1 Copyright © 2000 by Harcourt, Inc. All rights reserved. (1) 4 Module 4 Organizational Strategies...

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Copyright © 2000 by Harcourt, Inc. All rights reserved. (1)

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Module 4Module 4

Organizational Strategies and Organizational Strategies and the Sales Functionthe Sales Function

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(Exhibit 4.1)Organizational Strategy LevelsOrganizational Strategy Levels

Strategy Level Key Decision Areas Key Decision Makers

Corporate Strategy Corporate MissionSBU DefinitionSBU ObjectivesCorporate Growth Orientation

Corporate Management

Business Strategy Strategy TypesStrategy Execution

SBU Management

Marketing Strategy Target Market SelectionMarketing Mix DevelopmentIntegrated Mkt Communications

Marketing Management

Sales Strategy Account Targeting StrategyRelationship StrategySales Channel Strategy

Sales Management

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Definition of Definition of Strategic Business Units Strategic Business Units

(SBUs)(SBUs)

• 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 (Cravens 1991).”

• Too few SBUs makes it difficult to support each product or line of products.

• Too many SBUs creates expensive duplication within the corporation.

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Growth-Share Matrix for SBU ObjectivesGrowth-Share Matrix for SBU Objectives

MARKET SHARE

HIGH LOW

LO

WH

IGH

MA

RK

ET

GR

OW

TH

Build or HoldMarket Share

Objective

Build orDivest/Liquidate

Market ShareObjective

HoldMarket Share

Objective

Divest/LiquidateMarket Share

Objective

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SBU Objectives and the Sales OrganizationSBU Objectives and the Sales Organization(Exhibit 4.2)

Market Share Objectives Build Hold Harvest

Divest/LiquidateSales Organization Objective

Salary•Dump inventory•Eliminate service

•Minimize selling costs and clear out inventory

Divest/Liquidate

Salary plus bonus•Call on and service most profitable accounts only and eliminate unprofitable accounts•Reduce service levels•Reduce inventories

•Reduce selling costs•Target profitable accounts

Harvest

Salary plus commission or bonus

•Call on targeted current accounts•Increase service levels to current accounts

•Maintain sales volume• Consolidate market position through concentration on targeted segments•Secure additional outlets

Hold

Salary plus incentive•Call on prospective and new accounts•Provide high service levels particularly pre-sale service•Product/market feedback

•Build sales volume•Secure distribution

Build

Recommended Compensation System

Primary Sales TasksSales Organization Objectives

Market Share Objectives

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4Corporate Growth Orientation and Sales Management ActivitiesCorporate Growth Orientation and Sales Management Activities

(Compaq Computer Example)(Compaq Computer Example)

Development of new personal computers for existing markets

Development of new Internetproducts, small businesssystems, and engineering

workstations

Investing in companies withproducts to help existing

businesses compete more successfully

Operating as a venture capitalistand investing in companies

with promising new productsand technologies

Corporate Growth DirectionIntensive Growth Diversification Growth

Acq

uis

itio

nIn

tern

al D

evel

opm

ent

Cor

por

ate

Gro

wth

Met

hod

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• Porter’s Generic Business Strategies– Low Cost - focus on low cost– Differentiation - focus on uniqueness– Niche - focus on a particular target market and use a

low cost or differentiation approach

• Role of the Salesforce– Low Cost - sell to large customers; minimize costs;

focus on price; order taking role– Differentiation - sell non-price benefits; high customer

service and responsiveness; target low price sensitive customers; order generator

– Niche - could go either low cost or differentiation approach

Business Strategy and the Sales FunctionBusiness Strategy and the Sales FunctionBusiness Strategy Types

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Marketing Strategy and Marketing Strategy and the Sales Functionthe Sales Function

• Show TM41

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Advantages and Disadvantages Advantages and Disadvantages of Personal Sellingof Personal Selling

• 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

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4Personal Selling-Driven vs. Personal Selling-Driven vs.

