Ethical dilemma (p. 51)Ethical dilemma (p. 51)• The personal computer business unit of Modern Tech is The personal computer business unit of Modern Tech is

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

Organizational StrategiesOrganizational Strategiesand The Sales Functionand The Sales Function

Module ThreeModule Three

The Importance of TrustThe Importance of TrustAn Expert’s Viewpoint:An Expert’s Viewpoint:

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

ActionAction

channelschannels

Franciscan Estates makes wineFranciscan Estates makes wine

300 distributors worldwide300 distributors worldwide

restaurantsrestaurants

consumers consumers

The Importance of TrustThe Importance of TrustAn Expert’s Viewpoint:An Expert’s Viewpoint:

The sales organization uses this information to The sales organization uses this information to strengthen relationships with existing accounts and to strengthen relationships with existing accounts and to prioritize sales efforts to existing and new customers . . . prioritize sales efforts to existing and new customers . . . . . . Franciscan Estates has used it CRM strategy and . . . Franciscan Estates has used it CRM strategy and technology to develop a competitive advantage for its technology to develop a competitive advantage for its marketing and selling efforts.marketing and selling efforts.

ResultResult

Corporate Corporate StrategyStrategy

Corporate MissionCorporate MissionSBU DefinitionSBU DefinitionSBU ObjectivesSBU Objectives

Corporate Corporate ManagementManagement

Sales Sales StrategyStrategy

Strategy TypesStrategy TypesStrategy ExecutionStrategy Execution

SBU SBU ManagementManagement

Strategy Strategy LevelLevel

Key Key Decision AreasDecision Areas

KeyKeyDecision MakersDecision Makers

Organizational Strategy LevelsOrganizational Strategy Levels

Mission statementsMission statements

““We aim to be a global organization that constantly We aim to be a global organization that constantly stays a step ahead in dealing with change, stays a step ahead in dealing with change, creates new value, and contributes broadly to creates new value, and contributes broadly to society.” society.” SumitomoSumitomo

To provide clients with Expertise, Leading Edge To provide clients with Expertise, Leading Edge Technology and Quality Products that will Technology and Quality Products that will produce Maximum Drilling Program Efficiency produce Maximum Drilling Program Efficiency and Environmental Care.and Environmental Care. Genesis Internat. Oilfield ServicesGenesis Internat. Oilfield Services

Our product: SERVICE. Our value-added: Our product: SERVICE. Our value-added: FINANCIAL ADVICE. Our competitive FINANCIAL ADVICE. Our competitive advantage: OUR PEOPLE.advantage: OUR PEOPLE. Vision and values of Vision and values of WellsFargoWellsFargo

Strategy Strategy LevelLevel

Key Key Decision AreasDecision Areas

KeyKeyDecision MakersDecision Makers

Marketing Marketing StrategyStrategy

Corporate Corporate ManagementManagement

Target Market SelectionTarget Market Selection

Marketing Mix Dev.Marketing Mix Dev.

Integrated Mkt Comm.Integrated Mkt Comm.

Business Business StrategyStrategy

SBU SBU ManagementManagement

Account Targeting StrategyAccount Targeting StrategySales Channel StrategySales Channel StrategyRelationship StrategyRelationship Strategy

Organizational Strategy LevelsOrganizational Strategy Levels

Definition ofDefinition ofStrategic Business Units (SBUs)Strategic Business Units (SBUs)

Cravens (1991)Cravens (1991)

An SBU is a single product or brand, a line of An SBU is a single product or brand, a line of products, or a mix of related products that products, or a mix of related products that meets a common market need or a group of meets a common market need or a group of related needs, and the unit's management is related needs, and the unit's management is responsible for all (or most) of the basic responsible for all (or most) of the basic business functions."business functions."

