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					Chapter 4
Selling and Sales Management

01

Learning Objectives
1. 2. 3. 4. 5. What are the forces that have an impact on selling and sales management? How are different sales channels structured, and why? What are push and pull sales strategies and tactics? What are the unique problems and forces surrounding organisational and service sales settings? How useful are exhibitions for sales? How can they be used for promotion?

6.

What is „Public Relations‟? How can it be used as a selling tool?

2

Environmental and Managerial Forces: Behaviour
1. 2. 3. Rising expectations
• • consumers & organizations constantly demand more it‟s a very stressful experience. How to make it easier?

Customer avoidance of negotiations Growing power of major buyers
•
•

They want to have more, and pay less. They can always go somewhere else, you know? Demand: key account status; JIT inventory; joint funding of promotions; etc
Companies may sell in many markets Most of their profit may come from markets abroad Very complex requirements – may demand special terms of pricing, customisation etc , which require extra teamwork & coordination to keep their customers happy. Race, culture, lifestyle, income, etc Sales managers must be able to develop strategies, and identify opportunities, to satisfy all

4.

Globalisation of markets
• • •

5.

Fragmentation of markets
• •

Environmental and Managerial Forces: Technology
1.
• •

Salesforce automation
laptop computers; mobile phones; email; CRM tools; videoconferencing quotes; journey planning; recruitment; reports; promotional material can easily be transferred

2.
•

Virtual sales office
Workers and managers can be anywhere and still communicate =>savings in time & money

3.
• •

Electronic sales channels
Customers can buy online, less need for human involvement Free up sales team from small, one-off sales to focus on big organizational sales

Environmental and Managerial Forces: Management
• New strategies and tactics
– direct marketing
• direct mail & telemarketing • in-store customer kiosks (price & product info) to replace salespeople

– connect sales & marketing teams
• intranets • sales team aware of rapidly-changing data eg product details, pricing, competitor activity • knowledge-sharing

– training & professional qualifications for salespeople

Environmental and Managerial Forces: Managerial (ii)
• E-commerce changes sales from “order-taking and order-making” to Strategic Customer Management
– Customer at centre of company‟s focus – Sales team design & implement CRM

• 3 key activities
– Intelligence
• how do corporate buyers see the world? What are their markets? • gather information to see needs before the customer realises it • gain competitive advantage by seeing opportunities first

– Interfaces
• Salespeople must be trained to use and trust new technologies • Give the choice of communication to the customer, with the expectation of excellent service in all

– Integration
• All of the selling company‟s IT systems (sales; customer ordering; inventory management; order fulfilment) must be integrated to work together, in order to ensure customer satisfaction

Strategic Customer Management
• Sales is a core element of firm‟s competitiveness • Sales force responsible for all aspects of customer relationships:
– – – – designing establishing managing sustaining

• 3 „I‟s (explained elsewhere):
– Intelligence – Interface – Integration

Channels of Distribution
• 1 of 2 kinds of Sales Channels • Raw material > final customer
– How many parts are involved? – How many different sales are involved?
• „Direct‟ channel: smaller sales are gathered together to form one final sale
– Wheels sold to car manufacturers – Manufacturers sell to distributors – Distributors sell to consumers

• „Indirect‟ channel
– Manufacturer sells to wholesalers – Wholesalers break up purchase, and sell in smaller amounts to retailers – „Breaking bulk‟

Physical Distribution Management
• • • The physical flow of goods and materials from raw material to end customer “Supply chain integration” Stages:
1. 2. 3. 4. 5. 6. Order processing Materials handling Warehousing Inventory control Transportation Packaging Systems: inter-related components Total cost: try to reduce costs overall

•

How do we think about this?
1. 2.

Sales Channels
• • • • • Getting products/services to customers Manufacturing costs dropping Distribution costs rising Channel decisions now very complex 2 types of sales channel:
– Logistics – Distribution – both are important to the sales force, for different reasons

Sales Channels: Supply Chain Integration (SCI)
• Market
– maximum potential customers; compatibility with existing, similar products; avoid alarming customers

• Channel costs
– short or long? Short means closer connection to customer, greater sensitivity to their needs, but also higher burden for sales, inventory, transport costs. Short is better if pre-selling is possible

• Product
– Long channels good for low-cost, low-tech products, and for narrow product lines. Low profit margins benefit because intermediaries share costs.

Sales Channels: Supply Chain Integration (SCI)
• Profit potential
– Short channel: high margins, high expense. Long channel: low margins, lower expense. Finding the right balance is critical

• Channel structure
– What is the power balance between provider & intermediaries? „Push‟ strategy: strong intermediary; „Pull‟ strategy: strong provider. Does provider have the power to change the channel structure?

• Product life-cycle
– Where is the product on the life-cycle curve? Ends need more exposure...

• Non-marketing factors
– How much finance is required for different channels to be used? How much is available?

