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Part I
THE BIG PICTURE
Chapter 2:
Strategy and Sales Program Planning
BusinessStrategy
BusinessStrategy
MarketingStrategy
MarketingStrategy
LEVEL 1Top ManagementDecisions
Figure 2-1 The Sales Force Decision Sequence
Structure
Competencies Leadership
LEVEL 3Sales ForceProgramDecisions
Sales Process
ActivitiesAccount Relationship
Strategy
Go-to-MarketStrategy
Supply Chain Management (SCM)
CustomerRelationship
Management (CRM)LEVEL 2StrategyImplementationDecisions
Product DevelopmentManagement
(PDM)
BUSINESS STRATEGY:
Strategic planning is employed to make better use of company resources and to create and sustain an advantage over the competition. Business strategy involves defining and articulating an overall business mission, developing specific business goals, and designing a strategy for achieving these goals.
The factors influencing the strategic management planning process are depicted in Figure 2-2.
Figure 2-2: Factors Influencing Strategic Management
Distinct competencies Marketing Financial Technology Information
Distinct competencies Marketing Financial Technology Information
Environmental constraints Legal & regulatory Demographics Economic Conditions Technology Competitive conditions Sociocultural factors
Environmental constraints Legal & regulatory Demographics Economic Conditions Technology Competitive conditions Sociocultural factors
Strategic ManagementPlanning
Strategic ManagementPlanning
Resources Financial R&D Personnel Brand Equity Production
Resources Financial R&D Personnel Brand Equity Production
Firm’s historymanagement culture
Firm’s historymanagement culture
Business Mission:
A well-defined business mission provides a sense of direction to employees and helps guide them toward fulfillment of the firm’s potential. The basic character of an organization's business is defined by the three Cs—customers, competitors, and the company itself.
Top managers should ask, “What is our business?” and “What should it be?” A business mission statement should include information regarding (1) the types of customers it wishes to serve,(2) the specific needs to be fulfilled, and (3) the activities and technologies by which it will
fulfill these needs.
Establishing Goals:
the organization’s goals—specific objectives by which performance can be measured. These objectives are usually stated in terms of profits, sales revenue, unit sales, market share, survival, and social responsibility.
Measurable organizational goals must be communicated down the organizational structure.
0
10
70
60
50
40
30
20
29.8% 31.9%
66.1%
7.7%14.0%
7.8%
BuildingBrand of
Company/product
Enhancingcredibility
of companyproduct
Increasingsales/
revenue
Investorrelations
Savingcosts
Other
What Goals are Most Important to You?
0
100
60
80
40
20
BuildingBrand of
Company/product
Enhancingcredibility
of companyproduct
Increasingsales/
revenue
Investorrelations
Savingcosts
Other
How Successful Were You at Reaching Your Goals?
68%
58%
72%
94%83%
93%
32%
42%
28%
6%17%
7%
Strategies:
A strategy is the means an organization uses to achieve its objectives.
all successful businesses focus on creating superior customer value by achieving one of the following market positions: low cost, differentiation, or a niche.
Low Cost Strategy: Vigorous pursuit of cost reductions from experience and tight cost control.
High Profit Sales Programs: Extensive use of independent sales agents Focused on transactional customer
relationships Structured so that managers supervised a
large number of salespeople Compensation was largely incentive based Salespeople were evaluated primarily on their
sales outcome performance
Differentiation strategy: Creating an offering perceived as being unique leading to high brand loyalty and low price sensitivity.
High Profit Sales Programs: Selective use of independent sales agents Focused on long-term customer relationships Structured so that managers intensely
supervised a limited number of salespeople Compensation was largely salary based Salespeople were evaluated on their behaviors
as well as their outcomes.
Niche Strategy: Servicing a target market very well, focusing all decisions with the target market needs in mind, dominating sales with the segment.
High Profit Sales Programs: Experts in the operations and opportunities associated with a target market. Otherwise the firm adopted the program characteristics associated with the appropriate value creation strategy above.
Figure 2-4: Business Strategies and High Profit Sales Force Programs
MARKETING STRATEGY:
Marketing strategy is the set of integrated decisions and actions a business undertakes to achieve its marketing objectives by addressing the value requirements of its customers. marketing strategy is concerned with decisions related to market segmentation and target marketing, as well as development and communication of a positioning strategy.
Segmentation and target marketing 1- targeting : Target marketing refers to
the selection and prioritizing of segments to which the company will market.
or to decide where or for whom to go to sell your product and its involve two steps :Selecting your markets , and set priorities .
2- segmentation: Market segmentation involves aggregating customers into groups that (1) have one or more common characteristics, (2) have similar needs, and (3) will respond similarly to a marketing program.
