Chapter 14 Sales Force Strategies in the Global Marketplace Sales Management: A Global Perspective...

Chapter 14Sales Force Strategies in the

Global Marketplace

Sales Management:

A Global Perspective

Earl D. Honeycutt

John B. Ford

Antonis C. Simintiras

Sales Force Strategies in the Global Marketplace

• The Strategic Planning Process and the Sales Function– Small Businesses normally move through a series of evolutionary

stages in terms of formalized planning. The normal process involves the following stages:

• Planning as a Luxury

• Budgeting

• Annual Planning

• Long-Range Planning

• Strategic Planning


• The Strategic Planning Process and the Sales Function– Planning as a Luxury:

• Most entrepreneurial companies begin with the assumption that day-to-day survival is all-important.

• As a result, there is no perceived need for formalized planning.

• Planning requires time, which is considered a luxury.


• The Strategic Planning Process and the Sales Function– Budgeting:

• Eventually there will come a time when an entrepreneur realizes that he or she does not have the financial resources that are needed to do what they feel is necessary.

• The first need for formalization therefore focuses on the budgeting process where time must be taken to anticipate financial needs so that proper amounts can be set aside when the need arises.

• Eventually this leads to problems since the focus is on internal assessments of future finances, neglecting an external assessment of competitors and consumer needs.


• The Strategic Planning Process and the Sales Function– Annual Planning:

• The annual marketing plan is the first serious attempt at formalized planning and requires both internal and external assessments.

• By the time that the firm is in a position to develop marketing plans, it has probably grown considerably in size, and the plan will incorporate components from different functional areas within marketing.

• One of these key component areas would be the sales area.• It is important to remember that plans are normally developed in

a hierarchy which stretches from the company as a whole down to each of the separate functional areas operating within the firm.



• The marketing plan (or the sales plan embedded within it) will normally contain the following elements:

– Goals

– Objectives

– Strategies

– Tactics

– Budgeting

– Controls



• Goals:– The overall statements of where you want to be at a particular point

in time in the future.– They must be stated in a way which is specific and quantifiable.– They serve as benchmarks for performance, and if they are not

quantifiable, they cannot be used as benchmarks for performance.– Saying that the firm wants to be “number 1” is of little value since it is

not clear how this position would clearly be measured. Is it based on sales or units sold?

– Goals are statements of what you hope will realistically happen at the end of the one-year period, and they allow ongoing comparisons between what you expected to accomplish (the goals) and your actual performance.



• Objectives:– Objectives are similar to goals in that they are statements of where

and when; however, they are stated in terms of a variety of expectations which are under the umbrella of the goal.

– While there is an over-riding goal statement, there are usually a series of objectives that are complementary in nature.

– Suppose that the overall goal for the sales force is to increase sales by 20% over the next year. Typical objectives that would support the overall goal would be such expectations as:

» Increasing customer satisfaction ratings by 10%.» Reducing response time from 36 hours to 30 hours.» Increasing time spent with A-level customers by 5% while

reducing time spent with C-level customers by 5%.



• Strategies:– Strategies are the action plans that allow us to reach the goals

and objectives which have been set.– They are the statement of how we are going to get where we

plan to go by the expected time of arrival.– The strategies would involve such things as:

» Providing the sales force with laptop computers.» Adding three sales people in Europe.» Bringing sales people in for retraining in customer

relationship management.» Introducing more efficient call reporting mechanisms.



• Tactics:– Tactics are the day-to-day details that are part of the overall

strategies.

– They are the individual pieces of the action plan.

– The adding of three sales people in Europe from the previous section would constitute a tactic.



• Budgeting:– Budgeting involves the assessment of the financial/resource

needs of the firm for the coming period of time.– Sales managers have to sit down and examine all possible

expenses for the sales function and present a budget to firm management.

– There are four regularly used methods for setting budgets:» All You Can Afford» Percent of Past Sales» Percent of Future Sales» Objective and Task



• Budgeting:– All You Can Afford:

» This method involves management telling the sales manager just exactly how much money will be available for the sales function.

» This is often seen in centralized, top-down structured enterprises.

» Budgets are determined by top management and apportioned as judged appropriate by senior management.

» A poor mechanism for setting sales budgets since it does not consider the particular needs and expectations of the sales function.

Sales Force Strategies in the Global Marketplace• The Strategic Planning Process and the Sales Function

– Annual Planning:

• Budgeting:– Percent of Past Sales:

» This method is normally based upon historical evidence which suggests that a particular percentage apportionment is appropriate.

» Some firms simply allocate the same amount (as a % of past sales) each year for the sales manager to use as needed.

» The rationale often used for this method is that the sales figures were actual sales as opposed to projected sales, which may never be reached.

» The flaw in the logic is that it should not be the sales themselves which produce the sales budgets; it should be the sales budgets which lead to the achievement of sales.



• Budgeting:– Percent of Future Sales:

» This method is based on a sounder logic, and this is probably the most-used mechanism for budget allocation is use today.

» The percentage which is utilized is usually based upon industry standards.

» The main drawback to this type of budgeting is that industry standards do not necessarily mean the best allocations. They merely represent the collective wisdom of the industry and can serve as an effective starting point for sales managers when looking at expenses for the upcoming period.



• Controls:– These involve mechanisms which would allow the sales manager to

monitor ongoing performance and take corrective action if necessary.– Goals and objectives that are specific and quantifiable can serve as

effective benchmarks for performance.– If there is a discrepancy between actual sales performance and

expected performance, then some kind of corrective action can be taken to get things back on track.