Advertising-DrivenAdvertising-DrivenMarketing Communications StrategiesMarketing Communications Strategies

Advertising

Personal Selling

When Message Flexibility is ImportantWhen Message Timing is ImportantWhen Reaction Speed is ImportantWhen Message Credibility is ImportantWhen Trying to Close the Sale

When Low Cost per Contact is ImportantWhen Repetitive Contact is ImportantWhen Control of Message is ImportantWhen Audience is Large

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Target Market Situations and Target Market Situations and Personal SellingPersonal 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

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(Figure 4.4)The Sales Strategy FrameworkThe Sales Strategy Framework

Buying SituationAccount

TargetingStrategy

Buying CenterRelationship

Strategy

OrganizationalBuyer Behavior

Account SalespersonSales

Strategy

Buying Process

Buying Needs

Sales ChannelStrategy

SellingStrategy

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(Exhibit 4.6)

Organizational Buyer BehaviorOrganizational Buyer BehaviorTypes of Organizations

Major Category Types

Users - purchase products and services toBusinessor

Industrial Organizations

produce other products and services

Original Equipment Manufacturers (OEM)purchase products to incorporate intoproducts

Resellers - purchase products to sell

Government Organizations Federal, State, and Local GovernmentAgencies

Institutions Public and Private Institutions

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Organizational Buyer BehaviorOrganizational 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

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Organizational Buyer BehaviorOrganizational Buyer Behavior Buying Center

• Initiators

• Users

• Gatekeepers

• Influencers

• Deciders

• Purchasers

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Organizational Buyer BehaviorOrganizational Buyer Behavior Buying Process

Phase 1. Recognize Problem/Need

Phase 2. Determine Item Specs/Quantity Needed

Phase 3. Specify Item Specs/Quantity Needed

Phase 4. Identify and Qualify Potential Sources

Phase 5. Acquire and Analyze Proposals

Phase 6. Evaluate Proposals/Select Suppliers

Phase 7. Selection of Order Routine

Phase 8. Performance Feedback/Evaluation

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(Exhibit 4.7)

Organizational Buying Organizational Buying BehaviorBehavior

Buying NeedsPersonal Goals Organizational Goals

Want a Feeling of Power Control Cost in Product Use Situation

Seek Personal Pleasure Few Breakdowns of Product

Desire Job Security Dependable Delivery for Repeat Purchases

Want to be Well Liked Adequate Supply of Products

Want Respect Cost within Budget Limits

Organizational buying is goal directed.

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Sales StrategySales 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.

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Sales StrategySales Strategy

Relationship Strategy

A determination of the type of relationship to be developed with different account groups.

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(Exhibit 4.8)

Characteristics of Characteristics of Relationship Strategies

Relationship Relationship RelationshipTransaction Solutions Partnership Collaborative

Relationship

Goal Sell Products Add Value

Time Frame Short Long

Offering Standardized Customized

Number ofCustomers

Many Few

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Sales StrategySales Strategy Selling Strategy

The planned selling approach for each relationship strategy.

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(Exhibit 4.9)

Matching Matching Selling and and Relationship Strategies

Transaction

Stimulus-ResponseMental States

Collaborative

ConsultativeCustomized

Solutions

Need SatisfactionProblem-Solving

Partnership

Consultative

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Sales StrategySales Strategy Sales Channel Strategy

Ensuring that accounts receive selling effort coverage in an effective and efficient manner.

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4Sales Channel Strategy Sales Channel Strategy

The Internet

Sell or provide information to assist selling online.

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Sales Channel StrategySales Channel Strategy Industrial Distributors

• Employ their own salesforce

• May represent one manufacturer, several non-competing manufacturers or several competing manufacturers

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Sales Channel StrategySales Channel Strategy Independent Representatives (Manufacturer’s Reps or Reps)

• Sell complimentary products from non-competing manufacturers

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Sales Channel StrategySales Channel Strategy Team Selling

• Three Selling Situations– New Task Selling– Modified Resell– Routine Resell

• Two Types of Team Selling– Multilevel Selling– Major Account Selling

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(Figure 4.7)Team Selling and Buying CentersTeam Selling and Buying Centers

Selling Firm Buying Firm

Sales Team Salesperson ExchangeProcesses

PurchasingAgent

OrganizationalBuying Center

MarketingSales

Information

Purchasing

Problem SolvingManufacturing Negotiation Manufacturing

R & D FriendshipTrust

R & D

Engineering Product/Services EngineeringPhysical

DistributionPayment

ReciprocityMarketing

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(Figure 4.8)Uses of TelemarketingUses of Telemarketing

Replace FieldSales Force for

Certain Accounts

Integrate withField Sales ForceSelling to Same

Accounts

Activities Prospecting Qualifying Leads Conducting Surveys Taking Orders Checking on Order

Status Handling Order

Problems Following Up for

Repeat Business

Telemarketing

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Trade ShowsTrade Shows

Typically industry-sponsored events where companies utilize a booth to display product and services to potential and existing customers.

1 Copyright © 2000 by Harcourt, Inc. All rights reserved. (1) 4 Module 4 Organizational Strategies...

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