Sales Management Course Summary and Review email: [email protected]

Sales Management

Course Summary and Review

email: [email protected]

Strengths and Weaknesses Personal Selling Strengths

Interactive (questions can be answered and objectives overcome)

Adaptive (presentations can be changed to meet customer needs)

Complex arguments can be developed Relationships can be built because of

personal nature Provides the opportunity to close the sale

Personal Selling Weaknesses Sales calls are costly

1. Listening skills2. Follow up skills3. Ability to adapt4. Tenacity – don’t give up!5. Organisational skills6. Verbal communication skills7. Ability to interact with people

at all levels of the organisation8. Ability to overcome client objections9. Closing skills (have to ask for the sale)10. Personal planning and time management skills

Top 10 Success Factors in sales

Front line salespeople Major goal is to get customer

to make a purchase Front line salespeople Requires many skills

Identifying prospects Persuasion and negotiating Building new and profitable business

Technical Support salespeople Provide support for frontline salespeople, part of the selling team Provide important decision making information Can be full time or as needed

Merchandisers Retail and wholesale support Nationally negotiated deals Local advice on displays, stocking, sales promotions, etc.

Order Getters

B2C – Business to Consumer Customer buying for their own use - personal Fast moving consumer goods (FMCG) – bought

often, little thought into decisions – groceries, etc. Semi durable goods – clothing, shoes, jewelry (more

time spent, purchase less often Durable consumer goods – cars, appliances,

computers, considerable cost, more time spent researching, testing, deciding.

B2B – Business to Business Larger, powerful buyers Buyers are skilled specialists who are charged with

furthering corporate goals Long term negotiating - months or years in process

B2C vs. B2B Sales

1. Determining salesforce objectives and goals2. Forecasting and budgeting3. Salesforce organisation, salesforce size, territory

design and planning4. Salesforce selection, recruitment and training5. Motivating the salesforce6. Salesforce evaluation and control

Role of Sales Management

Products have a limited life and product life cycles are being shortened due to technology

Profits rise and fall at different stages. Products require different management

strategies at each stage in the cycle Product growth stage may mean sales

have to ration products In decline stage competitive or discount

pricing may become more important

Implications of the Product Life Cycle

Its relative advantage over other products or services in the marketplace

The extent to which it is compatible with the existing values and potential needs of customers

Its complexity in terms of how easily it can be used and understood by customers

Its divisibility in terms of how it can be tried beforehand on some kind of test basis before a commitment is made to purchase

Its communicability, which is the degree to which the innovation can be described or demonstrated prior to purchase (observation stimulates talk)

Product Adoption Factors

The buying power of customers. Company must differentiate its products or

services from competitors or offer a more competitive price

Prices are constrained by what competitors charge

To reduce price sensitivity, make the product more distinctive.

Market-based pricing (as opposed to cost-based pricing) acknowledges that price represents value and not just costs.

Inputs to Pricing Decisions

1. The selection of distribution channels: Which distribution channels should goods and services

be made available to the final consumer. (Long or short) Exclusive distribution vs. intensive distribution

2. Determining the level of customer service: Delivery periods and methods of transportation. Reduced delivery times can provide an advantage to a

company, but may increase inventory levels and cost. 3. The terms and conditions of distribution:

Conditions of sale on the part of distributors Minimum order/stocking quantities Credit, payment and discount terms for distributors.

Distribution Decision Areas

Marketing and Sales Strategy Salesforce strategy defines how marketing objectives will be achieved

and the following may be considered: Call rates Percentage of calls on existing versus potential new accounts Discount policy (the extent to which reductions from list prices is

allowed) Percentage of resources

Targeted at new versus existing products Targeted at selling versus providing after-sales service Targeted at field selling versus telemarketing Targeted at different types of customer (e.g. high versus low

potential) Improving customer and market feedback from the salesforce Improving customer relationships.

