Download the role of personal selling in a firm`s marketing strategy

MODULE 4 : MARKETING PLANNING, SALES PROGRAMMES AND ACCOUNT MANAGEMENT POLICIES
Marketing Planning
Planning is deciding what to do in the presentto achieve what is desired in the future. It involves an
analysis of where the organisation is and how it got there and a projection of where the organisation
will end up if it continues to move in the same direction.
Strategy is a statement of the fundamental pattern of present and planned objectives, resource
deployments, and interactions with markets, competitors and other environmental factorsthat
indicate how an organisation intends to survive and prosper over time.
Tactics are detailed programmes that spell out how resources are to be alloocated and what actions
are to be taken, by whom, and when.
The Planning Process
(i)
Company Mission and Goals
A statement of an organisation’s mission attempts to answer the most basic questions about its
reasons for being. The most appropriate way for a firm to define its mission is in terms of the broad
human needs it will try to satisfy. When an organisation’s mission is defined in terms of a need, it
becomes easier to identify attractive marketing opportunities. A clearly defined mission helps
management evaluate available opportunities and avoid those that are inconsistent with the firm’s
purpose.
(ii)
SBU Strategy
In organisations with multiple divisions or strategic business units, each SBU is likely to have its
own objectives and a distinct strategy for accomplishing them. The SBU’s competitive strategy will
influence and constrain the marketing objectives, strategies, and functional programs – including
the activities of the sales force. Various strategies pursued by SBUs could be classified as follows:
Low Cost
Differentiation
Niche
Prospector
Defender
Analyser
Once a business has decided how it will compete in order to gain a sustainable competitive
advantageover other firms, it must then decide where to compete, what specific product-markets or
market segments to target.
Generic Businress Strategies and their Implications for the Sales Force
(a)
Low-cost Supplier
Aggressive construction of efficient-scale facilities
Vigorous pursuit of cost reductions from experience
Tight cost and overhead control
Associated usually with high relative market share
Sales force Implications
Servicing large current customers
Pursuing large prospects
Minimising costs
Selling on the basis of price
Usually assuming significant order-taking responsibilities
(b)
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Differentiation
Creation of something perceived industrywide as being unique
Priovides insulation against competitive rivalry because of brand loyalty and resulting lower
sensitivity to price
Sales force Implications
Selling nonprice benefits
Generating orders
Providing high quality of customer service and responsiveness
Possibly significant amount of prospecting if high growth industry
Selecting customers based on low price sensitivity
Usually requires a high quality sales force
(c)
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Niche
Service of a particular target market, with each functional policy developed with its target
market in mind
Although market share in the industry might be low, the firm dominates a segment within
the industry
Sales force Implications
To become experts in the operations and opportunities associated with the target markets
Focusing customer attention on nonprice benefits and allocating selling time to the target
market
(d)
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Prospector
Attempt to pioneer in product/market development
Offer a frequently changing product line and be willing to sacrifice short-term profits to gain
a long term stronghold in their markets
Sales force Implications
Primary focus is on sales volume growth
Territory management emphasizes customer penetration and prospecting
(e)
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Defender
Offer a limited, stable product line to a predictable market
Markets are generally in the late growth or early maturity phase of the lifecycle
Emphasis is on low cost producer through high volume
Sales force Implications
Maintain the current customer base
Very little prospecting for new customers is involved
Customer service is emphasised along with greater account penetration
(f)
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Analyzer
Choose high growth markets while holding onto substantial mature markets
Analyzers are an intermediate type of firm
They make fewer and slower product market changes than prospectors but are less
committed to stability and efficiency than defenders
Sales force Implications
Must balance multiple roles : servicing existing customers, prospecting for new customers,
uncovering new applications, holding onto distribution of mature products and supporting
campaigns for new products
(ii)
Market Opportunity Analysis
A market opportunity exists only when some human need is unsatisfied. However, an unsatisfied
need represents a viable and attractive opportunity for a firm only if:
The opportunity is consistent with the mission and objectives of the firm
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There are enough potential customers for the needed product or service so the total potential
sales volume is, or will be, substantial.
The firm has the necessary resources and expertise to capture an adequate share of the total
market
These estimates of market potential, company sales potential and sales forecasts are critical to the
firm’s sales plans. They provide the basis for defining sales territories, deploying salespeople, and
getting sales quotas.