Change at the topChange at the top

In the early 1980s, the information technology (In the early 1980s, the information technology (ITIT) world ) world revolved around the product offerings of the Big 4: revolved around the product offerings of the Big 4:

1.1. IBM IBM

2.2. Digital Equipment Corporation (DEC)Digital Equipment Corporation (DEC)

3.3. BurroughsBurroughs

4.4. Data GeneralData General

In In office automationoffice automation including word-processing, including word-processing, Wang Wang ComputersComputers and and LanierLanier dominated. dominated.

Only IBM remains as a major firm Only IBM remains as a major firm

in these markets.in these markets.

Salary plus Salary plus incentiveincentive

Prospective and Prospective and new accountsnew accounts

Provide high Provide high service levels service levels particularly pre-particularly pre-sales servicesales service

Product/market Product/market feedbackfeedback

Build sales vol.Build sales vol.

Secure distributionSecure distributionBuildBuild

SBU Objectives andSBU Objectives andthe Sales Organizationthe Sales Organization

Compensation Compensation SystemSystem

Primary Primary Sales TasksSales Tasks

Sales Sales Organization Organization ObjectivesObjectives

Market Market Share Share

ObjectivesObjectives

Salary, bonus, incentiveSalary, 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 Salary plus commission or commission or bonusbonus

Call on targeted Call on targeted current accountscurrent accounts

Incr. service levels to Incr. service levels to current accountscurrent accounts

Call on new accountsCall on new accounts

Maintain sales vol.Maintain sales vol.

Consolidate Consolidate market position market position through through concentration on concentration on targeted segmentstargeted segments

Secure additional Secure additional outletsoutlets

HoldHold

SBU Objectives andSBU Objectives andthe Sales Organizationthe Sales Organization

Compensation Compensation SystemSystem

Primary Primary Sales TasksSales Tasks

Sales Sales Organization Organization ObjectivesObjectives

Market Market Share Share

ObjectivesObjectives

Salary plus Salary plus bonus bonus

Service most Service most profitable accountsprofitable accounts

eliminate eliminate unprofitable unprofitable accountsaccounts

Reduce service Reduce service levelslevels

Reduce inventories Reduce inventories levelslevels

Reduce selling Reduce selling costscosts

Target profitable Target profitable accountsaccounts

HarvestHarvest

SBU Objectives andSBU Objectives andthe Sales Organizationthe Sales Organization

Compensation Compensation SystemSystem

Primary Primary Sales TasksSales Tasks

Sales Sales Organization Organization ObjectivesObjectives

Market Market Share Share

ObjectivesObjectives

SalarySalaryDump inventoryDump inventory

Eliminate serviceEliminate service

Minimize selling Minimize selling costs and clear costs and clear out inventoryout inventory

Divest or Divest or LiquidateLiquidate

SBU Objectives andSBU Objectives andthe Sales Organizationthe Sales Organization

Compensation Compensation SystemSystem

Primary Primary Sales TasksSales Tasks

Sales Sales Organization Organization ObjectivesObjectives

Market Market Share Share

ObjectivesObjectives

Business Strategy andBusiness Strategy andthe Sales Functionthe Sales Function

• Low-cost supplierLow-cost supplier Pursue large customersPursue large customers

Minimize costMinimize cost

Compete on priceCompete on price

Seek customers who are Seek customers who are low price shopperslow price shoppers

Business Strategy andBusiness Strategy andthe Sales Functionthe Sales Function

• Low-cost supplierLow-cost supplier

• DifferentiationDifferentiation

Compete on non-price Compete on non-price benefitsbenefits

Provide high quality Provide high quality customer servicecustomer service

Seek customers who are Seek customers who are not low price shoppersnot low price shoppers

Business Strategy andBusiness Strategy andthe Sales Functionthe Sales Function

• Low-cost supplierLow-cost supplier

• DifferentiationDifferentiation

• NicheNiche

Serve a distinct target Serve a distinct target market not served well by market not served well by

othersothers

Provide high quality Provide high quality customer servicecustomer service

Seek customers who are Seek customers who are not low price shoppersnot low price shoppers