Positioning
3- Positioning: occur in the mind of the customer and
refers to how the customer perceive us versus our competitors .
-Some of the fundamental questions that customers ask about brands are: (1) Who are you? (brand identity); (2) What are you? (brand meaning); (3) What do I think or feel about you? (brand responses); and (4) What kind of association and how much of a connection would I like to have with you? (brand relationships).
STRATEGIC IMPLEMENTATION DECISIONS: (level 2)
Its require cross functional cooperation and coordination , and in its sales executives work with top executive from ( marketing , operation , engineering , customer service departments ) in making these decisions .
Strategic implementation decisions refer to a set of processes that organizations will develop to create customer value and achieve a competitive advantage.
STRATEGIC IMPLEMENTATION DECISIONS: (level 2) ==The fundamental decisions that most
companies will have to make with respect to these level 2 processes include: (1)How will customers be accessed? (Go-to-Market Strategy)
An essential set of activities must be performed in order to attract and retain customers. A go-to-market strategy defines who will perform these activities and for which customers.
The process for determining a go-to market strategy consists of answering the four major questions shown in Figure 2-5.12
1. What is the best way to segment the market?
2. What are the essential activities required by each segment?
3. What group of go-to-market participants should perform the essential activities?
4. Which face-to-face selling participants should be used?
Steps in Developing a Go-to-Market Strategy
Segmenting the Market:
Customer segments and go-to-market strategies will vary depending on the products old. Adult diapers and baby diapers are very similar in how they are manufactured, but they have very different go-to-market strategies. Most adult diapers are sold in bulk to nursing homes via distributors, and with very little advertising. Most baby diapers are sold at retail with massive advertising support.
Customer characteristics commonly used to segment a market for purposes of developing a go-to-market strategy include, but are not limited to, the following:
Segmenting the Market:
• Industry What business is the customer in? • Size What is the revenue size of the
customer? How many employees? What is the sales potential?
• Geography Where is the customer located? Does the customer have global operations?
• Behavior Who are the key decision markers? What are their adoption tendencies? Does the customer currently use our product? A competitor’s product? Does the customer buy centrally for all its plant locations?
Sales Process Activities
Sales Process Activities: The sales process activities consist of all
the activities needed to serve a customer properly. Essential activities can be divided into four groups: interest creation, prepurchase, purchase, and post-purchase.
These activities roughly mirror the selling cycle and are shown in Figure 2-6. Notice that the activities recycle, as good post-purchase activities and support can lead to interest creation, building a continuing relationship with the customer.
Figure 2-6 Essential Activities
Interest Creation
Purchase
Pre-PurchasePost-Purchase
Sales Process Activities
Interest creation activities include all the ways that customers can learn about the benefits of the product and the company. After all, only customers who want to buy will buy. Specific activities involved in interest creation include prospecting, generating leads, creating awareness and interest, and providing information about the company’s products.
Essential activities in the prepurchase phase include explaining features and benefits, qualifying prospects, assessing customer needs.
Activities in purchasing: negotiating, bidding, finalizing terms and conditions, and writing proposals.
The post-purchase activities may include delivery, installation, and servicing of products; addressing customer questions that need answering; providing information about new features; and collecting payment.
Account Maintenance:
Continue high-quality service Electronic Data Entry (EDI) Prompt delivery Enhance value proposition Relationships Friendship
Effectiveness Selling:
Solve and consult Cooperation Customization Integration Partnership
Efficiency Selling:
Take orders Secure distribution Consider self-ordering (lower price)
Targeted Selling:
Quick needs assessment and solution Explain features and benefits Economic evaluation
Large
Small
Low Information,Low Solution Needs
High Information,High Solution Needs
BuyingProcess
Customer Sizeand
Opportunity
A Framework for Defining Essential Activities
Go-to-Market Participants
Go-to-Market Participants: The combination of go-to-market
participants that is most appropriate for each customer segment and type of essential activity will depend on a number of factors, including cost, efficiency, and effectiveness. The efficiency of a marketing instrument refers to its ability to generate customer contacts for the money spent. On the other hand, the more results created from the number of customers contacted, the more effective the marketing instrument is.
