Ethical dilemma (p. 51) The personal computer business unit of Modern Tech is reaching the end of its fiscal year and is very close to meeting its sales growth objective. Herb Smith, your sales manager, is rallying the troops to “get over the top” so everyone can earn a substantial performance bonus. You are motivated to do your share. Your first call today is to ABC. ABC purchased a number of computers from you last year. Mary, purchasing manager at ABC, indicates that her IT people want to upgrade these computers. You know this sale could be critical to meeting your quota and the business unit’s sales growth objective. However, you also know that a new, more powerful PC will be available in 3 months. This new personal computer is exactly what ABC needs, but the sale cannot be made until after the fiscal year ends.The personal computer business unit of Modern Tech is reaching the end of its fiscal year and is very close to meeting its sales growth objective. Herb Smith, your sales manager, is rallying the troops to “get over the top” so everyone can earn a substantial performance bonus. You are motivated to do your share. Your first call today is to ABC. ABC purchased a number of computers from you last year. Mary, purchasing manager at ABC, indicates that her IT people want to upgrade these computers. You know this sale could be critical to meeting your quota and the business unit’s sales growth objective. However, you also know that a new, more powerful PC will be available in 3 months. This new personal computer is exactly what ABC needs, but the sale cannot be made until after the fiscal year ends.

Organizational Strategies and The Sales Function Module Three

The Importance of Trust An Expert’s Viewpoint: Franciscan Estates consists of seven winery estates based in California. Using the traditional sales strategy of working through distributors, the company had little information about product or customer sales beyond the distributor level. The company developed a customer relationship management (CRM) strategy to establish different types of relationships with different customers at different levels. Action

channels Franciscan Estates makes wine Franciscan Estates makes wine 300 distributors worldwide 300 distributors worldwide restaurants restaurants consumers consumers

The Importance of Trust An Expert’s Viewpoint: The sales organization uses this information to strengthen relationships with existing accounts and to prioritize sales efforts to existing and new customers Franciscan Estates has used it CRM strategy and technology to develop a competitive advantage for its marketing and selling efforts. Result

Corporate Strategy Corporate Mission SBU Definition SBU Objectives Corporate Management Sales Strategy Strategy Types Strategy Execution SBU Management Strategy Level Key Decision Areas Key Decision Makers Organizational Strategy Levels

Mission statements “We aim to be a global organization that constantly stays a step ahead in dealing with change, creates new value, and contributes broadly to society.” Sumitomo To provide clients with Expertise, Leading Edge Technology and Quality Products that will produce Maximum Drilling Program Efficiency and Environmental Care. Genesis Internat. Oilfield Services Our product: SERVICE. Our value-added: FINANCIAL ADVICE. Our competitive advantage: OUR PEOPLE. Vision and values of WellsFargo

Strategy Level Key Decision Areas Key Decision Makers Marketing Strategy Corporate Management Target Market Selection Marketing Mix Dev. Integrated Mkt Comm. Business Strategy SBU Management Account Targeting Strategy Sales Channel Strategy Relationship Strategy Organizational Strategy Levels

Definition of Strategic Business Units (SBUs) Cravens (1991) An SBU is 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."

Change at the top In the early 1980s, the information technology (IT) world revolved around the product offerings of the Big 4: 1.IBM 2.Digital Equipment Corporation (DEC) 3.Burroughs 4.Data General In office automation including word-processing, Wang Computers and Lanier dominated. Only IBM remains as a major firm in these markets.

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

Salary, bonus, incentive A bonus is a lump-sum payment for an above-normal performance A bonus must always be combined with salary and/or commission incentive means commission Siebel Systems in 2001 paid a base salary plus commissions plus a quarterly bonus based on customer satisfaction surveys for each rep

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

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

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

Business Strategy and the Sales Function Low-cost supplierLow-cost supplier Pursue large customers Minimize cost Compete on price Seek customers who are low price shoppers

Business Strategy and the Sales Function Low-cost supplierLow-cost supplier DifferentiationDifferentiation Compete on non-price benefits Provide high quality customer service Seek customers who are not low price shoppers

Business Strategy and the Sales Function Low-cost supplierLow-cost supplier DifferentiationDifferentiation NicheNiche 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 and 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

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

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

Integrated Marketing Communications IMC The strategic integration of multiple marketing communications tools communicating a consistent message in the most effective and efficient manner.

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

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

Government Organizations Major Category Types Federal, State, and Local Government Agencies Organizational Buyer Behavior: Types of Organizations Public and Private Institutions Institutions

Organizational Buyer Behavior: Buying Situations Straight Rebuy Buying Situation –Routinized Response Behavior Modified Rebuy Buying Situation –Limited Problem Solving New Task Buying Situation –Extensive Problem Solving

Organizational Buyer Behavior: Buying Center InitiatorsInitiators UsersUsers GatekeepersGatekeepers InfluencersInfluencers DecidersDeciders PurchasersPurchasers

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

Control Cost in Product Use Situation Few Breakdowns of Product Dependable Delivery for Repeat Purchases Adequate Supply of Products Cost within Budget Limits Want a Feeling of Power Seek Personal Pleasure Desire Job Security Want to be Well Liked Want Respect Personal Goals Organizational Goals Personal and Organizational Needs

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.

