Organizational Strategies & The Sales Function Module Three Organizational Strategies & The Sales Function The Strategic Role of the Sales Function

The Importance of Sales The Sales function is the company’s primary ‘interface’ with its marketplace… and principal source of revenue or its primary partner in completing the exchange process.

Exchange Facilitators The sales organization is designed so that this 'interface function is best suited to the larger needs & limitations of the total dynamic of the overall business organization.

Strategic levels of an Organization At the Corporate level Strategy Level Key Decision Areas Key Decision Makers Corporate Strategy Corporate Mission SBU Definition SBU Objectives Corporate Management

Strategic levels of an Organization At the Corporate level Strategy Level Key Decision Areas Key Decision Makers Marketing Strategy Corporate Management Target Market Selection Marketing Mix Dev. Integrated Mkt Comm.

At the SBU level Strategy Level Key Decision Areas Key Decision Makers Business Strategy SBU Management Account Targeting Strategy Sales Channel Strategy Relationship Strategy Sales Strategy Strategy Types Strategy Execution SBU Management

(SBUs) Strategic Business Units A functional grouping of 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. 4

SBU Objectives & the Sales Organization Compensation System Primary Sales Tasks Sales Organization Objectives Market Share Objectives Build Build sales volume Secure distribution. Prospective and new accounts Provide high service levels particularly pre-sales service Product/market feedback Salary plus incentive

SBU Objectives & the Sales Organization Compensation System Primary Sales Tasks Sales Organization Objectives Market Share Objectives Hold Maintain sales vol. Consolidate market position through concentration on targeted segments Secure additional outlets Call on targeted current accounts Incr. service levels to current accounts Call on new accounts Salary plus commission or bonus

SBU Objectives & the Sales Organization Compensation System Primary Sales Tasks Sales Organization Objectives Market Share Objectives Harvest Reduce selling costs Target profitable accounts Service most profitable accounts eliminate unprofitable accounts Reduce service levels Reduce inventories levels Salary plus bonus

SBU Objectives & the Sales Organization Compensation System Primary Sales Tasks Sales Organization Objectives Market Share Objectives Divest or Liquidate Minimize selling costs and clear out inventory Dump inventory Eliminate service Salary

Business Strategy & the Sales Function Strategy Type Sales Force Role Pursue large customers Minimize cost Compete on price Seek customers who are low price shoppers Low-cost supplier

Business Strategy & the Sales Function Strategy Type Sales Force Role Low-cost supplier Differentiation Compete on non-price benefits Provide high quality customer service Seek customers who are not low price shoppers

Business Strategy & the Sales Function Strategy Type Sales Force Role Low-cost supplier Differentiation Niche Serve a distinct target market not served well by others Provide high quality customer service Seek customers who are not low price shoppers

Marketing Strategy & the Sales Function 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 High cost per contact 9

IMC Integrated Marketing Communications The ‘third P’ ~ Promotions The Promotional -Mix Advertising Public Relations Internet / Interactive Personal Selling Direct Marketing

The Promotional-Mix For the best IMC Which ‘tools’ to use & when?

Personal Selling-Driven vs. Advertising-Driven (IMC) Strategies 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 Advertising

Target Market Situations & Personal Selling 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 10

The Sales Strategy Framework Buying Situation Buying Center Organizational Buyer Behavior Account Buying Process Buying Needs Account Targeting Strategy Relationship Salesperson Sales Sales Channel Selling 2

Organizational Buyer Behavior i) Types of Organizations Major Category Types Business or Industrial Organizations Users: purchase products and services to produce other products and services Original Equipment Manufacturers (OEM): purchase products to incorporate into products Resellers: purchase products to sell 4

Organizational Buyer Behavior: ii) Types of Organizations Major Category Types Federal, Provincial and Local Government Agencies Government Organizations Public and Private Institutions Institutions 4

Organizational Buyer Behavior iii) Buying Situations Straight Rebuy Buying Situation Routinized Response Behavior Modified Rebuy Buying Situation Limited Problem Solving New Task Buying Situation Extensive Problem Solving 5

Organizational Buyer Behavior: iv) The “Buying Centre” Initiators Users Gatekeepers Influencers Deciders Purchasers 5

Organizational Buyer Behavior v) The 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

Sales Strategy: a) 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. 10

Sales Strategy: b) Relationship Strategy A determination of the type of relationship to be developed with different account groups. 10

Characteristics of Relationship Strategies Transaction Solutions Partnership Collaborative Goal Sell Products Add Value Time Frame Short Long Offering Standardized Customized Number of Customers Many Few 12

Sales Strategy / Selling Strategy Ensuring that accounts receive selling effort coverage in an effective and efficient manner. 10

Matching Selling & Relationship Strategies Commitment Cost to Serve High Low Collaborative Partnership Solutions Transaction 15

Sales Strategy & Sales Channel Strategy The planned selling approach for each relationship strategy. The Internet Industrial Distributors Independent Representatives Team Selling Telemartketing Trade Shows 10

Sales Strategy & The Internet Increase Reach Gather Information about Customers Showcase New Products Conduct Surveys Enhance Corporate Image Obtain Feedback Service Existing Customers 10

Sales Channel Strategy & Industrial Distributors Have Their Own Sales Force May Represent One Manufacturer; Several Non-competing Manufacturers; Several Competing Manufacturers Normally Carry Inventory 17

Sales Strategy with Independent or Manufacturers’ Reps Sell complimentary products from non-competing manufacturers. Do Not Normally Carry Inventory Paid for Performance Reduced Control over Selling Effort Reduced Access to Customer Information 10

Sales Strategy & Team Selling Three Selling Situations New Task Selling Modified Resell Selling Situation Routine Resell Selling Situation Two Types of Team Selling Multilevel Selling Major Account Selling 10

Sales Strategy & Telemarketing May replace field sales force for certain accounts When integrated with field sales force, activities include: Prospecting, Qualifying Leads, Conducting Surveys Taking Orders, Checking on Order Status, Handling Order Problems Following Up for Repeat Business 10

Sales Strategy & Trade Shows Generate Leads Test Market New Products Introduce New Products Close Sales Gather Competitive Information Service Existing Customers Enhance Corporate Image 10

Organizational Strategies & The Sales Function Exchange Artists Strategic levels of an Organization SBU Objectives & the Sales Organization Business Strategy & the Sales Function Marketing Strategy &the Sales Function For the best IMC Which ‘tools’ to use & when? Organizational Buyer Behavior i) Types of Organizations Sales Channel Strategy &…