The Role of Advertising • Integrated Communication Programs. • Enhancing Sales Effectiveness. • Increased Sales Efficiency. • Creating Awareness.
Advertising • Cannot be a Substitute for effective personnel selling. • Cannot, by itself, create product preference.
The Decision Stages for Developing the Business-to-Business Advertising Program • Advertising is only one aspect of the entire marketing strategy. • The advertising decision process begins with the formulation of advertising objectives. • Equally important is the evaluation and selection of the media.
Setting Ad Budgets:Commonly Used Methods Percentage of Sales • Allocate some percent of sales to advertising. • Makes advertising a consequence rather than a determinant of sales and profits. • Useful only if possess VALID historical data • Most commonly used method
Setting Ad Budgets:Commonly Used Methods Affordability Method • Firm spends on advertising what it has available to spend • Good cash flow control • Most common with small firms • Sales drive the advertising
Setting Ad Budgets:Commonly Used Methods Objective-Task Method • An attempt to relate advertising costs to the objective it is to accomplish. • Focuses on the communications effects of advertising, not on the sales effects. • Generally considered the “best” method.
Developing the B2B Advertising Message • Determine advertising objectives. • Evaluate buying criteria of target audience. • Analyze most appropriate language for presenting message.
Typical Methods of Organizing the Sales Force • Line Organizations (& Line/Staff) • Functional Organizations • Specialization Organization • Sales Activities • Geographic Areas • Products • Customers
Line Organizations • Characteristics • Authority/responsibility for planning/implementing sales activities lie in hands of sales manager. • Each person has only one boss.
Line Organizations • Advantages • Very simple to understand and use. • Easy to trace accountability. • Relatively inexpensive (only a few highly-paid executives are necessary) • Quick action possible since decision-making is in hands of relatively few people.
Line Organizations • Disadvantages • As organization size increases, problems become more complex. • Specialized skills often needed. • Many sales managers cannot keep on top of all functions that relate to sales. • Lack of trained replacements.
Line Organizations • Implications • Best used by small organizations where operations can be clearly divided into basic functions of sales, finance, and production.
Line and Staff Organizations • Characteristics • Same as line organization except staff positions added • Staff positions don’t have authority over line positions • Advantages • Staff provide sales manager with specialized skills • Allows sales manager to be more efficient/ effective. • Doesn’t dilute his/her authority/contact w/salespeople.
Line and Staff Organizations • Disadvantages • Can be more expensive than a line organization. • Conflicts may arise between line & staff executives. • Staff executives may attempt to exert authority over line personnel. • Line executives may ignore the counsel of the staff
Line and Staff Organizations • Implications • If sales managers find themselves spending less time working with subordinates and more time performing planning & evaluating functions, may want to consider this organization
Functional Organizations • Characteristics • Organization divided by function. • Functional specialists have line authority. • Salespeople report to multiple bosses. • Advantages • Specialist ensure their functions are carried out. • Should improve performance in each functional area due to the specialization.
Functional Organizations • Disadvantages • Breakdown in the unity of command due to conflicting orders • Each salesperson is no longer accountable to only one boss • Implications • Typically used in large firms that feature numerous functions and that have the need for several specialists.
Centralized vs. Decentralized?Factors That Influence • Size of Sales Force • As sales force size increases, the need to decentralize increases. • Span-of-control problems emerge • More field managers will be necessary • Decentralization more feasible
Organizing by Sales Activities • Characteristics • Usually employ simple line organizations • Separate selling functions (present account maintenance and new account development) • Advantages • Allows salespeople to become proficient in their respective sales functions. • Places special emphasis on searching out and selling new accounts.
Organizing by Sales Activities • Disadvantages • Customers may resent being turned over to a different salesperson. • Salespeople may want to cultivate the accounts they have developed.
Organizing by Sales Activities • Implications • Use when there is a large turnover of customers • Use when there is a significant difference in the skills needed in each separate area • Use when fast growth through new account acquisition is deemed necessary
Organizing by Geographic Areas • Characteristics • Sales force is reorganized on a geographic basis • Salespeople sell all the company’s present products to all customers within their assigned territories
Organizing by Geographic Areas • Advantages • Salespeople and managers become more familiar with their territories • Local problems may be solved more quickly • Sales force can rapidly react to changes in the local competitive environment • Can provide better service at lower cost • Lower chance for customer confusion
Organizing by Geographic Areas • Disadvantages • Diversity/magnitude of product line may limit salesperson’s knowledge of any one product • Duplication of overhead expense • Greater level of salesperson control (which products to push, which customers to service) • Implications • Best used if product line is relatively homogeneous • Best used if customers are widely dispersed
Organizing by Products • Characteristics • Sales force is reorganized on a product basis • Salespeople specialize in particular products carried by the sales organization
Organizing by Products • Advantages • Each product line receives a higher degree of specialized attention • Allows for decentralization of both authority & responsibility for each product line • Allows decisions to be made closer to the problems with any particular product line
Organizing by Products • Disadvantages • If specialization occurs above salesperson level, additional overhead expense may be suffered. • More than 1 salesperson may be calling on customers • Difficult to maintain a consistent image
Organizing by Products • Implications • Best used if product line is relatively heterogeneous • Best used if have a wide variety of customers with quite different needs • Best used if products are technically complex • Broad, in-depth knowledge of product essential for the sales task
Organizing by Customers • Characteristics • Sales force is reorganized on a customer basis • Salespeople specialize in selling to/ servicing particular customer types
Organizing by Customers • Advantages • Most consumer oriented approach • Organization of sales force is based on customer needs • Control remains at the management level (which customers to call on, etc) • Allows salespeople to specialize in customer needs
Organizing by Customers • Disadvantages • Potential for overlapping territories is high • Hence, overhead costs may rise • Salespeople must become knowledgeable about company’s entire line of products
Organizing by Customers • Implications • Customers in a given market buy several different products/lines from single supplier • Same buying factors apply across product lines • Significant proportion of income is derived from a small number of accounts who require high service levels