channels & sales in new ventures mktg 241 dr. dawne martin march 29, 2012

CHANNELS & SALES IN NEW VENTURESMKTG 241

Dr. Dawne Martin

March 29, 2012

Dates and Learning Objectives• Paper 4 – Due Tuesday, April 3• Quiz 4 – Thursday, April 5• Paper 5 – Financials, Due April 10• Learning Objectives:

• To review the contents of Paper 4 – Marketing Strategy and Tactics• To investigate changes in the nature and purpose of channels of

distribution• To analysis the decisions needed to create a ;channel that

implements strategy and accomplishes goals

Paper 4: Marketing Strategy Due Tuesday, April 3

• Marketing Strategy• Marketing objectives and relationship to overall corporate (or enterprise)

objectives• Identify key strategies issues such as:

• Value proposition and competitive advantage• Positioning relative to the competition

• Marketing Programs• Product

• Features & Benefits• Quality• Packaging and labeling• Related services• Branding• Product development & management

• Promotion• Channel levels & types• Channel functions• Channel member selection criteria• Managing channels and multiple channels

Paper 4 (cont.)• Pricing Strategy

• Pricing objectives• Cost & breakeven analysis• Customer perceptions and demand• Competitive situation – reference prices

• Promotion Strategy• Personal Selling

• Role of sales person• Number of sales people• Qualifications for sales people• Sales Management – selection, training, compensation, evaluation

• Public relations & publicity• Advertising

• Goals & objectives• Audience• Exposures• Costs

• Sales Promotions• Web-site• Support - Customer Service Strategy

Channels of Distribution• Unique combination of distribution and sales effort that creates a way to reach the target customer with• customer’s desired point of purchase• service level sought• producing effective sales opportunities for business in a

cost effective manner

• Strategic Benefits• Sales growth• Customer value• Competitive advantage

• Video: http://www.marsdd.com/videos/entries/distribution-entrepreneurship-101-2011-12

http://www.marsdd.com/videos/entries/distribution-entrepreneurship-101-2011-12

http://www.marsdd.com/videos/entries/distribution-entrepreneurship-101-2011-12

Rethinking Marketing, 1st Edition

Channels Haven’t Changed Much• Direct or indirect• Mass production and consumption have lured

intermediaries into the junction between buyer and sellers:

• These intermediaries have either • Taken title to the goods or services during the flow from

producer to customer• In some way facilitated this by specializing in one or more of

the functions that must be performed for such movement to occur

• Distribution channels • Flows of title and functions• The intermediaries who have facilitated them

Prentice Hall © 2009 12-6


• Dealing with the channel for a product or service ranks as one of the key marketing quandaries

• Distribution channels generally involve relatively long-term commitments

• If managed effectively over time, they create a key external resource

• They exhibit powerful inertial tendencies • Once in place and working well, managers are reluctant

to fix what is not broken


Rethinking Marketing, 1st EditionPrentice Hall © 2009 12-8

So . . . Is anything happening?• Recent years have in fact witnessed significant

changes• Result of major shifts in the environment of business

• Changes in legislation have

• Freed channels• Broken restrictive trading practices

• Changes in economic circumstances• Changes in cultural and social values• Changes in technology

• Result has been disappearance of some channels and development of new• Book stores versus Amazon, Itunes


Back to Basics: What is the purpose of a distribution strategy?

• “Goal of marketing is the matching of segments of supply and demand”

• —Wroe Alderson 1958

• Purpose of a distribution channel• Right quantities of the right product or service

available• Right place• Right time

• Distribution strategy unique—depends on physical location

• Old saying among retailers three keys to success• 3 L’s, location, location, location


Internet Technologies Have Three Major Effects on Distribution

1. The death of distance• Distance will have substantially less effect

on distribution cost2. The homogenization of time

• In a physical market, time and season predominate trading and, by definition, distribution

• Activities that occur by time of day and in social and climatic seasonality

• Virtual marketplace is atemporal; a website is always open

• Seller need not be awake to serve the buyer• Buyer need not be awake, or even physically present, to

be served by the seller • Web is independent of season



3. The irrelevance of location• Any screen-based activity can be operated anyplace

on earth• No longer is location key to most business decisions• One can dispute whether the term even has

meaning in the case of Internet pureplays • Defining location itself becomes onerous

• Is it the address where the firm is officially registered? • Is it where most of the people employed by the firm work? • Is it where the server is physically situated?

Is this true for all channels?

In what businesses would location and time continue to be major marketing considerations?


Compare Marketspace to Conventional Bookstore – 5 Criteria

1. Content: Conventional bookstore sells books; Amazon.com sells information

2. Context (Interface with Customer): Conventional bookstore is in a shop with books; Amazon.com through a screen

3. Infrastructure: Building, people, lots of books, good location; Amazon.com requires fast, efficient server and a big database

4. Content: Conventional bookstore can never stock all books in print; Amazon.com stocks only those books that sell in great numbers, yet paradoxically stocks all books

5. Infrastructure: Conventional bookstore location is important; Amazon.com location does not matter



Implications1. Distribution media rather than distribution

channels for most services and many products—they can create

• Virtual markets (www.betfair.com)• Virtual communities (NuNomad.com and LaptopHobo.com)• Virtual worlds (www.secondlife.com)

• Primary relationship• Not between customers• With mediated environment with which they mutually interact

