Answer to Question #188191 in Management for PAS

Question

Discuss build up method of sales territory design. ( Please answer in 150 words)

What are advantages and disadvantages of build up method over break down method of sales territory design? ( please give at least 5 advantages and 5 disadvantages )

Answer 1

Build-up is a method of designing sales territory. The Build-up method is also known as the workload method. This method assesses the attractiveness of the current and prospective customers. Once the customers are identified, their sales requirements are then analyzed individually. The territories are usually assigned to the salespersons based on the sales volumes. The salespersons are also assigned territories according to the number of calls they are supposed to make to those accounts. There are specific procedures to use in the Build-up method for an effective territory design. Firstly, determine the optimum call frequency for each category. Another procedure is determining the total number of calls needed by multiplying the number of customers in each category by the desired call frequency. Also, assess workload capacity, which is the number of hours required to serve the entire market. The next procedure is to draw territorial boundaries and lastly modify the tentative territorials as needed. 

The advantage of the Build-up method is that it equalizes the workload of salespersons. Another advantage is that it is easy to understand. Also, this method is advantageous because it recognizes the effort required to serve different categories of customers. 

 One of the disadvantages of the Build-up method of sales design territory is that it assumes that all accounts in the same category require the same effort.

Another disadvantage is that it assumes that salespersons are equally efficient. Also, after categorizing accounts, some differentiating factors are not considered ie. Cost of services, gross margins.