Sales Channels:Characteristics
• Choice of 4 types. Changing once a choice has been made can be difficult & expensive.
1. Direct-to-customer 2. Selective: a few intermediaries, chosen for specific strengths 3. Intensive: maximum exposure & no. of outlets 4. Exclusive: a restricted number of dealers, expected to meet certain quality levels.

Trade Marketing: different types of retail organisation
1. 2. 3. 4. 5. 6. 7. Multiples: > 10 branches; narrow focus Variety chains: > 5 branches; broad focus Co-operative societies: owned & controlled by consumers Department stores: > 5 departments in 1 building; >25 staff; very wide focus Independents: individual owners; may collaborate on purchasing Mail order: commissioned agents sell with catalogues Direct selling: agent visits customers at home. Host may organize „party‟ and receive share of commission

Trade Marketing:
• Combination of:
– key account management – marketing

• in order to focus on retailer needs:
– – – – – products sizes packaging prices promotion

• to develop appropriate products • and to tailor promotion to specific environments

Franchising/Vertical Management System (VMS): Types
• Power is several stages away from the end customer (hence VMS) • Types:
– Manufacturer > retailer (car dealerships) – Manufacturer > wholesaler (soft drink manufacturers) – Wholesaler > retailer (independent retailers join a group eg 7-11) – Service firm > retailer (McDonald‟s, Pizza Hut, Avis Car Rental, Holiday Inn hotels)

Franchising/Vertical Management System (VMS): procedures
• Franchisor supplies
– business advice to franchisee – brand recognition – favourable purchasing system (bulk discount/‟secrets‟) – strict rules for „behaviour‟ (and ensures they are followed) – initial startup and ongoing training

• Franchisor charges royalties/fees for use of brand & services; actual business belongs to franchisee

Services
• Satisfy consumer needs but:
– cannot be stored – cannot be displayed – satisfaction achieved through activity

• Sales issues:
– intangibility – production & consumption difficult to separate – not standardized; may be difficult to assess value

Services: the 7 Ps
• In addition to marketing‟s usual 4Ps, for services we add:
– People
• training is very important. Customer must be dealt with appropriately. Customer satisfaction vital.

– Process
• How is the service provided. Consistency and QoS vital.

– Physical evidence
• QoS; physical location; tools & materials; show evidence that an intangible service has been provided well.

Sales Promotions
• Purpose
– – – – – encourage repeat purchases build long-term loyalty encourage use of a particular sales outlet build up retail stock levels widening/increasing distribution of product/brand

• Techniques
– consumer promotions – trade promotions
• increased margins; free holidays; dealer competitions; • legal awareness needed

– salesforce promotions
• bonuses; training; trophies & awards; • may be demotivating for some

Exhibitions
• Usually for display & awareness-building, rather than immediate sales
– though are the main areas for sales in some industries

• Intended to prepare for future sales • A tool for PR; part of overall sales & marketing efforts • Allow potential customers to see most or all of the communications strata • Allow sales force to:
– sell – provide quotes – obtain permission for follow-up contact

Exhibitions: Further purposes
• Define market (region/product/other segmentation) • Define value of potential purchases • Define status of contact • Define type of necessary sales decision (new buy/re-buy/etc) • Define appropriate communication method

Unique Sales Proposition (USP)
• aka “Unique Selling Point” • Describes why the customer should buy this product, not competitor • Can be very easy to describe in a sentence, or may need costly demonstration
– different methods are called “communication strata”

• Sales & marketing should be designed to emphasize the USP.

„Push‟ techniques
• Encourage retailers/distributors to stock item • Need to give price incentives => higher margins for retailers
– May require large cash reserves

• Aims:
– – – – – – widespread distribution of new brand move excess stock from inventory greater display levels increase overall stockholding encourage distributor sales force to recommend brand support broader promotional strategy

„Pull‟ techniques
• Create customer demand, encouraging retailers/distributors to stock product in response • Reliant on advertising & promotions
– discounts; more for same price (BOGOF); coupons; introductory discounts; gifts; continuities (collectible sets); free samples

• Gives manufacturer power over retailers • Lower margins for retailers

Public Relations
• Broader than selling or marketing, but needed to assist sales • Features
– planned communication
• deliberate, planned, sustained (proactive, not reactive)

– public(s)
• community; employees; government; financial community; distributors; consumers; opinion leaders

– specific objectives
• communication is carried out for specific reasons and goals

– mutual understanding
• receiver understands the message the way the sender intended

• Helps to build “corporate identity” or “corporate personality”

Public Relations
• Tasks:
– Be aware of public opinion, political issues, etc that may affect the company – Advise all managers on decisions & communication – Constantly be aware of how to create informed public opinion necessary for corporate success – Plan & implement efforts to influence/change public policy – Manage resources necessary for PR

• Relationship to sales team:
– Creates market awareness of company and products – Uses sales force as a communication channel


				
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posted:11/24/2009
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