Direct SalesForce
Direct SalesForce
AgentsDistributors
Retailers
AgentsDistributors
RetailersIntegratorsIntegrators AlliancesAlliances
AdvertisingPromotionDirect Mail
AdvertisingPromotionDirect Mail
Tele-marketing
Tele-marketing InternetInternet
Direct Indirect
Non-Sales Force OptionsSales Force Options
CompanyCompany
Customers and ProspectsCustomers and Prospects
Figure 2-7 Potential Go-to-Market Participants
Figure 2-8 Comparing Various Go-to-Market Alternatives
Advertising
Direct Mail
Internet
Telemarketing
Sales Force
Effectiveness
Efficiency
High Salesper Exposure
Low Costper Exposure
Various Go-to-Market alternatives Advertising and Promotion. Advertising
and promotion consists of instruments such as broadcast media, magazines, trade publications, newspapers, and direct mail. The marketing program required a coordinated effort among advertising, sales promotion, channels of distribution, and the sales force. (not very effective)
Telemarketing. Telemarketing refers to customer contacts utilizing telecommunications technology for personal selling without direct, face-to-face contact.
Various Go-to-Market alternatives Internet. The extensive use of the Internet to gather
information and to make purchases is a key business go-to-market development. more expensive but more effective at generate desire customer behaviors .
“Today we notice that trying to get our customers to purchase through the Web has not worked. But we do know that buyers will make their purchasing decisions because of the Internet.
Face-to-Face Selling Alternatives. Upon deciding that a face-to-face sales force should perform some of the essential activities, a company must still address another question. Should the selling be performed by a direct company sales force, a selling partner, or some combination? The main outsourcing options available to most companies are agents, resellers, integrators, and alliances.
Various Go-to-Market alternatives Independent Sales Agents. Independent sales agents are not employees, but rather
independent businesses given exclusive contracts to perform the selling
function within specified geographic areas. Unlike distributors, they take neither ownership nor physical possession of the products they sell and are always compensated by commission.
Resellers. Resellers are channel members, retailers, and distributors, who take title to the offerings they sell to end-users.
(they market their supplies offering to their own customers ) Integrators. Set solutions for complicated problems that
end customer face (powerful buying influence with complex choice )
Alliances. An increasingly popular alternative for accessing markets is to establish an alliance with another organization in a joint venture to sell products to specific markets.
product development management [PDM]) 2-(2) How will new offerings be
developed and existing products be improved? (product development management [PDM])
Figure 2-9 Product Development Management Sub processes
Identify customer needs for better solutions
Discovering and designing new product solutions
Developing new solution prototypes
Managing internal departmental priorities and involvement
Designing activities to speed-up development process
Launching new and redesigned offerings
product development management [PDM]) The sales force will almost always play a major role in
the launching of new products. Professors Wotruba and Rochford have shed new light on the changes that most companies make in their sales force programs when introducing new products.25 Some of the more common changes are as follows.
Motivation Sales Competencies Leadership Compensation Sales Structure At the same time, studies indicate that new product
failure rates are around 50 percent of all launched products and that on average it takes 3,000 new product ideas to produce one successful new product launch.
(supply chain management)[SCM] (3) How will physical products be created and
delivered to the customer? (supply chain management)
In short, supply chain managements about producing world-class products that are available at the right time, at the right place, and in the right form and condition.
Following are some of the important implications of SCM for the evolution of the sales force :
Knowledge of the entire upstream and downstream supply chain.
Thinking strategically about partnering. Establishing good lines of communications and influence
with senior corporate management.
Figure 2-10 Supply Chain Management Subprocesses
Selecting and managing supplier relationships
Managing inbound logistics
Managing internal logistics
Managing outbound logistics
Designing product assembly and batch manufacturing
Managing process technology
Order, pricing, and terms management
Managing channel partners
Managing product installation and maintenance
(customerrelationship management [CRM]) (4) How will customer relationships be enhanced
and leveraged? (customer relationship management [CRM]) CRM is a comprehensive set of processes and
technologies for managing relationships with potential and current customers and business partners across marketing, sales, and service regardless of the communications channel.
Successful CRM efforts depend on a combination of people, processes, technology, and knowledge.
The processes involved in customer relationship affected by CRM technology include:
Marketing. Sales Service
Figure 2-11 Customer Relationship Management Sub processes
Identifying high value prospects
Learning about product usage and application
Developing and executing advertising and promotion programs
Developing and executing sales programs
Developing and executing customer service programs
Acquiring and leveraging customer contact information systems
Managing customer contact teams
Enhancing trust and customer loyalty
Cross-selling and upselling of offerings
SALES FORCE PROGRAM DECISIONS: A sales force program is a tool for
planning how the sales force will perform its role in achieving the firm’s objectives.
