Chapter 2: Strategy and Sales Program Planning Part I THE BIG PICTURE Chapter 2: Strategy and Sales Program Planning

Learning Objectives Describe the major elements of business strategy. State the basic elements of strategic marketing planning. Explain what is meant by strategic implementation process decisions. Describe the purpose of a sales force program and lists its major elements. Tell What is an account relationship strategy is and explain its purpose.

Chapter Outline Business Strategy and Marketing Strategy. Factors Influencing Strategic Management. Business Strategies. Go to Market Strategy. Product Development Management (PDM). Supply Chain Management (SCM). Customer Relationship Management (CRM). Sales Force Program Decisions.

Figure 2-1 The Sales Force Decision Sequence LEVEL 1 Top Management Decisions Business Strategy Marketing Strategy Go-to-Market Strategy Supply Chain Management (SCM) Customer Relationship Management (CRM) LEVEL 2 Implementation Decisions Product Development Management (PDM) Structure Competencies Leadership LEVEL 3 Sales Force Program Decisions Sales Process Activities Account Relationship Strategy Figure 2-1 The Sales Force Decision Sequence

Business Strategy: Business Strategy involves defining and articulating an overall business mission, developing specific business goals, and designing a strategy for achieving these goals.

Marketing Strategy: Marketing Strategy is the set of integrated decisions and actions a business undertakes to achieve its marketing objectives. Marketing Strategy decisions are related to market segmentation & target marketing, as well as the development of a positioning strategy.

Segmentation & Target Marketing Market Segmentation involves aggregating customers into groups that (1) Have one or more common characteristics, (2) Have similar needs, and (3) Will respond similarly to a marketing program. Target Marketing refers to the selection and prioritizing of segments to the company will market.

Positioning Strategy Positioning strategy is developed and implemented based on product, price, distribution, and promotion decisions. Positioning occurs in the mind of the consumer and refers to how the consumer perceives the product, brand, and company vis-à-vis competitors.

Positioning Strategy The fundamental questions that a customers ask about brands are: Who are you? (brand identity) What are you? (brand meaning) What do I think or feel about you? (brand responses) What kind and how much association would I like to have with you. (brand relationship)

Figure 2-2: Factors Influencing Strategic Management Environmental constraints Legal & regulatory Demographics Economic Conditions Technology Competitive conditions Sociocultural factors Resources Financial R&D Personnel Brand Equity Production Distinct competencies Marketing Financial Technology Information Strategic Management Planning Firm’s history management culture Figure 2-2: Factors Influencing Strategic Management 1

Go to Market Strategy: Go to Market Strategy is concerned with answering one question which is; How will customers will be accessed? A Go to Market Strategy defines who will perform marketing activities and for which customers.

Steps in Developing a Go-to-Market Strategy What is the best way to segment the market? What are the essential activities required by each segment? What group of go-to-market participants should perform the essential activities? Which face-to-face selling participants should be used?

Go to Market Strategy To determine a Go to Market Strategy, an important decisions should be taken in these three areas: Segmenting the Market. Sales Process Activities. Go to Market Participants.

Figure 2-6 Essential Activities Interest Creation Post-Purchase Pre-Purchase Purchase

Interest Creation Activities It include all the ways that the customers can learn about the benefit of the product and the company: Prospecting. Generating leads. Creating awareness and interest. Providing information.

Pre-Purchase In this phase customers are actively considering and evaluating competitive product and service offerings: Explaining features and benefits. Qualifying prospects. Assessing customers needs. Cooperating in problem solving. Demonstrating company and product capabilities.

Purchase Negotiating. Bidding. Finalizing terms and conditions. Writing Proposals.

Post-Purchase Delivery. Installation. Servicing of products. Addressing customers questions. Providing information about new features. Collecting payments.

Customers and Prospects Figure 2-7 Potential Go-to-Market Participants Customers and Prospects Direct Sales Force Agents Distributors Retailers Integrators Alliances Advertising Promotion Direct Mail Tele- marketing Internet Direct Indirect Sales Force Options Non-Sales Force Options Company

Figure 2-8 Comparing Various Go-to-Market Alternatives Low Cost per Exposure Advertising Direct Mail Internet Telemarketing Efficiency Sales Force High Sales per Exposure Effectiveness

Product Development Management (PDM) Product Development Management is the process of developing, producing, and marketing new product offerings.

Figure 2-9 Product Development Management Subprocesses Identify customer needs for better solutions Discovering and designing new product solutions Developing new solution prototypes Managing internal departmental priorities and involvement Designing activities to speed-up development process Launching new and redesigned offerings

Supply Chain Management (SCM) Supply Chain Management is the integration and organization of information and logistics activities across firms in a supply chain for the purpose of creating and delivering goods and services that provide value to customers.

Figure 2-10 Supply Chain Management Subprocesses Selecting and managing supplier relationships Managing inbound logistics Managing internal logistics Managing outbound logistics Designing product assembly and batch manufacturing Managing process technology Order, pricing, and terms management Managing channel partners Managing product installation and maintenance

Customer Relationship Management (CRM) It is a comprehensive set of processes and technologies for managing relationships with potential and current customers and business partners. Successful CRM efforts depends on a combination of people, processes, technology, knowledge, and information.

Figure 2-11 Customer Relationship Management Subprocesses Identifying high value prospects Learning about product usage and application Developing and executing advertising and promotion programs Developing and executing sales programs Developing and executing customer service programs Acquiring and leveraging customer contact information systems Managing customer contact teams Enhancing trust and customer loyalty Cross-selling and upselling of offerings

Three Steps in Leveraging the CRM: Customers viewed as assets CRM;s Task: To increase shareholder value by leveraging the customer base. The Market Value of the Company is the sum of (NPV) of all current and future customers cash flow. Shareholder Value Driver of Cash Flow & EVA Improving the profitability of customers seen as a driver of business profit Focus on customer selection Business Driver of Profits CRM viewed as a tool to achieve a bigger customer share through cross-selling and up-selling Focus on account planning and organizational alignment Sales Driver of Revenue

Sales Force Program Decisions. A sales force program is a tool for planning how the sales force will perform its role in achieving the firm’s objectives.

Account Relationship Strategy. A firm’s account relationship strategy refers to the type of relationship it intends to develop with its customers. Why it is important? What implications does it have on the Sales Force Program?

Transactional Relationship A transactional relationship is a relationship based on the need for a product of acceptable quality, competitively priced, and a process and relationship convenient for the buyer.

Consultative Relationship A consultative relationship is based on the customer’s demand and willingness to pay for a sales efforts that creates new value and provides additional benefits outside of the product itself.

Enterprise Relationship An enterprise relationship is one in which the primary function is to leverage any and all corporate assets of the supplier in order to contribute to the customer’s strategic success.

Figure 2-13: Alternative Types of Account Relationships Investment by Supplier Enterprise Relationship Consultative Relationship Transactional Relationship Investment by Customer Figure 2-13: Alternative Types of Account Relationships

Different Sales Orientations Solutions to your needs “Solution provider” Function/ department Product and service solutions to customer needs Understanding the customer’s needs Solution Sales Product Sales Impact on your business results “business consultant” All levels Valuable solutions to support competitive advantage Driving customer profits and EVA Value Sales Sales Argument Best products “Product Expert” Narrow Space (e.g., purchasing) Best products with a competitive price Product excellence and/ or cost leadership Profile of Sales Customer Contacts Offering Success Factors

Figure 2-14: Changes in Customer Expectations of Suppliers