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A Multiple-Product Sales Force Allocation Model

Author

Listed:
  • David B. Montgomery

    (Stanford University)

  • Alvin J. Silk

    (Massachusetts Institute of Technology)

  • Carlos E. Zaragoza

    (Management Analysis Center, Inc., Cambridge, Massachusetts)

Abstract

When several products are marketed by the same sales force, it frequently becomes impossible or impractical for salesmen to promote all items in the product line extensively in each and every time period. Management's problem is to decide how the available selling effort should be allocated across products and over time. The opportunity costs associated with using limited selling resources to promote certain products but not others must be evaluated. This paper describes a decision calculus-type modeling system for dealing with this question. The problem is analyzed by a two-step procedure. First, a response function is defined which relates selling effort to sales and profit results in a manner which represents some behavioral phenomena considered to be important. An interactive conversational program elicits judgmental data from managers which are used to parameterize the response model. A separate response function is specified for each product in the firm's line by this method. The set of response functions so obtained becomes the input for the second component of the system, an allocation heuristic. An incremental search procedure is employed to find an allocation of the sales force's time to the various products and over several time periods which is "best" in terms of total contribution to company profits. The model is presented in the context of an ethical drug manufacturer's multiple-product sales force allocation problem. Results of an application are summarized and implementation considerations noted. A comparison of the model-based allocation with that determined previously by management indicated that the former plan would offer a substantial improvement in profits.

Suggested Citation

  • David B. Montgomery & Alvin J. Silk & Carlos E. Zaragoza, 1971. "A Multiple-Product Sales Force Allocation Model," Management Science, INFORMS, vol. 18(4-Part-II), pages 3-24, December.
    • Handle: RePEc:inm:ormnsc:v:18:y:1971:i:4-part-ii:p:p3-p24
    DOI: 10.1287/mnsc.18.4.P3
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    Cited by:

    1. Donald G. Morrison & Jagmohan S. Raju, 2004. "50th Anniversary Article: The Marketing Department in Management Science: Its History, Contributions, and the Future," Management Science, INFORMS, vol. 50(4), pages 425-428, April.
    2. Fabio Caldieraro & Anne T. Coughlan, 2009. "Optimal Sales Force Diversification and Group Incentive Payments," Marketing Science, INFORMS, vol. 28(6), pages 1009-1026, 11-12.
    3. David Godes, 2003. "In the Eye of the Beholder: An Analysis of the Relative Value of a Top Sales Rep Across Firms and Products," Marketing Science, INFORMS, vol. 22(2), pages 161-187, May.
    4. John D. C. Little, 2004. "Comments on ÜModels and Managers: The Concept of a Decision CalculusÝ," Management Science, INFORMS, vol. 50(12_supple), pages 1854-1860, December.

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