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)

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

Figure 2-3: Hierarchy of Sales Objectives

Corporate goalsIncrease shareholder wealth by 10%

Corporate goalsIncrease shareholder wealth by 10%

Business unit objectives12% revenue growth

Grow pre-tax profits by 18%

Business unit objectives12% revenue growth

Grow pre-tax profits by 18%

Marketing objectivesIncrease product A’s market share by 2 points

Grow contributions after sales & marketing by 20%

Marketing objectivesIncrease product A’s market share by 2 points

Grow contributions after sales & marketing by 20%

Sales department objectivesAchieve sales revenue of $210 million

Grow contributions after sales expenses by 25%

Sales department objectivesAchieve sales revenue of $210 million

Grow contributions after sales expenses by 25%

Sales district objectiveAchieve sales revenue of $10.5 million in product AObtain $7 million contributions after direct selling

Sales district objectiveAchieve sales revenue of $10.5 million in product AObtain $7 million contributions after direct selling

Salesperson objectiveAchieve sales revenues of $1.2 million in product A

Obtain $0.8 million in gross margin dollars

Salesperson objectiveAchieve sales revenues of $1.2 million in product A

Obtain $0.8 million in gross margin dollars

Major account objectiveAchieve sales revenues of $95,000 in product A

Obtain an average gross margin of 80%

Major account objectiveAchieve sales revenues of $95,000 in product A

Obtain an average gross margin of 80%

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

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

Figure 2-5:

Figure 2-6 Essential Activities

Interest Creation

Purchase

Pre-PurchasePost-Purchase

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

Figure 2-9 Product Development Management Subprocesses

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

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

Figure 2-11 Customer Relationship Management Subprocesses

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

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

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

Good27%

Fair10%

Poor53%

Very Good10%

Figure 2-14: Partnering Effectiveness Index