Sales Planning Process

PEST (EL) Analysis

Political Factors

Economic Factors

Socio Cultural Factors

Technological Factors

Environmental Factors

Legal Factors

Economic Interest rates Taxation changes Economic growth Inflation Disposable income Business cycles Bank Financing Exchange Rate Mechanism Incentives for Exports Restrictions for Imports For example:

Higher interest rates may deter investment because it costs more to borrow

A strong currency may make exporting more difficult because it may raise the price in terms of foreign currency

Legal Monopolies legislation Legislation Employment laws Environmental protection

laws In recent years there have

been many significant legal changes that have affected firms' behaviour.

The introduction of age discrimination and disability discrimination legislation, an increase in the minimum wage and greater requirements for firms to recycle are examples of relatively recent laws that affect an organisation's actions.

Legal changes can affect a firm's costs (e.g. if new systems and procedures have to be developed) and demand (e.g. if the law affects the likelihood of customers buying the good or using the service).

Objectives must be S.M.A.R.T. Specific

Who or what is the focus of the effort and what needs to change

Measurable Indicate a quantity such as a percentage change needed

Achievable / Attainable / Appropriate Ensure the objectives are something the company is

willing and able to accomplish Realistic / Relevant

Given the company’s resources and the business environment is this realistic and relevant to your clients?

Time-Related Should include a time limit: done by when?

Statement of Objectives

Market potential is the maximum possible sales available for an entire industry during a stated period of time.

Sales potential is the maximum possible portion of that market which a company could reasonably hope to achieve under the most favourable conditions.

Finally, the sales forecast is the portion of the sales potential that the company estimates it will achieve.

Sales forecast affects all operations (productions, etc.) Will be discussed in detail in Chapter 16.

Determine Sales Forecasts

Objective: Maximise profits from established clients Strategy 1: Targeting / segmentation based on:

Value (consumption levels, value of goods purchased) Customer preference (telephone/email ordering service,

type of products/services purchased) Life stage (status of relationship between supplier and

customer: active/lapsed/dormant customer/months since last purchase).

At this point it is important that: Segments must be potentially profitable; Segments are not mutually exclusive; Segments are not stable.

Hence, a consumer may fall into more than one segment or different segments at different times.

If the segment requires a special effort to reach or appeal to it, then it must have sufficient potential purchasing power to justify the effort.

Examples of Strategies

Proximity of the sales function to the marketplace places it in a unique position to contribute to the analysis of the current market situation facing the company.

Sales is often well placed to contribute to the analysis of customer needs and trends in purchasing behaviour.

Sales manager can also make a valuable contribution in terms of knowledge about competitors and their standing in the marketplace.

This informational role of sales managers should not be ignored because, through the salesforce, they are ideally equipped to provide up-to-date, accurate information based on feedback from customers

Market Situation Analysis

The promotional mix is made up of four major elements: Advertising Sales promotion Publicity/public relations Personal selling.

To these traditional elements can now be added: Direct marketing Interactive/internet marketing.

All six elements can contribute to company sales, but a decision has to be made on where to place the emphasis.

This decision is made at the planning stage. The elements of the promotional mix work together to

achieve company objectives.

The Promotional Mix

Type of market: B2B vs. B2C marketing. Application of the marketing

mix elements often differ (advertising and sales promotion more important in consumer marketing, personal selling more important to business buyers).

Differences between B2B and B2C marketing stem from differences in buyer behaviour (FMCG/Capital).

The ‘new’ promotional mix increasingly involves e-commerce (Internet) possibilities.

In addition, the use of freephone facilities is also making communication easier and cost-free to the potential customer.

Promotional Mix Decisions

Stage In The Buying Process:

Advertising and publicity more cost effective in earlier stages

Personal selling is more cost effective than other forms of promotional activity at the conviction and purchase stages.

Promotional Mix Decisions

Push versus pull strategies – channel of distribution. A push strategy is one in which the focus of marketing

effort is aimed at pushing the product through the channel of distribution. Ensure wholesalers and retailers stock the product. If they stock a product they will be active in ensuring that

it is sold. Push strategy has a greater emphasis on personal selling

and trade promotion. A pull strategy relies on advertising to promote the

product to the final consumer. If sufficient consumer demand can be generated for a

product they will ask retailers for the product. Retailers will then ask wholesalers for the product, who

will contact the producer. The product is ‘pulled’ through the channel by creating

consumer demand via assertive advertising.