Marketing Strategy andMarketing Strategy andthe the Sales FunctionSales Function

AdvantagesAdvantages+ Only promotional tool that consists of Only promotional tool that consists of

personal communication between seller personal communication between seller and buyerand buyer

+ More credible and has more impactMore credible and has more impact

+ Better timing of message deliveryBetter timing of message delivery

+ Ability to tailor message to buyerAbility to tailor message to buyer

+ Allows for sale to be closedAllows for sale to be closed

DisadvantageDisadvantage– High cost per contactHigh cost per contact

Personal Selling-Driven vs. Advertising-DrivenPersonal Selling-Driven vs. Advertising-DrivenMarketing Communications StrategiesMarketing Communications Strategies

AdvertisingAdvertising

Personal SellingPersonal Selling

When Message Flexibility is ImportantWhen Message Flexibility is ImportantWhen Message Timing is ImportantWhen Message Timing is ImportantWhen Reaction Speed is ImportantWhen Reaction Speed is ImportantWhen Message Credibility is ImportantWhen Message Credibility is ImportantWhen Trying to Close the SaleWhen Trying to Close the Sale

When Low Cost per Contact is ImportantWhen Low Cost per Contact is ImportantWhen Repetitive Contact is ImportantWhen Repetitive Contact is ImportantWhen Control of Message is ImportantWhen Control of Message is ImportantWhen Audience is LargeWhen Audience is Large

Target Market Situations andTarget Market Situations andPersonal SellingPersonal Selling

Target Market:Target Market:A definition of the specific market segment to be servedA definition of the specific market segment to be served

Personal Selling-Driven Promotional Strategies Personal Selling-Driven Promotional Strategies are appropriate when:are appropriate when:

– The market consists of only a few buyers that tend The market consists of only a few buyers that tend to be concentrated in locationto be concentrated in location

– The buyer needs a great deal of informationThe buyer needs a great deal of information– The purchase is importantThe purchase is important– The product is complexThe product is complex– Service after the sale is importantService after the sale is important

IIntegrated ntegrated MMarketing arketing CCommunicationsommunicationsIMCIMC

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

Business or Business or Industrial Industrial

OrganizationsOrganizations

Major CategoryMajor Category TypesTypes

UsersUsers:: purchase products purchase products and services to produce and services to produce other products and servicesother products and services

Organizational Buyer Behavior:Organizational Buyer Behavior:Types of OrganizationsTypes of Organizations

Original Equipment Original Equipment Manufacturers (OEM)Manufacturers (OEM):: purchase products to purchase products to incorporate into productsincorporate into products

ResellersResellers:: purchase purchase products to sellproducts to sell

Government Government OrganizationsOrganizations

Major CategoryMajor Category TypesTypes

Federal, State, and Federal, State, and Local Government Local Government AgenciesAgencies

Organizational Buyer Behavior:Organizational Buyer Behavior:Types of OrganizationsTypes of Organizations

Public and Public and Private InstitutionsPrivate InstitutionsInstitutionsInstitutions

Organizational Buyer Behavior: Organizational Buyer Behavior: Buying SituationsBuying Situations

Straight Rebuy Buying SituationStraight Rebuy Buying Situation– Routinized Response BehaviorRoutinized Response Behavior

Modified Rebuy Buying SituationModified Rebuy Buying Situation– Limited Problem SolvingLimited Problem Solving

New Task Buying SituationNew Task Buying Situation– Extensive Problem SolvingExtensive Problem Solving

Organizational Buyer Behavior: Organizational Buyer Behavior: Buying CenterBuying Center

• InitiatorsInitiators• UsersUsers• GatekeepersGatekeepers• InfluencersInfluencers• DecidersDeciders• PurchasersPurchasers

Organizational Organizational BuyerBuyer Behavior: Behavior:Buying ProcessBuying Process

Phase 1: Recognize Problem/NeedPhase 1: Recognize Problem/Need

Phase 2: Determine Item Specs/Quantity NeededPhase 2: Determine Item Specs/Quantity Needed