– The type of control mechanism will depend upon the specific goals/objectives that have been set. If we want to increase customer satisfaction levels, we can use customer surveys for control. If we want to increase the number of sales calls being made, we can use salesperson call reports.


• The Strategic Planning Process and the Sales Function

– Long Range Planning:• With this evolutionary step the time horizon is extended for

planning purposes.

• Annual planning is maintained while a longer-term perspective is achieved through the long-range plan.

• Many firms begin by developing a 5-year plan, which is written in more general terms than the annual plan.

• Looking at trends that are occurring outside of the firm is a necessity here so that the firm will not be caught by surprise by changes which can significantly affect performance.


• The Strategic Planning Process and the Sales Function– Long Range Planning:

• An important component of long-range planning is the process known as environmental scanning which involves careful examinations of external trends.

• Environmental scanning should include the following types of careful external assessments:

– Political changes– Legal changes– Economic changes– Technological changes– Societal changes– Cultural changes



– Strategic Planning:• The most advanced stage is known as strategic planning.

• The previously mentioned components are all retained in the strategic plan (budgeting, annual planning, and long-range planning), but the strategic plan will add a significant amount of information based upon an additional set of perspective enhancing tools and techniques.

• Strategic planning enhances the chances of gaining competitive advantage by systematically matching up the skills and abilities of the firm with the opportunities in the marketplace.


• The Strategic Planning Process and the Sales Function– Strategic Planning:

• The goal is to maximize the firm’s strengths while minimizing its weaknesses.

• The only way for this to happen is through a thorough analysis of not only the firm and its resources, but also the customers and the competition.

• Strategies need focus and direction,, and when a firm gets to this stage, it needs a better mechanism for developing its marketing/sales plan.

• Strategic focus is aided greatly by the development of:– Mission statement– Vision statement



• The mission statement is the statement of what the company is in business for.

• It conveys valuable information not only about what the company does, but it also tells what the company does not do.

• Annual and long-range plans are written under the umbrella of the mission statement to maintain consistency and focus.

• The vision statement is a more recent addition to the strategic planning literature.

• It is a statement of where management would like to see the firm move in the future.

• It should be written under the limitations of scope established by the mission statement.



– Strategic Planning:

• An overview of the tools and techniques that help in the development of effective strategic sales plans are found in Figure 14-1.



• Decision Support System:– This refers to the intelligence gathering and storing mechanism

for use in the strategic planning process.– For the sales function this would involve systematic input from

field sales people on what is happening in their territories, internally generated reports (e.g., sales to quota reports, new account generation forms, etc.), outside secondary studies (e.g., A.C. Nielsen reports, Euromonitor reports, etc.), and relevant primary data studies (e.g., customer satisfaction surveys, perceptual mapping studies, etc.).

– There has to be an effective mechanism that will allow the collection of this information, storage, and dissemination when it is needed.



– Strategic Planning:• Situational Assessment:

– This is a detailed report of what is actually happening in the various markets served by the company and why.

– This report looks at the customers served, the competitors, market dynamics, environmental factors which affect the market, company sales, profits and costs.



– Strategic Planning:• Competitor Assessment:

– A detailed competitor assessment helps to strengthen the situational assessment.

– The best model ever devised for this type of assessment is the Five Forces Model that was developed by Michael Porter at Harvard, which has been adapted for the sales function in Figure 14-2.



• Core Competency Assessment:– This involves an identification of what the company does that is not

easily duplicated by someone else.– When examining the sales function in particular, the sales manager must

look at the entire functional area to see where distinctive competencies may lie.

– One way that a competency might be achievable is in ensuring the highest value for the customer.

– Distinctive competencies could lie in:» A brand name which is highly valued by the customer.» A delivery system that outperforms the competitors.» Long-term relationships which provide exceptional value for the

customer.



• Contingency Planning:– This involves the development of a series of alternative responses to

particular occurrences in the market.– What is deadly for a company is to have something happen which

was not anticipated.– Should this happen, the company is often forced to stop, step back

and assess the situation, and then develop a strategic response to what has happened.

– If history teaches companies anything, it is that a delay of this kind could be disastrous.

– In order to avoid this possibility, the sales manager must look at a bare minimum of three scenarios: 1) best case, 2) worst case, and 3) status quo (if things continue as they have been).



• SWOT Analysis:– This is an attempt to assess the company’s strengths, weaknesses,

opportunities and threats.– The previous tools and techniques discussed all add valuable

information that can be effectively used in this type of analysis.– For the sales manager, strengths and weaknesses would be assessed

by examining the sales force and the various support mechanisms available for them.

– When assessing opportunities and threats, the sales manager has to consider the probability of certain things happening.

– Looking at the information generated by the situational analysis and the assessment of the future in contingency planning provide an excellent basis for estimating the probabilities of future occurrences.



• SWOT Analysis:– The sales manager must also be careful to consider both short-

term as well as long-term effects of possible changes in policies and practices.

– Once this type of analysis is thoroughly done, then the sales manager is in a much stronger position to develop meaningful annual plans and long-range plans that are strategically focused.

– Strategic planning really is a perspective enhancing process.– It provides the sales manager with all of the information to make

appropriate decisions and enhance the chances of gaining a competitive advantage.

Chapter 14 Sales Force Strategies in the Global Marketplace Sales Management: A Global Perspective...

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