4

Organizational Strategies and the Sales Function

Organizational Strategy Levels

(Exhibit 4.1)
Strategy Level
Corporate Strategy

Key Decision Areas

Corporate Mission SBU Definition SBU Objectives Corporate Growth Orientation Strategy Types Strategy Execution

Key Decision Makers

Corporate Management

Business Strategy

SBU Management

Marketing Strategy

Target Market Selection Marketing Mix Development Integrated Mkt Communications Account Targeting Strategy Relationship Strategy Sales Channel Strategy

Marketing Management

Sales Strategy

Sales Management

Definition of Strategic Business Units

(SBUs)
Cravens (1991) (def): "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."

SBU Objectives and the Sales Organization

Market Share Objectives

(Exhibit 4.2)

Sales Organization Objectives

Primary Sales Tasks

Recommended Compensation System

Salary plus incentive

Build

Build sales volume Secure distribution

Hold

Harvest

Maintain sales volume Consolidate market position through concentration on targeted segments Secure additional outlets Reduce selling costs Target profitable accounts

Call on prospective and new accounts Provide high service levels particularly presale service Product/market Call on targeted feedback current accounts Increase service levels to current accounts Call on new accounts Call on and service most profitable accounts only and eliminate unprofitable accounts Reduce service levels Reduce inventories Dump inventory Eliminate service

Salary plus commission or bonus

Salary plus bonus

Divest/Liquidate

Minimize selling costs and clear out inventory

Salary

Business Strategy and the Sales Function

Business Strategy Types
Generic Business Strategies (Porter)
Low Cost Differentiation Niche

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
COST

Personal Selling-Driven vs. Advertising-Driven Marketing 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

Figure 4.2 Advertising

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

The Sales Strategy Framework

(Figure 4.4)
Buying Situation Account Targeting Strategy Relationship Strategy Sales Strategy Sales Channel Strategy Selling Strategy

Buying Center

Organizational Buyer Behavior

Account

Salesperson

Buying Process

Buying Needs

Sales and Service Philosophy

(4:06)

Organizational Buyer Behavior

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

Institutions

Organizational Buyer Behavior

Buying Situation

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 Initiators Users Gatekeeper s Influencers Deciders Purchasers

Personal and Organizational Needs

(Exhibit 4.7)
Personal Goals
Want a Feeling of Power Seek Personal Pleasure Desire Job Security Want to be Well Liked Want Respect

Organizational Goals
Control Cost in Product Use Situation Few Breakdowns of Product Dependable Delivery for Repeat Purchases Adequate Supply of Products Cost within Budget Limits

Organizational buying is goal directed.

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

Characteristics of Relationship Strategies

(Exhibit 4.8)
Transaction Relationship Goal Time Frame Sell Products Short Solutions Relationship Partnership Relationship Collaborative Relationship Add Value Long

Offering
Number of Customers

Standardized
Many

Customized
Few

Sales Channel Strategy

Industrial distributors Independent reps Internet Company salesforce
Team selling Telemarketing Trade shows

Sales Channel Strategy

Industrial Distributors

Channel middlemen Take title to goods Own salesforce May represent one manufacturer; several noncompeting manufacturers; several competing manufacturers

Sales Channel Strategy

Independent Representatives Manufacturers Reps

Sell complimentary products from non-competing manufacturers Do not carry inventory, do not take title to products they sell Sell purely on commission Cost versus control issue

Sales Channel Strategy Internet

Most companies not replacing sales reps w/Internet, but integrating internet into multiple channel strategy or using it to enhance/assist sales reps

Team Selling

Sales Channel Strategy

Three Selling Situations

New Task Selling Modified Resell Selling Situation Routine Resell Selling Situation

Two Types of Team Selling

Multilevel Selling Major Account Selling

Team Selling and Buying Centers

(Figure 4.7)
Selling Firm
Sales Team Marketing Sales Manufacturing R&D Salesperson Exchange Processes Purchasing Agent

Buying Firm
Organizational Buying Center Purchasing Information Problem Solving Negotiation Friendship Trust Product/Services Payment Reciprocity Manufacturing R&D

Engineering Physical Distribution

Engineering Marketing

Uses of Telemarketing
(Figure 4.8) Telemarketing
Integrate with Field Salesforce Selling to Same Accounts

Replace Field Salesforce for Certain Accounts C C C C C

Activities
Prospecting Qualifying Leads Conducting Surveys Taking Orders Checking on Order Status C Handling Order Problems C Following Up for Repeat Business

Trade Shows
Average Cost/Visitor $185