Before the Industrial Revolution, small-scale enterprises dominated the economic scene, and selling was no problem. The chief problem was to produce enough goods for nearby customers. Orders were obtained with minimum effort, and they were on hand before goods were produced. In most firms a single individual supervised all phases of the business, including both manufacturing and selling. Manufacturing problems received the most attention. Selling and other marketing problems were handled on a part-time basis.
With the Industrial Revolution, which began in about 1760 in England and shortly after the American Revolution in the United States, it became increasingly necessary to find and sell new markets. Newly built factories were turning out huge quantities of goods of every description. Their continued operation demanded great expansions in the area of sales coverage, as adjacent markets could not absorb the increased quantities being manufactured. But even under these circumstances other business problems took precedence over selling. These were problems associated with hiring large numbers of workers, and acquiring land, buildings, and machinery. To solve them, large amounts of capital had to be raised. The result was that more and more businesses adopted the corporate form of organization—the day of large-scale manufacturing enterprises had arrived. Firsthand, administration of all phases of the operation being beyond the capabilities of most individuals, authority was increasingly delegated to others. Separate functional departments were established, but sales departments were set up only after the activation of manufacturing and financial departments.
The advent of specialized sales departments helped to solve the organizational problems of market expansion, but another problem remained— communicating with customers. Little by little, manufacturers shifted portions of the marketing function to intermediaries. At the start, goods were sold to retailers, who resold them directly to consumers. Eventually, some larger retailers began to purchase for resale to other retailers, and, as time passed, many of these evolved into wholesale institutions. Other wholesalers developed out of the import-export business. The manufacturer’s sales department was becoming more remote from consumers, and it was increasingly difficult to maintain contact with final buyers and users of the product and to control the conditions under which wholesalers and retailers made their sales. Thus, in some respects, the addition of intermediaries to the channel of distribution complicated the problem of market expansion.
Meanwhile, marketing activities conducted by the manufacturer’s sales department grew in importance. Many tasks, such as advertising and sales promotion, became increasingly complex. One solution was to split the marketing function, a trend that is still continuing. New departments were and are being organized for the performance of specialized marketing tasks. Marketing activities today are carried on not only by the sales department, but by such departments as advertising, marketing research, export, sales promotion, merchandising, traffic and shipping, and credits and collections. In spite of this growing fragmentation of marketing operations, the sales department still occupies a strategically important position. The underlying responsibility for the making of sales has not shifted elsewhere. Businesses continue to rely upon their sales departments for the inward flow of income. It has been aptly said that the sales department is the income-producing division of business.
Source: Richard R. Still, Edward W. Cundliff, Normal A. P Govoni, Sandeep Puri (2017), Sales and Distribution Management: Decisions, Strategies, and Cases, Pearson; Sixth edition.