 
A. Matrix organizations
B. Co-marketing alliances
C. Multilevel systems
D. Leveraged buyouts
E. Span of control documentation systems

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64. (p. 116) Which of the following statements about logistical alliances is true? 

A. Logistical alliances are a variation of team selling
B. From a customer's point of view, logistical alliances are less convenient than placing orders
through salespeople
C. Logistical alliances could potentially make salespeople redundant
D. From the customer's point of view, logistical alliances are more time consuming than
placing orders through salespeople
E. All of the above statements about logistical alliances are true

65. (p. 116) Why would buyers agree to a logistical alliance? 

A. To reduce the number of people they have to keep track of
B. It is convenient and flexible
C. Alliances result in lower prices
D. Alliances commit the seller to selling more to the customer
E. They prefer to interact with salespeople

66. (p. 116) The span of control should be smaller and the number of levels of management
should be larger when: 
A. The salespeople in the company are well paid and professional
B. The salespeople in the company are new inexperienced recruits
C. The sales task is relatively simple
D. The profit impact for the performance of each individual salesperson is low
E. The sales job is defined as easy by the people hired to sell

67. (p. 116) The span of control should usually be smaller at higher levels in the sales
organization because: 
A. Of a need to control variable expenses
B. Top-level managers should have more time for analysis and decision making
C. The lower-level people who report to them need an authoritative work environment
D. Most sales organizations are decentralized
E. Field selling is viewed as a training ground for future sales or marketing managers

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68. (p. 117) Which of the following statements about decision making within the sales
organization is true? 
A. The significance of the decision has no effect on the level at which the decision will be
made
B. Firms that have many low-paid salespeople who perform relatively routine sales tasks
usually place the decision-making authority in the hands of its top sales executives
C. As a general rule of organization, the more important a decision is for the success of the
firm, the higher the level of management that should make the decision
D. As a rule, field-line sales managers are responsible for seeing that sales tasks are
completed, but have no decision-making authority
E. Firms that have professional salespeople who perform complex sales tasks typically place
all decision-making authority in the hands of its salespeople

69. (p. 117) Which of the following statements about the selling responsibilities of the sales
manager is true? 
A. Sales managers often prefer to remain active in selling activities
B. Sales managers are usually not qualified to sell
C. Once a salesperson is promoted to management, he or she should not remain active in
selling activities
D. It is more important for sales managers in larger firms to remain active in selling, than
those in smaller firms
E. Most sales managers devote the largest percentage of their time to face-to-face selling

70. (p. 118) Which of the following sales-related function is the least visible but most
important? 
A. Installation and delivery
B. Special product design and engineering
C. Repair and maintenance
D. Information gathering
E. Order processing and expediting

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71. (p. 118) Span of control and management responsibility decisions are constantly changing

primarily due to changes in 
A. Government regulation
B. Sales force attitudes
C. Technology
D. Integrative institutional supply chains
E. Transaction cost analysis

72. (p. 118) Sales staff executives are commonly used to: 

A. Recruit new salespeople
B. Analyze sales trends and make forecasts
C. Train new salespeople
D. Collect and gather environmental information which line managers may need for decision
making
E. Do all of the above

73. (p. 118) Generally, the employment of staff specialists is justified only when: 

A. The organization has a large turnover
B. Such staff can be used to improve employee morale and working conditions
C. Line managers are unable to collect any useful data
D. The sales organization is large enough to provide staff specialists with enough work to
keep them busy
E. The sales organization is introducing a new product

74. (p. 119-120) Which of the following is NOT one of the key building blocks to starting a sales
force? 
A. Define the sales force's mission
B. Leverage existing organizational strengths
C. Allows sales people to go find out what works
D. Provide support
E. Develop compensation plans that motivate

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75. (p. 119) Fiona is creating a new sales force. To develop an effective sales force she will 
A. Start with an annual sales target
B. Avoid existing sales efforts
C. Allow new salespeople independence
D. Avoid compensation snafus
E. Develop her sales force secretly

 
 

Short Answer Questions

 

76. (p. 102) What guidelines should a sales manager use in choosing an independent

manufacturing sales rep? 