Phase 3: Specify Item Specs/Quantity NeededPhase 3: Specify Item Specs/Quantity Needed

Phase 4: Identify and Qualify Potential SourcesPhase 4: Identify and Qualify Potential Sources

Phase 5: Acquire and Analyze ProposalsPhase 5: Acquire and Analyze Proposals

Phase 6: Evaluate Proposals/Select SuppliersPhase 6: Evaluate Proposals/Select Suppliers

Phase 7: Selection of Order RoutinePhase 7: Selection of Order Routine

Phase 8: Performance Feedback/EvaluationPhase 8: Performance Feedback/Evaluation

Control Cost in Product Control Cost in Product Use SituationUse SituationFew Breakdowns of ProductFew Breakdowns of ProductDependable Delivery for Dependable Delivery for Repeat PurchasesRepeat PurchasesAdequate Supply of Adequate Supply of ProductsProductsCost within Budget LimitsCost within Budget Limits

Want a Feeling of PowerWant a Feeling of Power

Seek Personal PleasureSeek Personal Pleasure

Desire Job SecurityDesire Job Security

Want to be Well LikedWant to be Well Liked

Want RespectWant Respect

Personal GoalsPersonal Goals Organizational GoalsOrganizational Goals

Personal and Organizational NeedsPersonal and Organizational Needs

Sales Strategy:Sales Strategy:Account-TargetingAccount-Targeting Strategy Strategy

The classification of accounts withinThe classification of accounts withina target market into categories fora target market into categories forthe purpose of developing strategic the purpose of developing strategic approaches for selling to each account approaches for selling to each account or account group.or account group.

Sales Strategy:Sales Strategy:Relationship StrategyRelationship Strategy

A determination of the type of A determination of the type of relationship to be developed relationship to be developed with different account groups.with different account groups.

Sales Strategy: Sales Strategy: Selling StrategySelling Strategy

Ensuring that accounts receive Ensuring that accounts receive selling effort coverage in an selling effort coverage in an effective and efficient manner.effective and efficient manner.

Sales Strategy:Sales Strategy: Sales Channel StrategySales Channel Strategy

ensuring that accounts receive selling effort coverage ensuring that accounts receive selling effort coverage efficiently and effectivelyefficiently and effectively

The planned selling approach for each The planned selling approach for each relationship strategy. relationship strategy. Use one or more theseUse one or more these

– The InternetThe Internet– Industrial DistributorsIndustrial Distributors– Independent RepresentativesIndependent Representatives– Team SellingTeam Selling– TelemarketingTelemarketing– Trade ShowsTrade Shows

Sales Strategy: Sales Strategy: The InternetThe 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:Sales Channel Strategy:Industrial DistributorsIndustrial Distributors

• Have Their Own Sales ForceHave Their Own Sales Force• May Represent One Manufacturer; May Represent One Manufacturer;

Several Non-competing Manufacturers; Several Non-competing Manufacturers; Several Competing ManufacturersSeveral Competing Manufacturers

• Normally Carry InventoryNormally Carry Inventory

Sales Strategy:Sales Strategy: Independent Independent oror Manufacturers’ Reps Manufacturers’ Reps

• Sell complementary products from non-Sell complementary products from non-competing manufacturers.competing manufacturers.

• Do Not Normally Carry InventoryDo Not Normally Carry Inventory• Paid for Performance Paid for Performance (commission)(commission)• Reduced Control over Selling EffortReduced Control over Selling Effort• Reduced Access to Customer InformationReduced Access to Customer Information

Independent sales firmIndependent sales firm

• You want to expand and increase your You want to expand and increase your customer base, but you need sales customer base, but you need sales people to do it. And you can't hire sales people to do it. And you can't hire sales people until you are making revenues people until you are making revenues from a larger customer base.from a larger customer base.

