1 Copyright © 2000 by Harcourt, Inc. All rights reserved. (1) 4 Module 4 Organizational Strategies and the Sales Function

1 Copyright © 2000 by Harcourt, Inc. All rights reserved. (2) 4 (Exhibit 4.1) Organizational Strategy Levels Strategy Level Key Decision AreasKey Decision Makers Corporate Strategy Corporate Mission SBU Definition SBU Objectives Corporate Growth Orientation Corporate Management Business Strategy Strategy Types Strategy Execution SBU Management Marketing Strategy Target Market Selection Marketing Mix Development Integrated Mkt Communications Marketing Management Sales Strategy Account Targeting Strategy Relationship Strategy Sales Channel Strategy Sales Management

1 Copyright © 2000 by Harcourt, Inc. All rights reserved. (3) 4 Definition of Strategic Business Units (SBUs) A single product or brand, a line of products, or a mix of related products that meets a common market need or a group of related needs, and the unit's management is responsible for all (or most) of the basic business functions (Cravens 1991).” Too few SBUs makes it difficult to support each product or line of products. Too many SBUs creates expensive duplication within the corporation.

1 Copyright © 2000 by Harcourt, Inc. All rights reserved. (4) 4 Growth-Share Matrix for SBU Objectives MARKET SHARE HIGHLOW HIGH MARKET GROWTH Build or Hold Market Share Objective Build or Divest/Liquidate Market Share Objective Hold Market Share Objective Divest/Liquidate Market Share Objective

1 Copyright © 2000 by Harcourt, Inc. All rights reserved. (5) 4 SBU Objectives and the Sales Organization SBU Objectives and the Sales Organization (Exhibit 4.2) Market Share Objectives Build Hold Harvest Divest/Liquidate Sales Organization Objective SalaryDump inventory Eliminate service Minimize selling costs and clear out inventory Divest/Liquidate Salary plus bonusCall on and service most profitable accounts only and eliminate unprofitable accounts Reduce service levels Reduce inventories Reduce selling costs Target profitable accounts Harvest Salary plus commission or bonus Call on targeted current accounts Increase service levels to current accounts Maintain sales volume Consolidate market position through concentration on targeted segments Secure additional outlets Hold Salary plus incentiveCall on prospective and new accounts Provide high service levels particularly pre-sale service Product/market feedback Build sales volume Secure distribution Build Recommended Compensation System Primary Sales TasksSales Organization Objectives Market Share Objectives

1 Copyright © 2000 by Harcourt, Inc. All rights reserved. (6) 4 Corporate Growth Orientation and Sales Management Activities (Compaq Computer Example) Development of new personal computers for existing markets Development of new Internet products, small business systems, and engineering workstations Investing in companies with products to help existing businesses compete more successfully Operating as a venture capitalist and investing in companies with promising new products and technologies Corporate Growth Direction Intensive GrowthDiversification Growth Acquisition Internal Development Corporate Growth Method

1 Copyright © 2000 by Harcourt, Inc. All rights reserved. (7) 4 Porter’s Generic Business Strategies –Low Cost - focus on low cost –Differentiation - focus on uniqueness –Niche - focus on a particular target market and use a low cost or differentiation approach Role of the Salesforce –Low Cost - sell to large customers; minimize costs; focus on price; order taking role –Differentiation - sell non-price benefits; high customer service and responsiveness; target low price sensitive customers; order generator –Niche - could go either low cost or differentiation approach Business Strategy and the Sales Function Business Strategy Types

1 Copyright © 2000 by Harcourt, Inc. All rights reserved. (8) 4 Marketing Strategy and the Sales Function Show TM41

1 Copyright © 2000 by Harcourt, Inc. All rights reserved. (9) 4 Advantages and Disadvantages of Personal Selling Advantages –Only promotional tool that consists of personal communication between seller and buyer –More credible and has more impact –Better timing of message delivery –Ability to tailor message to buyer –Allows for sale to be closed Disadvantage –COST

1 Copyright © 2000 by Harcourt, Inc. All rights reserved. (10) 4 Personal Selling-Driven vs. Advertising-Driven Marketing Communications Strategies Advertising Personal Selling When Message Flexibility is Important When Message Timing is Important When Reaction Speed is Important When Message Credibility is Important When Trying to Close the Sale When Low Cost per Contact is Important When Repetitive Contact is Important When Control of Message is Important When Audience is Large

1 Copyright © 2000 by Harcourt, Inc. All rights reserved. (11) 4 Target Market Situations and Personal Selling Target Market: A definition of the specific market segment to be served Personal Selling-Driven Promotional Strategies are appropriate when: –The market consists of only a few buyers that tend to be concentrated in location –The buyer needs a great deal of information –The purchase is important –The product is complex –Service after the sale is important

1 Copyright © 2000 by Harcourt, Inc. All rights reserved. (12) 4 (Figure 4.4) The Sales Strategy Framework Buying Situation Account Targeting Strategy Buying Center Relationship Strategy Organizational Buyer Behavior AccountSalesperson Sales Strategy Buying Process Buying Needs Sales Channel Strategy Selling Strategy

1 Copyright © 2000 by Harcourt, Inc. All rights reserved. (13) 4 (Exhibit 4.6) Organizational Buyer Behavior Types of Organizations Major CategoryTypes Users - purchase products and services to Business or Industrial Organizations produce other products and services Original Equipment Manufacturers (OEM) purchase products to incorporate into products Resellers - purchase products to sell Government OrganizationsFederal, State, and Local Government Agencies InstitutionsPublic and Private Institutions

