File: Ch06, Chapter 6: Sales Force Organization

True/False

1. Sales managers are expecting that organizing the sales force according to specific
types of customers will become more popular with companies in the future.

Ans: True
Response: See page 155

2. The most common form of sales force organization today is according to geographic
territories without farther specialization.

Ans: False
Response: See page 157

3. Executives generally expect more and more sales forces to be organized according
to the type of customer.

Ans: True
Response: See page 157-158

4. Organizing along product lines is the most common form of sales force organization
today.

Ans: False
Response: See page 157-158

5. Most sales forces are organized along functional lines.

Ans: False
Response: See page 159-160
6. A simple geographic organization of a sales force generally works best when the
product line is fairly broad and complex.

Ans: False
Response: See page 156

7. The most common way to organize a field sales force is in a generalist structure.

Ans: True
Response: See page 156

8. One of most serious problems with geographical organizations is that salespeople

must sell the entire line, when they may not be equally knowledgeable about all product
lines.

Ans: True
Response: See page 156-157

9. One of the key advantages of a customer specialization type of sales force

organization is that it minimizes the sales force’s travel time.

Ans: False
Response: See page 156

10. One of the problems with organizing your company's sales force as generalists is
that salespeople have a great deal of latitude to decide which products to emphasize.

Ans: True
Response: See page 156

11. The organization of salespeople along product lines is often found in small firms
where technical knowledge is not important.

Ans: False
Response: See page 157
12. Multiple salespeople calling on the same customer is one of the drawbacks to
customer specialization type of sales force organization.

Ans: False
Response: See page 157

13. With customer specialization, each salesperson typically sells the entire product line
to selected types of customers.

Ans: True
Response: See page 158-159

14. One benefit of a customer specialized sales force is that they are able to be very
knowledgeable about their clients and the clients’ industry.

Ans: True
Response: See page 159

15. Multiple salespeople calling on the same customer may be a problem when a sales
force is organized along product lines.

Ans: True
Response: See page 158

16. An example of a functional specialist type sales organization is to have new

customer and retention specialists.

Ans: True
Response: See page 160

17. A 3M engineer responsible for working with the design engineers in an customer
account is an example of an end-user specialists
Ans: False
Response: See page 160

18. A strategic account program is essentially an effort to provide the kinds of services
and products necessary to establish a long-term relationship with key customers.

Ans: True
Response: See page 161

19. One reason more and more companies are establishing strategic account programs
is that a select group of customers are accounting for a disproportionately large share of
total sales.

Ans: True
Response: See page 161

20. Strategic accounts are often large chain retailers or original equipment
manufacturers that buy in large volumes.

Ans: True
Response: See page 163

21. One reason organizations are initiating strategic account programs is the
concentration of their sales to a few very important customers.

Ans: True
Response: See page 161

22. A highly successful management practice is to select the largest customers in terms
of sales volume as strategic account management.

Ans: False
Response: See page 163
23. Assigning strategic accounts to sales executives can be an effective way to
implement a strategic account program.

Ans: True
Response: See page 161-162

24. One of the primary disadvantages of telemarketing is the high cost per sales call.

Ans: False
Response: See page 165

25. Telemarketing is frequently used to sell to smaller customers.

Ans: True
Response: See page 165

26. Telemarketing refers to customer contacts utilizing telecom-

munications technology for personal selling without face-to-face contact.

Ans: True
Response: See page 165

27. Many companies service their small accounts by using telemarketing.

Ans: True
Response: See page 165

28. Working with a telemarketing sales force is generally welcomed by the outside sales
force.

Ans: False
Response: See page 166
29. Motivation and retention continue to be two management problems associated with
telemarketing sales forces.

Ans: True
Response: See page 166

30. The internet has the potential to entirely replacing most organizations’ telemarketing
efforts.

Ans: False
Response: See page 166-167

31. Permission marketing refers to first asking the customer for permission to make a
sales call.

Ans: False
Response: See page 166

32. With permission marketing, the customer initiates the selling process.

Ans: True
Response: See page 166

33. If a company’s objective is to minimize total sales force costs, then a generalist
sales force structure is the best option for organizing your sales force.

Ans: True
Response: See page 156

34. To be successful, specialized sales force structures often require exceptional

training capabilities.

Ans: True
Response: See page 167
35. If a company’s objective is to minimize total sales force costs, then some form of
sales force specialization is the best sales force structure option.