Promotional Mix Decisions

Promotional Mix Decisions

Fewer organisational buyers - 80% to 10-15 clients Close, long-term relationships between organisational

buyers and sellers – large customers Organisational buyers are more rational Organisational buying may be to specific requirements Reciprocal buying may be important in organisational

buying. May be more risky – not always known what will happen

as products are usually more customised More complex – decisions need to be made across

different levels of the organisation Negotiation is important – because of size, complexity

and customisation of products. Professional buyers and sellers.

Differences between consumerand organisation buying

1. Initiator: the person who begins the process of considering a purchase. Information may be gathered by this person to help the decision.

2. Influencer: the person who attempts to persuade others in the group concerning the outcome of the decision. Influencers typically gather information and attempt to impose their choice criteria on the decision.

3. Decider: the individual with the power and/or financial authority to make the ultimate choice regarding which product to buy.

4. Buyer: the person who conducts the transaction: who calls the supplier, visits the store, makes the payment and effects delivery.

5. User: the actual consumer/user of the product.

Who buys? (Households/Orgs)

The consumer decision-making process(buy phases)

Extensive problem solving: When a problem or need is new, there may be extensive

problem solving required Salesperson builds good will by helping with the

assessment of alternatives and providing information Limited problem solving:

Usually repeat purchasing, experience with product Salesperson can expose clients to competitive products

Automatic response: Companies try to move their clients to this type of buying Brand loyalty / advertising reinforcement

Important factor is level of involvement with the purchase Important purchases, high risk, self image, social

implications, provide pleasure In high involvement cases, salesperson must have the

information client requires.

How the Buying Situation affects decision making

Process - How:

The organisational decision-making process

InfluencesOnOrganisationalPurchasingbehaviour

New task - need for the product has not arisen previously so that there is little or no relevant experience in the company, and a great deal of information is required. Important for sales to be involved as early as possible to

help build commitment and influence specifications Straight re-buy - previously purchased items from suppliers

already judged acceptable. Routine purchasing procedures are set up to facilitate straight re-buys. Important to have no changes for client, any upset to

routine may initiate analysis by the buyer Modified re-buy - regular requirement for product exists and

the buying alternatives are known, but sufficient change has occurred to require some alteration of the normal supply procedure. Longer buying cycle and sales must make all resources

available to assist client with analysis of the purchase

Influence on organisational buying behaviour - Buy Class

Purchase perceived as important when: Involves large sums of money Cost of making the wrong decision is high Considerable uncertainty about the outcome of alternative

offerings. Many people at different organisational levels are likely to be

involved in the decision and the process is likely to be long, with extensive search and analysis of information.

Opportunities to convince buyers that your product offering has the best payoff

Guarantees of delivery dates and after-sales service may be necessary when buyer uncertainty regarding these factors is high.

Influence on organisational buying behaviour Importance of Purchase

A number of trends have taken place within the purchasing function that have marketing implications for supplier firms: Just-in-time purchasing (JIT) Centralised purchasing Systems purchasing Reverse marketing - buyer attempts to persuade the supplier to provide exactly what the organisation wants Leasing.

Developments in purchasing practice

Minimise stocks by organising a supply system which provides materials and components as they are required.

Stockholding costs are significantly reduced or eliminated and thus profits are increased.

Stock is seen as a cushion which acts as a disincentive to management to eliminate inefficiencies.

Suppliers are evaluated on their ability to provide high-quality products.

Buyers are encouraged to specify essential product characteristics, so suppliers have more discretion in product design and manufacturing.

The supplier is expected to certify quality, so quality inspection at the buyer company is reduced and overall costs are minimised.

Developments in Purchasing Practice: Just-In-Time Purchasing

Purchaser takes the initiative in approaching new or existing suppliers and persuading them to meet their supply requirements.