• “The medium is the message” complemented with the medium in the product


http://www.betfair.com/

http://www.secondlife.com/


Implications2. Diminished effect on marketers’ ability to differentiate

the product or service• Commoditization: Process by which the complex

and the difficult become so simple and easy that anyone can do them

• Solution• Niche market too small to be attractive to others• Rapid innovation to stay ahead of the pack• Monopoly• Mass Customization

3. Dis-intermediation and Re-intermediation – networks and universal service


Channel Design• Design

• Where are how are customers used to buying?• Identify needs of customers and product

• Convenience, need to touch and feel, time pressure• Need for information, education (sales effort) and consulting services,

on-site service• Need for smaller quantities, more product assortment• Stocking and availability• Financing

• Available channels and relative ability to deliver needs services

Example

You are a forest products producer who has developed a “fire proof” pine roof shingle – what are the customers and product needs?• What kind of information do construction contractors

need?• Are there any issues with building codes? • Where is the product needed?• On what time schedule?• What are the relative costs of shipping versus stocking?• What are the existing channel options?

Channel Management• What tasks does the channel need to provide?• How will you compensate the channel for the services

provided?• How will you ensure that the services are delivered at

the level you need to maintain product and service quality?

• What support do you need to provide to the channel members?

• Marketing materials?• Financing or floor planning inventory?• Training and sale support?

Entrepreneurial Selling• You are it!• Sales is about identifying, building and developing value

for customers• You can’t makes sales calls to everyone – choose your

target customers carefully• You can develop sales skills – listen, ask questions, let

the customer define the problems and benefits of solutions (SPIN Selling – Situation, Problem, Implications, Needs/Payoffs)

• Videohttp://www.marsdd.com/videos/entries/sales-entrepreneurship-101- 2010-11

http://www.marsdd.com/videos/entries/sales-entrepreneurship-101-2010-11



Traditional role of sales

•Management is preoccupied with making sure the salespeople are• Making right number of calls• Calling on the right accounts• Pushing the right products• Selling at the right price• Closing the right number of deals


Principles Behind a New Mindset in Sales

• The sales function must become a source of competitive advantage in companies

• Great sales organizations are run strategically and with strategic intent

• Sales managers and salespeople must see themselves as entrepreneurs, and the sales department should be the most entrepreneurial area within companies

• Sales must be an opportunity-driven, rather than a resource-constrained, activity

• Innovation is a major responsibility of those in sales• The ability to create, develop, and manage relationships with

customers is the single biggest way in which salespeople create value in the marketplace

• The sales function is not separate from the marketing function• Peak performance in sales is most likely when organizations

have dynamic management systems to support the sales force



Changes in markets affect sales

• Today’s market highly fragmented• Terms such as relationship marketing and one-to-

one marketing are being introduced to describe• Market segmented into dozens and even

hundreds of narrowly defined segments• Individual customers must be approached

as unique market segments• Individual customers must be approached as

unique market segments• Customer expectations continue to ratchet upward• More emphasis on customized solutions for

customers



Result of Market Changes

• Those in sales must have more knowledge at their fingertips

• Customers expect salespeople to know about them and to make specific recommendations

• Speed has become a key source of competitive advantage

• Customer expectations are on the rise regarding response time to questions and demands

• Customer demands can overload salespeople who experience

• Information overload• Role overload (burnout)



• Salespeople “leverage” organizational resources• Adept at tapping into a variety of resources within their own firms

on behalf of customers• Production• Customer service• Product development• Credit and finance• Senior management

• Build relationships with customers and key members of own firm

• Salespeople deal with a large number & variety of individuals within client organizations

• Understand the dynamics of how people influence decision-making process, more challenging

• Teams and networks make buying decisions• No longer one or two individuals

• Growing reliance on strategic alliances• Package “total solutions” for their customers• Need to analyze lines of power and influence


Death of the Sales Force?

1. The creative sales force• Creativity is soul of sales organization

• Vital in every facet of sales management and personal selling

• Creativity is about destruction and construction• Abandonment of certain assumptions• Rejection of accepted precepts• Willingness to challenge established methods

• “Creative abrasion”• Facilitate divergence• Leadership that produces convergence



1. The creative sales force—cont.

• Results in concepts or solutions that can disrupt the work lives of people in companies

• Making them break out of patterns and comfort zones

• A fresh start, new way• A path toward what can be• To create is to

matter, count, make a difference

have an impact, be a source of value


2. The expeditionary (or innovating) sales force• Creativity results in innovation

• Novel methods• Unusual solution• Core competency• Innovation is dynamic

• Must know the customer intimately• Learn from competitors’ success and failures• Salespeople are front line of the organization

• Monitoring external environment• Deciphering patterns and trends• Predicting change• Developing strategy

• Expeditionary sales force is one that

• Leads customers• Leads competitors• Leads its own firm


4. The strategic sales force

• Two dimensions1. Connection between company as a whole and

sales force

2. Connection between overall direction and priorities of the sales organization and the day-to-day operational decisions made by sales managers and salespeople

• Need for technology to assist in the process• Document customer contacts• Automate and customize communications• Track customer purchase behavior and future needs

channels & sales in new ventures mktg 241 dr. dawne martin march 29, 2012

Documents

sales channels sales

rethinking marketing

sales effort

channels havent

purpose of channels

occurdistribution channels

themprentice hall

functionsthe intermediaries