Ans: False
Response: See page 167

36. Breakeven sales analysis can be used to choose between a company sales force
and independent sales agents.

Ans: True
Response: See page 168

37. It is not uncommon for firms to turn to independent sales agents to develop new
markets.

Ans: True
Response: See page 167

38. Independent sales agents are almost always compensated by paying a commission
on sales.

Ans: True
Response: See page 167

39. Sales agents are usually employed when a company has a high sales volume in a
particular geographic area.

Ans: False
Response: See page 168

40. Given enough analysis, it is usually easy to find a firm's optimal organization
structure.

Ans: False
Response: See page 167
41. The primary means by which a company influences the behavior of independent
sales agents is through commissions.

Ans: True
Response: See page 169

42. The amount of time a sales agent will spend selling for a company will depend on
how many product lines the company has for the sales agent to sell.

Ans: False
Response: See page 169

43. Sales agents are likely to be used when the company is selling only a few products.

Ans: True
Response: See page 169

44. Sales agents are likely to be used when the company needs to have tight control
over the selling effort.

Ans: False
Response: See page 169

45. The same company will not use both a company sales force as well as sales
agents.

Ans: False
Response: See page 169

46. The primary objective of forming a functional team sales organization is to develop a
closer customer relationship when servicing existing customers.

Ans: True
Response: See page 171

47. The need to customize solutions to individual customers has led some
manufacturers to using selling partners who can provide technical and operating
support.

Ans: True
Response: See page 173

Multiple Choice

48. Which form of sales force organization is expected to increase in popularity the most
over the next five years?

a. customer
b. geographic
c. product line
d. functional
e. both a and b above

Ans: A
Response: See page 158

49. The most widely used form of sales force organization in use today is:

a. customer.
b. geographic.
c. product lines.
d. both a and b above.
e. none of the above.

Ans: C
Response: See page 157

50. Which of the following are commonly used types of sales specialization?
 a. customer specialization
b. product specialization
c. generalist structure
d. both a and b above
e. all of the above

Ans: E
Response: See page 161

51. Relatively smaller territories and reduced travel time and expenses are advantages
related to which organizational approach?

a. geographical
b. product
c. customer
d. matrix
e. functional

Ans: A
Response: See Page 155-156

52. The most serious problem with geographic organization is:

a. salespeople must sell the entire line and may not be sufficiently knowledgeable
about all products.
b. it is difficult to set up an equitable geographic organizations.
c. it generally results in extensive travel time.
d. it is a usually the most costly alternative.
e. salespeople usually do not like it.

Ans: A
Response: See page 156

53. J&J Medical has over 100 operating units producing products such as orthopedic
implants, pharmaceuticals, and sutures. Based on this information, how is their sales
force most likely to be organized?

a. geographically
b. along product lines
c. customer specialization
 d. functional specialization
e. both c and d above

Ans: B
Response: See page 157-158

54. When Hyatt Hotels had a separate sales force dedicated to each of its hotel
properties, its sales force was organized according to:

a. geography.
b. product line.
c. customer.
d. functional.
e. none of the above.

Ans: B
Response: See page 158

55. With the type of sales force organization, salespeople are

better able to identify strategic problems in the client’s operation that a supplier can
address.

a. matrix
b. product-oriented
c. customer-oriented
d. functional
e. none of the above

Ans: C
Response: See page 158-159

56. One benefit of a customer oriented sales force organization is that:

a. it is more closely identified with clients.

b. it consolidates the support services.
c. it allows for product specialization.
d. there are usually smaller territories.
e. it requires less travel time and costs.

Ans: A
Response: See pgs 159

57. Which of the following are examples of functional specialists?

a. salespeople responsible for landing new customers.

b. salespeople responsible for increasing sales to existing customers.
c. salespeople responsible for selling to end-users.
d. only a and b above.
e. a, b and c are all examples.

Ans: E
Response: See pg 159-160

58. Which of the following are examples of functional specialists?

a. salespeople responsible for landing new customers.

b. salespeople responsible for selling a new product line.
c. salespeople responsible for selling to end-users.
d. Only a and b above.
e. Only a and c above.

Ans: E
Response: See pg 159-160

59. The main objective of developing a strategic account program is to:

a. expand geographic sales coverage on a nationwide basis to take full advantage

of total sales potential.
b. Provide an enterprise type of relationship with some customers and a
consultative relationship to others.
c. free-up more of the regular sales force's time.
d. both a and b above.
e. all of the above.

Ans: B
Response: See pg 161-162
60. Customers who are good candidates for a strategic account program are large
customers who exhibit all the following characteristics except:

a. purchase centrally.
b. expect specialized attention and service.
c. are geographically close to headquarters.
d. involve multiple people in the purchasing process.

Ans: C
Response: See page 163

61. Companies often use which of the following to sell to their strategic accounts when
they first set-up a strategic account organization:

a. the existing sales force.

b. sales management.
c. sales agents.
d. a separate sales force.
e. a cross functional sales team.