1 Copyright © 2000 by Harcourt, Inc. All rights reserved. (14) 4 Organizational Buyer Behavior Organizational Buyer Behavior Buying Situation Straight Rebuy Buying Situation –Routinized Response Behavior Modified Rebuy Buying Situation –Limited Problem Solving New Task Buying Situation –Extensive Problem Solving

1 Copyright © 2000 by Harcourt, Inc. All rights reserved. (15) 4 Organizational Buyer Behavior Organizational Buyer Behavior Buying Center Initiators Users Gatekeepers Influencers Deciders Purchasers

1 Copyright © 2000 by Harcourt, Inc. All rights reserved. (16) 4 Organizational Buyer Behavior Organizational Buyer Behavior Buying Process Phase 1. Recognize Problem/Need Phase 2. Determine Item Specs/Quantity Needed Phase 3. Specify Item Specs/Quantity Needed Phase 4. Identify and Qualify Potential Sources Phase 5. Acquire and Analyze Proposals Phase 6. Evaluate Proposals/Select Suppliers Phase 7. Selection of Order Routine Phase 8. Performance Feedback/Evaluation

1 Copyright © 2000 by Harcourt, Inc. All rights reserved. (17) 4 (Exhibit 4.7) Organizational Buying Behavior Buying Needs Personal GoalsOrganizational Goals Want a Feeling of PowerControl Cost in Product Use Situation Seek Personal PleasureFew Breakdowns of Product Desire Job SecurityDependable Delivery for Repeat Purchases Want to be Well LikedAdequate Supply of Products Want RespectCost within Budget Limits Organizational buying is goal directed.

1 Copyright © 2000 by Harcourt, Inc. All rights reserved. (18) 4 Sales Strategy Sales Strategy Account-Targeting Strategy The classification of accounts within a target market into categories for the purpose of developing strategic approaches for selling to each account or account group.

1 Copyright © 2000 by Harcourt, Inc. All rights reserved. (19) 4 Sales Strategy Sales Strategy Relationship Strategy A determination of the type of relationship to be developed with different account groups.

1 Copyright © 2000 by Harcourt, Inc. All rights reserved. (20) 4 (Exhibit 4.8) Characteristics of Relationship Strategies Relationship TransactionSolutionsPartnershipCollaborative Relationship GoalSell ProductsAdd Value Time FrameShortLong OfferingStandardizedCustomized Number of Customers ManyFew

1 Copyright © 2000 by Harcourt, Inc. All rights reserved. (21) 4 Sales Strategy Sales Strategy Selling Strategy The planned selling approach for each relationship strategy.

1 Copyright © 2000 by Harcourt, Inc. All rights reserved. (22) 4 (Exhibit 4.9) Matching and Matching Selling and Relationship Strategies Transaction Stimulus-Response Mental States Collaborative Consultative Customized Solutions Need Satisfaction Problem-Solving Partnership Consultative

1 Copyright © 2000 by Harcourt, Inc. All rights reserved. (23) 4 Sales Strategy Sales Strategy Sales Channel Strategy Ensuring that accounts receive selling effort coverage in an effective and efficient manner.

1 Copyright © 2000 by Harcourt, Inc. All rights reserved. (24) 4 Sales Channel Strategy Sales Channel Strategy The Internet Sell or provide information to assist selling online.

1 Copyright © 2000 by Harcourt, Inc. All rights reserved. (25) 4 Sales Channel Strategy Sales Channel Strategy Industrial Distributors Employ their own salesforce May represent one manufacturer, several non-competing manufacturers or several competing manufacturers

1 Copyright © 2000 by Harcourt, Inc. All rights reserved. (26) 4 Sales Channel Strategy Sales Channel Strategy Independent Representatives (Manufacturer’s Reps or Reps) Sell complimentary products from non- competing manufacturers

1 Copyright © 2000 by Harcourt, Inc. All rights reserved. (27) 4 Sales Channel Strategy Sales Channel Strategy Team Selling Three Selling Situations –New Task Selling –Modified Resell –Routine Resell Two Types of Team Selling –Multilevel Selling –Major Account Selling

1 Copyright © 2000 by Harcourt, Inc. All rights reserved. (28) 4 (Figure 4.7) Team Selling and Buying Centers Selling FirmBuying Firm Sales Team Salesperson Exchange Processes Purchasing Agent Organizational Buying Center Marketing Sales Information Purchasing Problem Solving ManufacturingNegotiationManufacturing R & DFriendship Trust R & D EngineeringProduct/ServicesEngineering Physical Distribution Payment Reciprocity Marketing

1 Copyright © 2000 by Harcourt, Inc. All rights reserved. (29) 4 (Figure 4.8) Uses of Telemarketing Replace Field Sales Force for Certain Accounts Integrate with Field Sales Force Selling to Same Accounts Activities C Prospecting C Qualifying Leads C Conducting Surveys C Taking Orders C Checking on Order Status C Handling Order Problems C Following Up for Repeat Business Telemarketing

1 Copyright © 2000 by Harcourt, Inc. All rights reserved. (30) 4 Trade Shows Typically industry-sponsored events where companies utilize a booth to display product and services to potential and existing customers.