A Multiple-Product Sales Force Allocation Model

David B. Montgomery, Alvin J. Silk and Carlos E. Zaragoza
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David B. Montgomery: Stanford University
Alvin J. Silk: Massachusetts Institute of Technology
Carlos E. Zaragoza: Management Analysis Center, Inc., Cambridge, Massachusetts

Management Science, 1971, vol. 18, issue 4-Part-II, P3-P24

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.

Date: 1971
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