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

TransactionSolutionsPartnershipCollaborative Characteristics of Relationship Strategies Goal Sell Products Add Value Time Frame Short Long Offering Standardized Customized Number of Customers ManyFew

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

Matching Selling and Relationship Strategies Transaction Solutions Partnership Collaborative Commitment Cost to Serve HighHighLow

Sales Strategy: Sales Channel Strategy ensuring that accounts receive selling effort coverage efficiently and effectively The planned selling approach for each relationship strategy. Use one or more these –The Internet –Industrial Distributors –Independent Representatives –Team Selling –Telemarketing –Trade Shows

Sales Strategy: The Internet Increase ReachIncrease Reach Gather Information about CustomersGather Information about Customers Showcase New ProductsShowcase New Products Conduct SurveysConduct Surveys Enhance Corporate ImageEnhance Corporate Image Obtain FeedbackObtain Feedback Service Existing CustomersService Existing Customers

Sales Channel Strategy: Industrial Distributors Have Their Own Sales ForceHave Their Own Sales Force May Represent One Manufacturer; Several Non-competing Manufacturers; Several Competing ManufacturersMay Represent One Manufacturer; Several Non-competing Manufacturers; Several Competing Manufacturers Normally Carry InventoryNormally Carry Inventory

Sales Strategy: Independent or Manufacturers’ Reps Sell complementary products from non- competing manufacturers.Sell complementary products from non- competing manufacturers. Do Not Normally Carry InventoryDo Not Normally Carry Inventory Paid for Performance (commission)Paid for Performance (commission) Reduced Control over Selling EffortReduced Control over Selling Effort Reduced Access to Customer InformationReduced Access to Customer Information

Independent sales firm You want to expand and increase your customer base, but you need sales people to do it. And you can't hire sales people until you are making revenues from a larger customer base.You want to expand and increase your customer base, but you need sales people to do it. And you can't hire sales people until you are making revenues from a larger customer base. The most common solution is to hire an independent sales company, or rep firmThe most common solution is to hire an independent sales company, or rep firm

Rep firm The rep firm will work on commission ‑ only, but the reps will not work just for you ‑‑ they will represent several different companies and sell whoever's product or service seems the best match for the customer

Fixed costs…..Variable costs

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

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

Sales Strategy: Trade Shows Generate LeadsGenerate Leads Test Market New ProductsTest Market New Products Introduce New ProductsIntroduce New Products Close SalesClose Sales Gather Competitive InformationGather Competitive Information Service Existing CustomersService Existing Customers Enhance Corporate ImageEnhance Corporate Image

Enhancing the brand Trade shows are an excellent place to enhance the brand because of the personal contact that can occur.Trade shows are an excellent place to enhance the brand because of the personal contact that can occur. Even with all the ing and Internet communication most customers crave the personal contact of a sales call and conversation at a trade show.Even with all the ing and Internet communication most customers crave the personal contact of a sales call and conversation at a trade show.

Enhancing the brand All the “personalization” efforts on the best interactive web sites cannot come close to the experience of a personal contact.All the “personalization” efforts on the best interactive web sites cannot come close to the experience of a personal contact. The larger the purchase the more the need to have some personal contact.The larger the purchase the more the need to have some personal contact. The more complex the transaction the more need for personal contact.The more complex the transaction the more need for personal contact.

Integrating the trade show Use the Internet to support your relationship marketing plan.Use the Internet to support your relationship marketing plan. Develop an appropriate preview of your trade show exhibit and post it on the web about a month before the show and leave it up for a month afterwards.Develop an appropriate preview of your trade show exhibit and post it on the web about a month before the show and leave it up for a month afterwards. Surveys show that more that 60 percent of attendees use the Internet to plan their trade show visits.Surveys show that more that 60 percent of attendees use the Internet to plan their trade show visits.

Focus Before going to a trade show try to be very clear who your market segment is and who it is not. If top management is unclear about exactly whom its target market is, spend some time with them to make it clear. Planning, executing and following up on the results of a trade show are infinitely easier if you have a good description of your target market segment.

Use the trade show Introducing a new brand at a trade show is often an excellent idea because your most important buyers and potential partners are likely to attend and be in the right frame of mind to learn about your new offering.Introducing a new brand at a trade show is often an excellent idea because your most important buyers and potential partners are likely to attend and be in the right frame of mind to learn about your new offering. Trade shows are excellent for maintaining awareness of the product with the primary buyers.Trade shows are excellent for maintaining awareness of the product with the primary buyers.

Trade shows are expensive Average annual trade show budget in 2001 $777,730 Average pay for exhibit managers was $60k for males and $48k for females

Mktg dollars in B2B Field sales 47% Trade shows 14% Trade ads 12% Direct mail 9% PR Telemktg