• The most common solution is to hire an The most common solution is to hire an independent sales companyindependent sales company, or , or rep firmrep firm

Rep firmRep firm

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

Fixed costs…..Variable costsFixed costs…..Variable costs

Sales Strategy: Sales Strategy: Team SellingTeam Selling

Three Selling SituationsThree Selling Situations– New Task SellingNew Task Selling– Modified Resell Selling SituationModified Resell Selling Situation– Routine Resell Selling SituationRoutine Resell Selling Situation

Two Types of Team SellingTwo Types of Team Selling– Multilevel SellingMultilevel Selling– Major Account SellingMajor Account Selling

Sales Strategy: Sales Strategy: TelemarketingTelemarketing

May replace field sales force for certain accountsMay replace field sales force for certain accounts

When integrated with field sales force, activities When integrated with field sales force, activities include:include:

– Prospecting, Qualifying Leads, Conducting SurveysProspecting, Qualifying Leads, Conducting Surveys– Taking Orders, Checking on Order Status, Handling Taking Orders, Checking on Order Status, Handling

Order ProblemsOrder Problems– Following Up for Repeat BusinessFollowing Up for Repeat Business

Sales Strategy: Sales Strategy: Trade ShowsTrade 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 brandEnhancing the brand

• Trade showsTrade shows are an excellent place to are an excellent place to enhance the brand because of the enhance the brand because of the personal contact that can occur. personal contact that can occur.

• Even with all the emailing and Internet Even with all the emailing and Internet communication most customers crave communication most customers crave the personal contact of a sales call and the personal contact of a sales call and conversation at a trade show.conversation at a trade show.

Enhancing the brandEnhancing the brand

• All the “personalization” efforts on the best All the “personalization” efforts on the best interactive web sites cannot come close to interactive web sites cannot come close to the experience of a personal contact. the experience of a personal contact.

• The larger the purchase the more the need to The larger the purchase the more the need to have some personal contact. have some personal contact.

• The more complex the transaction the more The more complex the transaction the more need for personal contactneed for personal contact..

Integrating the trade showIntegrating the trade show

• Use the Internet to support your Use the Internet to support your relationship relationship marketing planmarketing plan. .

• Develop an appropriate preview of your trade Develop an appropriate preview of your trade show exhibit and post it on the web about a show exhibit and post it on the web about a month before the show and leave it up for a month before the show and leave it up for a month afterwards. month afterwards.

• Surveys show that more that 60 percent of Surveys show that more that 60 percent of attendees use the Internet to plan their trade attendees use the Internet to plan their trade show visits.show visits.

FocusFocus

Before going to a Before going to a trade showtrade show try to be very try to be very clear who your market segment is and who clear who your market segment is and who it is not. it is not.

If top management is unclear about exactly If top management is unclear about exactly whom its target market is, spend some time whom its target market is, spend some time with them to make it clear. with them to make it clear.

Planning, executing and following up on the Planning, executing and following up on the results of a trade show are infinitely easier if results of a trade show are infinitely easier if you have a good description of your target you have a good description of your target market segment.market segment.

Use the trade showUse the trade show

• Introducing a new brand at a Introducing a new brand at a trade showtrade show is is often an excellent idea because your most often an excellent idea because your most important buyers and potential partners are likely important buyers and potential partners are likely to attend and be in the right frame of mind to to attend and be in the right frame of mind to learn about your new offering.learn about your new offering.

• Trade showsTrade shows are excellent for maintaining are excellent for maintaining awareness of the product with the primary awareness of the product with the primary buyers.buyers.

Trade shows are expensiveTrade shows are expensive

Average annual trade show budget in 2001 Average annual trade show budget in 2001 $ $777,730777,730

Average pay for exhibit managers was Average pay for exhibit managers was $60k for males and $48k for females$60k for males and $48k for females

Mktg dollars in B2BMktg dollars in B2B

Field sales Field sales 47%47%

Trade shows 14%Trade shows 14%

Trade ads Trade ads 12%12%

Direct mail Direct mail 9%9%

PRPRTelemktgTelemktg