Look for a rep with:

Compatible product lines
Compatible territories
Compatible customers
Credibility
Capabilities
Credits (references)

77. (p. 102) What four sets of factors will sales managers consider when deciding whether to use
independent agents or a company sales force? 

They will consider economic criteria, control, transaction costs and strategic flexibility.

78. (p. 104) What is transaction cost analysis? What does it imply for sales managers? 

Transaction cost analysis states that when substantial transaction-specific assets are necessary
to sell a manufacturer' product, the costs of using and administering independent agents are
likely to be higher than the cost of hiring and managing a company sales force. Reps are more
likely to minimize post sale service and to expend little effort calling on smaller accounts.

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79. (p. 106) What are the advantages of geographic sales organization? 

Lower cost, fewer managerial levels, reduced customer confusion and easily identified
customer responsibility.

80. (p. 107) What is the primary advantage of organizing a sales force by product? 

The salesperson can develop familiarity with the technical aspects and applications of the
product and most effective selling methods associated with a single product or product line.

81. (p. 109) How does telemarketing fit within a sales strategy? 

Telemarketing is good for prospecting, quick servicing of accounts, seeking repeat business
from existing accounts and quick dissemination of information, new product changes and
other news.

82. (p. 114) What are some of the problems associated with team selling? 

Coordination, motivation and compensation are the three areas of problems associated with
team selling.

83. (p. 116) What are the benefits of a computerized ordering system? 

For the customer, the benefits to computerized ordering include convenience, flexibility and
saving time. From a supplier's perspective the benefits are also saving time but more
importantly, tying the customer to the organization.

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84. (p. 116) What two key questions must be answered in designing an effective vertical

structure for a sales organization? 

How many levels of sales managers should there be? How many people should each manager
supervise?

85. (p. 119) What is the first key building block in starting a new sales force? 

Start with a strategy, defining the sales force's mission, skill sets and customer benefits.

86. (p. 100) What coordination and integration issues need to be addressed by sales managers

regardless of the sales force structure? 

Three issues need to be addressed. The activities of the sales force must be integrated with the
needs and concerns of customers. The firm's selling activities must be coordinated with those
of other departments. If the firm's selling tasks are divided among specialized units, all those
tasks must be integrated.

87. (p. 103) Why do most sales and marketing managers believe company salespeople are more
likely to produce a higher volume of total sales than agents? 

Company salespeople concentrate entirely on the firm's products, are usually better trained
and tend to be more aggressive since their future depends on the company's success. Also,
customers prefer to deal directly with a supplier.

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88. (p. 105-109) Compare the four common bases for structuring sales efforts in an organization.
What are the advantages and disadvantages of each? 

Geographic: advantages-tends to be lowest cost and simplest organizational structure,

disadvantage-does not benefit from specialization. The sales rep in each territory must be
familiar and able to sell all of the company's products.
Type of product: advantage-familiarity with specific products, can also lead to closer
cooperation between production and selling divisions, disadvantage-duplication of effort as
salespeople from different divisions call on the same customers.
Type of customer: advantage-better understanding of customer needs, potential to identify
new products to meet customer needs, disadvantage-higher costs as sales reps travel to
different areas based on customer types.
Selling function: advantage-specialization based on skills of salespeople, disadvantage-
customer resistance to be passed from one sales rep to another, also the potential for conflict
among sales people regarding who services which accounts.

89. (p. 116) What issues and questions need to be addressed in vertical sales organizations? 

Two basic questions are how many levels of sales managers should there be and, how many
people should each manager supervise? This is referred to as span of control. Some sales
managers advocate "flat" organizations with few management levels. They argue this
facilitates communication and more direct control. Others argue this spreads management too
thin and limits communication and control. Generally the span of control should be smaller
and levels of management larger when the sales task is complex, the profit impact of each
salesperson's performance is high and when the salespeople in the organization are well paid
and professional.

90. (p. 119-120) What are the six key building blocks for starting a sales force? 

The six key building blocks are the sales force's mission, appoint an expansion team, leverage
existing organizational strengths, go to the press, develop compensation plans that motivate
and provide support.

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