Sales Management Environment
Chapter 7
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Model of Sales Management Environment
Internal environment: factors within the organization that impact the selling process. Corporate resources, sales budget, types of products offered, organizational structure are among the components of the such environment. External environment: factors beyond the control of the organization that impact the selling process. Unexpected changes in the external environment may present opportunities or threats to the sales organization.
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Responding to Environmental Changes
Adapting to Change: Try to adapt sales operations to
changes in the environment. If a leading competitor is having success with a product-based sales organization, you should recognize your sales force into a similar pattern.
Moving counter to the change: It involves more risk but at
the same time has a greater payoff. Suppose, the trend is towards telemarketing to sell to smaller accounts in a particular industry, to counter this trend, the firm might expand its sales force to provide personal attention to these accounts to strengthen customer loyalty, and increase market share.
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Trying to modify the change: Its not always easy or
feasible to move counter to a change, especially if its directed by the government. In some cases advertising, public relations can influence or modify the change in the firms favor.
Example is of a firm hiring fresh college graduates as
salespersons, agents refuse to deal with them, claiming they lack industry experience. The firm develops a series of seminars in which the new salespeople current industry and product information.
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Management Response
Thus management should include specific
guidelines in sales training programs for sales force. Management should provide update information about legal developments related to communication with customers. Use incentive package that reward salespeople for appropriate behavior. Review salesperson’s performance to identify any action or practices that might lead to legal problems for the Firm.
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Components of External Environment
1. Social and cultural environment 2. Technology environment 3. Economic environment 4. Competitive environment 5. Political and legal environment
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1. Social and Cultural Environment
Factors such as (a) size and average age of the
population (b) geographic distribution (c) cross cultural similarities and differences (d) education level (e) increased number of working women (f) peoples attitudes (g) living standards and styles.
These factors can contribute to the success or failure of
the selling process.
Sales managers must understand the impact of these
factors on international as well as domestic markets.
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2. Technology Environment
Involves the various methods by which people use their
knowledge and available resources to produce goods and services.
These products and services come about through one or two
processes (a) invention or creation of something brand new (b) redesign or adaptation of ideas or products to better-fit consumer needs.
Customers depend on sales people as information sources for
new innovations related to their business.
Sales managers should make use of this technology to cut
down on costs and speed up the sales negotiations, and make 8 them more effective and efficient.
3. Economic Environment
Many factors must be considered by sales managers when assessing the economic environment, such as:
Income level and purchasing power (consumers ability to buy goods and services) Impact of inflation or rising prices that reduces consumer purchasing power Unemployment, here the sales team should realize the sensitivity of pricing their products, increased customer services, and aggressive selling strategies Cost of sales (personal selling has been researched as one of the expensive mediums of selling), breakeven analysis is essential. Savings and debt patterns, which includes interest rates, spending power, investments etc.
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4. Models of Competition
Perfect competition – market where there are several buyers and
sellers and no one firm can make a great difference in prices. Selling strategy is focused on non-price factors or marketing mix elements. Very close substitutes available in the market. which no close substitutes are available. Pricing freedom due to lack of competition. Sales people focus on brand differentiation, aggressive marketing efforts, through advertising and other promotional methods. There are price leaders and followers. Sales manager should focus on customer service and quality. offer products that are relatively heterogeneous to the consumer. Sales manager should use a combination of pricing and non-pricing 10 strategy.
Monopoly – market dominated by one firm offering a product for
Oligopoly – market dominated by relatively few large companies.
Monopolistic competition – market in which several competitors
5. Political and Legal Environment
Laws are there to prevent monopoly and deceptive and
unfair trade practices.
Some laws are there to protect consumer’s rights. These
include federal laws for specific industries, such as food, drugs, and cosmetics.
Improper use of promotional material, misrepresentation of
samples, and even silence in the face of prospect’s questions are other ways that salespeople can create an unintended warranty or misrepresent a product’s features and benefits. Such actions clearly violate standards of ethical behavior for professional sales people.
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