Ans: A
Response: See page 164

62. Reason(s) for the growing popularity of telemarketing include:

a. telemarketing sales calls can be very cost effective.

b. ease in retraining a telemarketing sales force.
c. telemarketers are easy to motivate.
d. only a and c of the above.
e. all of the above.

Ans: D
Response: See page 165

63. The functions for which telemarketing is used differs from one business to the next.
Some common uses of telemarketing include:

a. customer service.
b. lead generation.
c. data gathering.
 d. lead qualification.
e. all of the above.

Ans: E
Response: See page 165

64. Some common ways in which telemarketing is used by businesses includes all of
the following except:

a. customer service - "800" numbers.

b. prospecting and lead qualification.
c. sales support - selling of services to compliment product purchases.
d. sales training - answering salespeople's questions about specific products.

Ans: D
Response: See page 166

65. Although telemarketing holds many benefits, gaining acceptance for telemarketing
by the field sales force can be difficult because:

a. field salespeople may feel threatened by telemarketers.

b. field salespeople fear an increased work load.
c. telemarketers are unfriendly towards field salespeople.
d. both a and b above.
e. none of the above.

Ans: A
Response: See pg 166

66. Despite its considerable merits, venturing into telemarketing has its challenges. Key
challenges include all of the following except:

a. acceptance by the field sales force.

b. effective organization of the telemarketing effort.
c. developing telemarketing equipment.
d. both a and b above
e. none of the above.

Ans: C
Response: See pg 166
67. When purchasing a Dell computer, the customer can see the computer alternatives
they may consider purchasing on Dell’s website, as well as calling a Dell representative
to answer any additional questions. This is an example of:

a. internet marketing.
b. telemarketing.
c. permission marketing.
d. both a and b above.
e. all of the above.

Ans: C
Response: See pg 166

68. Which of the following is true about independent sales agents?

a. They are employees of the firm.

b. They take ownership and physical possession of the products they sell.
c. They are generally more cost effective when sales volumes are low.
d. They are usually compensated solely by a combination of salary and
commission.
e. all the above are true.

Ans: C
Response: See pg 167

69. If independent sales agents receive a 7% commission on sales with overhead of

$70,000 and company salespeople receive a 5% commission with salary and overhead
costs of $500,000, what is the break-even point between the two choices?

a. $28,500,000
b. $21,500,000
c. $25,000,000
d. $23,500,000
e. $20,500,000

Ans: B
Response: See pgs 168
70. One common concern by manufacturers who use independent agents is:

a. higher promotional support costs.

b. the time needed to establish relationships with accounts in the territory.
c. agents not devoting enough of their time to selling your product.
d. both b and c above.
e. none of the above.

Ans: C
Response: See page 169

71. A company is considering whether to hire independent agents or develop its own
sales force. Agents are paid a 4% commission, alternatively a company sales force
would consist of 6 people paid a $25,000 salary each along with a 2% commission. A
company sales force is economically viable if sales are forecasted to be:

a. below $1,250,000.
b. above $1,250,000.
c. below $7,500,000.
d. above $7,500,000.

Ans: D
Response: See pg 168

72. A company is thinking of switching from independent sales agents to hiring its own
sales force. If 10 salespeople were hired, they would be paid a 3% commission on sales
plus a salary of $20,000 each. Independent sales agents are currently paid a
commission of 5% on sales. At what sales volume is the company economically
indifferent about which sales organization to use in a selling situation?

a. $1,000,000
b. $2,500,000
c. $10,000,000
d. $25,000,000

Ans: C
Response: See pg 168
73. Which of the following factors is not important when deciding to use sales agents in
a particular geographic area?

a. how close the business prospects are to your headquarters

b. level of control over the actions of the sales force
c. the volume of business in the geographic area
d. the predictability of sales from the geographic area

Ans: A
Response: See pg 168-169

74. What actions are companies taking to encourage better coordination and
communications between marketing and sales?

a. Holding regular meetings between sales and marketing.

b. Having marketing people go along sales calls.
c. Having salespeople help in developing marketing plans.
d. Co-locate marketers and salespeople.
e. All the above steps are being taken.

Ans: E
Response: See pg 170

75. With which of the following functional areas is a sales force likely to interact with the
most?

a. engineering
b. marketing
c. accounting
d. finance
e. customer service

Ans: E
Response: See pg 172

76. Typical issues requiring coordination between the sales force and customer service
include:

a. equipment installation.
b. warranty servicing.
 c. customer training on equipment.
d. both a and b above.
e. all of the above.

Ans: E
Response: See pg 171-172