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Territory Management

A sales territory comprises a group of customers or a geographical area

assigned to a sales unit. The territory may or may not have geographic
boundaries. A sales territory represents a group of customer accounts, an
industry, a market or a specific geographical area. Territory management
includes the market potential, number of customer accounts, the firms
experience and market share in the territory, the capability of the salesperson
assigned and the frequency of sales calls made.
The following diagram outlines the activities of Territory Management:
Trade Relations/Dealer Relations
Potential Business
Territory Size
Portfolio of Accounts
Selling Techniques
Customer Satisfaction
Selling Abilities

Factors to be Considered when designing

The two basic approaches commonly used for designing sales
territories are discussed below:
Market Build-up Approach

In this approach, an estimation of the present and potential

products/services demand by looking at how the market is built up, who
are its present/potential users, how much do they consumer and at what

In this approach, information from trade directories, state publications,

etc. is consolidated and then aggregated to understand an all India
market potential for the product. For example, if the market potential
for a new deluxe car in Maharashtra is 1,00,000, Gujarat is 60,000 and
Rajasthan is 50,000, I t shows the total market potential of 2,10,000 cars
in the country. This leads to an estimation of total sales called required
per area, and number of salespersons required. Sales territories are then
formed in such a manner that the sales potential and work load is
distributed among areas.

Factors to be Considered when designing

territories (Contd.)


The Workload Approach

This approach is designed by WJ Talley on the basis of the
workload performed by salespersons. The following steps should
be considered important when using the above approach:
Customers are grouped into class size according to the sales
Optimum call frequencies for each class of customers are estimated.
Present and potential customers are then located geographically and
arranged volume-wise and value-wise.
The number of present and potential customers in each
volume/value group is then multiplied by the desired call frequency
to get the total number of planned calls required for each
geographical control unit.

Factors to be Considered when designing

territories (Contd.)

Assign to Territories
Some salespeople can handle large territories and the
travel associated with them; some territories require
experienced sales people and some are best suited to
new people. There are a few factors a manager needs to
consider what assigning both new and experienced
people to territories.
In todays complex selling situation, the presence of a
well-thought-out daily and weekly route plan is required
for effective management. The following may be
considered basic route patterns of a territory.

Straight Line Pattern


First Call


Clover Leaf Pattern




Major City Pattern