Figure 2-12 Sales Force Program
Marketing Objectives, Strategy, andStrategy Implementation Program
Marketing Objectives, Strategy, andStrategy Implementation Program
Account Relationship StrategyAccount Relationship Strategy
Desired Selling Actionsand Behaviors
Desired Selling Actionsand Behaviors
Organizational StructureOrganizational Structure
Competency Development ProgramCompetency Development Program
Leadership SystemLeadership System
Estimates of salespotential and sales forecast
Estimates of salespotential and sales forecast
Estimates of sales forcesize and budget
Estimates of sales forcesize and budget
Feedback
Account Relationship Strategy:
A firm’s account relationship strategy refers to the type of relationship it intends to develop with its customers.
this decision determines which customers can be profitably served because it calls for very different levels of investment into customer relationships.
Account relationships may take a variety of forms, each having major implications for the sales force with respect to recruiting and selection, compensation, necessary competencies, and behaviors.
Types of Account Relationship: 1-A transactional relationship
is one in which the relationship is based on the need for a product of acceptable quality, competitively priced, and a process and relationship convenient for the buyer.
it is usually based on a personal relationship between individual buyers and sellers.
Types of Account Relationship: 2- Consultative Relationship. A
consultative relationship, a quite common relationship in industrial markets, is based on the customer’s demand and willingness to pay for a sales effort that creates new value and provides additional benefits outside of the product itself.
-get very close to the customer and to intimately grasp the customer’s business issues.
2- Consultative Relationship the sales force attempts to create value
for the customer in three ways: • Helping customers understand their
problems and opportunities in a new or different way
• Helping customers develop better solutions to their problems than they would have discovered on their own
• Acting as the customer’s advocate inside the supplier’s organization, ensuring the timely allocation of resources to deliver customized or unique solutions to meet the customer's special needs.
2- Consultative Relationship consultative relationship is most appropriate when
one or more of the following conditions are present:
• The product or service can be differentiated from competitive alternatives.
• The product or service can be adapted or customized to the needs of the customer.
•The customer is not completely clear about how the product or service provides solutions or adds value.
• The delivery, installation, or use of the product or service requires coordinated support from the selling organization.
• The benefits of the product or service justify the relatively high cost of consultative relationships.
3-Enterprise Relationship. An enterprise relationship is one in
which the primary function is to leverage any and all corporate assets of the supplier in order to contribute to the customer’s strategic success.
-To achieve successful enterprise relationships, the supplier must deliver exceptional customer value while also extracting sufficient value from the relationship.
Just to remember ??!
A critical mistake is to assume that more investment in the customer relationship will automatically create a better relationship with improved results. It turned out, however, that most customers simply didn’t want advice or help. They needed packaging material, pure and simple, and that’s all they were prepared to pay for.
Traditional Relationships
Enterprise Relationships
Little recognition of credit for past performance
Recognition of past performance and track record.
No responsibility for supplier’s profit margins
Recognition of suppliers’ need to make a fair profit
Little support for feedback from suppliers
Feedback from suppliers encouraged.
No guarantee of business relationship beyond the contract.
Expectations of business relationship beyond the contract.
No Performance expectations beyond the contract.
Considerable performance expectations beyond the contract.
Adversarial, zero-sum game. Cooperative and trusting, positive-sum game.
Figure 2-14: Changes in Customer Expectations of Suppliers
Investmentby
Supplier
Investment by Customer
Transac
tional
Relatio
nship
Consulta
tive
Relatio
nship
Enterpris
e
Relatio
nship
Figure 2-13: Alternative Types of Account Relationships
Account Relationship
Strategy
• How long is the selling cycle?• How much time is spent on customer need
discovery?• Will the offering be customized for each
customer?• Will other functional areas be involved in the
sale?• How much will we need to invest in the
individual customer relationship?• How easily can the customer switch to a
competitor once the relationship is established?Sales ForceSelling
Activities
• What are their non-selling responsibilities?• How much customer face-time will salespeople
have?• How will sales leads be generated?• How much time will be spent with new
prospects?• How will business with existing customers be
grown?• With whom in the customer’s organization will
the sales force interact?• What support will be needed to consummate a
sale?• How will customers be serviced?
Sales Force Program Elements – Cont.
Sales Force Program Elements – Cont.
Organizational Structure
• Will the sales force be specialized by product, customer, or function?
• How many salespeople will be needed?• What is the span of control for management?• How many levels of management will be
needed?• How will territories by designed?• What is the location of salespeople and
managers?• Will telemarketing support be needed?
• Experience level of new salespeople?• Length and purpose of initial training program?• Nature of continuing development program?
Competency Development
Program
LeadershipProgram
• Mix of salary, bonus, and commission compensation?
• Total compensation level?• What additional incentive programs will be
needed?• What benefits will be needed?• Use of quotas?• How much will be spent on sales meetings?• Behavioral-based evaluation metrics?• Performance-based evaluation metrics?• Required sales force information system?
Sales Force Program Elements – Cont.