The implications of reverse marketing are that it may pose serious threats to uncooperative existing suppliers but major opportunities to responsive outside suppliers

The growth of reverse marketing presents two key benefits to suppliers who are willing to listen to the buyer’s proposition and carefully consider its merits. First, it provides the opportunity to develop a stronger and

longer-lasting relationship with the customer. Second, it could be a source of new product opportunities

that may be developed to a broader customer base later on.

Developments in Purchasing Practice: Reverse Marketing

Salesforce automation Laptops, smart phones, mobile telephones, fax, email Sales software (account planning), and recruitment,

selection and evaluation of sales personnel Electronic data interchange (EDI) provides computer

links between manufacturers and resellers Virtual sales offices

Allows sales personnel to keep in contact with head office, customers and co-workers

Cost and time savings Enhanced job satisfaction for salespeople

Electronic sales channels Internet TV Shopping

3 Major Technological Forces affecting sales

The result of these forces is to change the role and operation of the traditional sales organisation from a focus on order-taking and order-making to strategic customer management which requires 3 activities:

Intelligence gathering: enhancing knowledge of customers to add value to the relationship.

Interfaces: refocusing salesforce efforts into the management and exploitation of critical interfaces (points of contact) that affect customer value (for example, with customer relationship management and key account management).

Integration: bringing all the company’s activities and processes that affect customer value together into a single, integrated and sustained point of value delivery to customers through the sales person.

Strategic Customer Management

Where sales take place. Involves two distinct activities: Logistics or physical distribution management (PDM):

The effective and economic planning, implementation and control of the physical flow of materials in their unprocessed state through to finished goods from the point of origin to delivery to the end-consumer.

Channels of distribution: the route that goods take through the selling process from supplier to customer. Sometimes the channel is direct, especially where goods sold are incorporated into a manufacturing process. Final goods might then be sold through a different channel.

Distribution Channels

A manufacturer has the choice of one of four types of distribution:1. Direct: the manufacturer does not use a middleman

and sells and delivers direct to the end-customer.2. Selective: the manufacturer sells through a limited

number of middlemen who are chosen because of special abilities or facilities to enable the product to be better marketed.

3. Intensive: maximum exposure at the point of sale is needed and the manufacturer sells through as many outlets as possible.

4. Exclusive: the manufacturer sells to a restricted number of dealers.

Characteristics of sales channels

Services vs. Products

Intangibility; The difficulty of separating production from consumption as

many services are consumed as they are produced Services are not as ‘standard’ as products and are more

difficult to assess (in terms of value) It is not possible to ‘stock’ services (e.g. unsold hotel rooms)

unlike products.

Sales Promotions Sales promotions include techniques used as part of org’s

marketing effort which can: Encourage repeat purchases Build of long-term customer loyalty Encourage consumers to visit a particular sales outlet Widening or increasing the distribution of a product or

brand. Sales promotions include:

Price reductions Vouchers or coupons; Gifts Competitions Lotteries Cash bonuses

Trade Promotions The aim is to push products through the channel towards

the customer. Incentives are offered through extra rewards such as discounts, increased margins on sales, dealer competitions, exhibitions, provision of demonstrators and free holidays etc.

The objectives of retailer–distributor promotions are to: achieve widespread distribution of a new brand; move excess stocks onto retailers’ shelves achieve required display levels of a product encourage greater overall stockholding of a product encourage salespeople at distributor levels to

recommend the brand – particularly in the case of non-consumer products

encourage support for overall promotional strategy.

Exhibition StandsThe exhibition stand itself should have a number of

elements:1. Products on show will depend upon the target market..2. Literature should not be on a self-service display.3. Graphics should include at least a display board featuring

the product literature.4. An office or interview room can take up a lot of expensive

display space. 5. Refreshment facilities on the stand are good attractors6. An area should be designated for storage of coats,

briefcases, literature, materials, etc., to avoid clutter.7. An expensive, eye-catching stand can be a problem as it

might attract visitors, but can be perceived affecting the price of products.

