Module 4 Organizational Strategies and the Sales Function

1. Module 4Organizational Strategies and the Sales Function

2. Corporate Mission Corporate Management Corporate Strategy SBU Definition SBU Objectives Corporate Growth Orientation Strategy Types SBU Management Business Strategy Strategy Execution Target Market Selection Marketing Management Marketing Strategy Marketing Mix Development Integrated Mkt Communications Account Targeting Strategy Sales Management Sales Strategy Relationship Strategy Sales Channel Strategy Organizational Strategy Levels (Exhibit 4.1) Key Decision Areas Key Decision Makers Strategy Level

3. 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.

4. HIGH LOW Growth-Share Matrix for SBU Objectives Build or Divest/Liquidate Market Share Objective Build or Hold Market Share Objective MARKET GROWTH Hold Market Share Objective Divest/Liquidate Market Share Objective HIGH LOW MARKET SHARE

5. Market Share Objectives Build Hold Harvest Divest/LiquidateSales Organization Objective Build • Build sales volume • Secure distribution • Call on prospective and new accounts • Provide high service levels particularly pre-sale service • Product/market feedback Salary plus incentive Hold • Maintain sales volume • Consolidate market position through concentration on targeted segments • Secure additional outlets • Call on targeted current accounts • Increase service levels to current accounts Salary plus commission or bonus Harvest • Reduce selling costs • Target profitable accounts • Call on and service most profitable accounts only and eliminate unprofitable accounts • Reduce service levels • Reduce inventories Salary plus bonus Divest/Liquidate • Minimize selling costs and clear out inventory • Dump inventory • Eliminate service Salary SBU Objectives and the Sales Organization(Exhibit 4.2) Market Share Objectives Sales Organization Objectives Primary Sales Tasks Recommended Compensation System

6. Corporate Growth Orientation and Sales Management Activities(Compaq Computer Example) Corporate Growth Direction Intensive Growth Diversification Growth Development of new personal computers for existing markets Development of new Internet products, small business systems, and engineering workstations Internal Development Corporate Growth Method 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 Acquisition

7. Business Strategy and the Sales Function Business Strategy Types • 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

8. Marketing Strategy and the Sales Function • Show TM41

9. 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

10. Personal Selling-Driven vs. Advertising-DrivenMarketing Communications Strategies 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 Advertising

11. 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

12. Account Targeting Buying Situation Strategy Relationship Buying Center Strategy Sales Organizational Account Salesperson Strategy Buyer Behavior Sales Channel Buying Process Strategy Selling Buying Needs Strategy The Sales Strategy Framework (Figure 4.4)

13. Users - purchase products and services to Business produce other products and services or Industrial Organizations Original Equipment Manufacturers (OEM) purchase products to incorporate into products Resellers - purchase products to sell Government Organizations Federal, State, and Local Government Agencies Institutions Public and Private Institutions Organizational Buyer Behavior Types of Organizations (Exhibit 4.6) Major Category Types

14. Organizational Buyer BehaviorBuying Situation • Straight Rebuy Buying Situation • Routinized Response Behavior • Modified Rebuy Buying Situation • Limited Problem Solving • New Task Buying Situation • Extensive Problem Solving

15. Organizational Buyer BehaviorBuying Center • Initiators • Users • Gatekeepers • Influencers • Deciders • Purchasers

16. Organizational Buyer BehaviorBuying Process Phase 8. Performance Feedback/Evaluation Phase 7. Selection of Order Routine Phase 6. Evaluate Proposals/Select Suppliers Phase 5. Acquire and Analyze Proposals Phase 4. Identify and Qualify Potential Sources Phase 3. Specify Item Specs/Quantity Needed Phase 2. Determine Item Specs/Quantity Needed Phase 1. Recognize Problem/Need

17. Organizational Buying Behavior Buying Needs (Exhibit 4.7) Personal Goals Organizational Goals Want a Feeling of Power Control Cost in Product Use Situation Seek Personal Pleasure Few Breakdowns of Product Desire Job Security Dependable Delivery for Repeat Purchases Want to be Well Liked Adequate Supply of Products Want Respect Cost within Budget Limits Organizational buying is goal directed.

18. Sales StrategyAccount-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.

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

20. Transaction Solutions Partnership Collaborative Relationship Relationship Relationship Relationship Goal Sell Products Add Value Time Frame Short Long Offering Standardized Customized Number of Many Few Customers Characteristics of Relationship Strategies (Exhibit 4.8)

21. Sales StrategySelling Strategy The planned selling approach for each relationship strategy.

22. Stimulus-Response Mental States Need Satisfaction Problem-Solving Consultative Customized Matching Sellingand Relationship Strategies (Exhibit 4.9) Transaction Solutions Partnership Collaborative Consultative

23. Sales StrategySales Channel Strategy Ensuring that accounts receive selling effort coverage in an effective and efficient manner.

24. Sales Channel Strategy The Internet Sell or provide information to assist selling online.

25. Sales Channel StrategyIndustrial Distributors • Employ their own salesforce • May represent one manufacturer, several non-competing manufacturers or several competing manufacturers

26. Sales Channel StrategyIndependent Representatives (Manufacturer’s Reps or Reps) • Sell complimentary products from non-competing manufacturers

27. Sales Channel StrategyTeam Selling • Three Selling Situations • New Task Selling • Modified Resell • Routine Resell • Two Types of Team Selling • Multilevel Selling • Major Account Selling

28. Team Selling and Buying Centers (Figure 4.7) Selling Firm Buying Firm Organizational Exchange Purchasing Sales Team Salesperson Buying Center Processes Agent Marketing Purchasing Sales Information Problem Solving Manufacturing Negotiation Manufacturing R & D Friendship R & D Trust Engineering Product/Services Engineering Physical Payment Marketing Distribution Reciprocity

29. Replace Field Integrate with Sales Force for Field Sales Force Certain Accounts 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 Uses of Telemarketing (Figure 4.8) Telemarketing

30. Trade Shows Typically industry-sponsored events where companies utilize a booth to display product and services to potential and existing customers.