The public relations practitioner has to conduct activities that concern every public with which the organisation has contact. The specific nature of such groups will vary according to circumstances. Jefkins identifies seven basic publics: The community Employees Government The financial community Distributors Consumers Opinion leaders

Public relations (PR)

PR is used in order to create a better environment for the organisation and its activities. Objectives may include: Attract sales inquiries Reinforce customer loyalty Attract investors Attract merger partners or smooth the way for acquisition Attract better employees Dissolve or block union problems Minimise competitor advantage while you catch up Open a new market Launch a new product Reward key people with recognition Bring about favourable legislation

Public relations (PR)

Sales responsibilities

Prospecting is the searching for and calling upon customers who, until now, have not purchased from the company.

Sources of prospects: Existing customers (ask for referrals) Trade directories Enquiries (word-of-mouth, advertising, etc.) Press and Internet (advertisements and

articles) Cold Calling (unannounced, without an

appointment)

1. Prospecting

A salesperson may have to organise their own call plan, which involves dividing territory into sections to be covered day by day and deciding the best route to follow between calls.

Often it makes sense to divide a territory into segments radiating outwards, which the salesperson’s

home at the centre. Each segment is designed to be small enough to be

covered by the salesperson during one day’s work. On average, only 20–30 per cent of a salesperson’s

normal working day is spent face-to-face with customers. Another factor, which may be the responsibility of the

salesperson, is deciding on call frequency. It is sensible to grade customers according to potential.

For example, consumer durable salespeople may categorise the retail outlets they are selling to into A, B and C grades.

3. Self Management

Primarily this involves the relationships between salespeople and customers (discussed in Chapter 3).

Another set of relationships that a salesperson must master in today’s complex selling environment are those between the salesperson and other people in their company who are vital to ensure a smooth sales process and efficient delivery and service of the product.

Particularly with key accounts, selling is performed by a team of players (e.g. from engineering, production, marketing, finance and senior management).

Key account managers must be able to manage these relationships both within their firms and between those players and members of the customer’s DMU.

6. Relationship Management

Misunderstandings regarding strategy can have grave implications. For example, the credibility of a premium price and

high-quality position can be undermined by a salesforce eager to give large price discounts.

The solution might be to decide discount structure at managerial level based on the price sensitivity of various market segments.

Product’s positioning strategy would remain intact while allowing the salesforce some discretion.

Successful implementation of strategy can mean the difference between winning or losing new accounts. An effective method of gaining an account in the face of

entrenched competition is the diversion. The aim is to distract a rival into concentrating its efforts

on defending one account (and therefore neglecting another).

7. Implementing Strategies

Knowledge of product features is insufficient for sales success. Because people buy products for the benefits they confer, successful salespeople relate product features to consumer benefits; product features are the means by which benefits are derived.

1. Product Knowledge & Benefits

Although versatility, flexibility and the ability to ‘think on one's feet’ are desirable attributes, there are considerable advantages to presentation planning:1. The sales person is less likely to forget important consumer benefits associated with each product.2. The use of visual aids and demonstrations can be planned into the presentation at the most appropriate time to reinforce the benefits the salesperson is communicating.3. It builds confidence in the sales person, particularly the

newer, less experienced, that they are well equipped to do the job efficiently and professionally.

4. Possible objections and questions can be anticipated and persuasive counterarguments prepared.

3. Sales presentation planning

The essential skill in setting call objectives is to phrase them in terms of what the salesperson wants the customer to do rather than what the salesperson will do.

Examples of possible objectives for sale calls might be as follows: For the customer to define clearly what their

requirements are To have the customer visit the production site To have the customer try the product, e.g. fly on an

aircraft To have the customer compare the product against

competing products in terms of measurable performance criteria.

To have the customer place an order To have the customer plan for next year’s purchases

4. Setting Sales Objectives

A sales negotiator will benefit by paying attention to the following additional factors during preparation:• Assessment of the balance of power • Determination of negotiating objectives

• Concession analysis • Proposal analysis

Preparation for Sales Negotiations