Market opportunities usually do not involve every consumer or organisational buyer in the market
place. Market opportunities should be defined and marketing strategies developed – for specific
target markets, which usually consist of only one or a few customer segments with relatively
homogenous preferences and characteristics.
(iv)
Generate Strategies
Strategy generation is a creative task. The key at this stage is to be as creative as possible – the idea
is not to evaluate strategies but to generate them.
(v)
Select Strategies
The criteria used to evaluate the most appropriate marketing strategy should be directly related to
the objectives to be accomplished. However, the bets overall strategy may not be the best for any
single objective.
(vi)
Programme Marketing Mix
The firm’s strategic sales programme gives information about :
The total amount to be spent on the total marketing effort
Allocation of marketing expenditure to the elements of the marketing mix
Allocation of resources and effort across the possible activities
(vii) Review and Revision
The various functional plans must be reviewed and integrated into a cohesive whole at the business
unit and corporate level and any incompatibilities between the product manager’s plans and the
business unit’s financial or production plans must be eliminated.
(viii) Audit and Adjust
Involves periodic comparisons of actual results with the sales volume, market share, expense
budgets, and other objectives satisfied in the plan. Any deviations of specific results from planned
levels need to be examined and appropriate corrective action taken by adjusting specific elements of
the marketing mix, adopting a new marketing strategy or possibly reevaluating market
opportunities.
THE ROLE OF PERSONAL SELLING IN A FIRM’S MARKETING STRATEGY
There are four basic types of promotional activities:
(i)
Personal Selling
(ii)
Advertising
(iii)
Sales Promotion
(iv)
Publicity
The Advantages of Personal Selling as a Promotional Tool
Personal selling involves oral communication with a potential customer on a person-to-person basis.
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Because of direct face-to-face communication with a potential customer, the potential
customer is more likely to feel obliged to pay attention to the sales representative’s message.
As the sales rep communicates with only one potential customer at a time, the rep can tailor
the message to fit the need and interests of the specific customer.
Communication flows in both directions during a sales call.
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Immediate feedback received from the customer in the form of questions, objections, and
non-verbal communications.
The sales rep can communicate a larger amount of complex information than can be
transmitted with other promotional tools.
Demonstration of the product can be done and visual aids can be used.
The rep, by virtue of the larger amount of time spent with the customer, can learn about the
client’s problems or needs and educate the client about the appropriate products or services.
Disadvantage:
A sales rep can communicate only with a small number of potential customers. Thus, it is more
costly per person reached than other promotional tools.
Determinants of Personal Selling’s Appropriate Strategic Role
Personal selling should play a substantial role in the firm’s marketing mix only when the
communications tasks involved are performed better by face-to-face selling than any other method.
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The firm receives a greater profit return from the last (marginal) dollar invested in personal
selling than it would by spending that dollar on any other part of the marketing programme
or any other company activity.
Each dollar spent on personal selling produces at least one dollar of marginal income.
The appropriate amount of personal selling effort depends on:
The business’ objectives, strategy and resources
The target market
Product characteristics
Distribution policies
Pricing policies
Company Resources, Objectives and Marketing Strategy
Although the costs per person reached are higher for personal selling, a successful personal selling
effort may require a smaller total financial outlay than either an advertising or a sales promotion
campaign. The high costs involved in extensive advertising advertising and sales promotion efforts
limit their use by smaller firms. Such firms must often rely on personal selling – perhaps
supplemented with less expensive local, regional or cooperative advertising as their primary
promotional tool.
The highly persuasive nature of personal selling makes it an appropriate business tool when the
objective is to take market share away fgrom establishesd competitors, especially if the product is a
relatively complex industrial or consumer durable good.
If a firm is introducing a new product or an existing product in new markets, marketing objectives
might be to stimulate primary demand andf to generate awareness of the product among potential
customers, then media advertising and sales promotion are the best tools because they can
communicate basic information about the product to many potential buyers with great efficiency.
If the firm’s objective is to expand distribution by persuading more wholesalers or retailers to carry
the product, then a strong personal selling effort and perhaps a trade promotion programme are
indicated.
Characteristics of the Target Market
Personal selling is most often emphasized when:
the target market contains relatively few customers
the average customer is likely to place a relatively large order
customers are clustered close together
Firms selling to industrial markets with few potential customers, and those that distribute their
products through a small number of wholesale intermediaries, commonly rely on personal selling as
their promotional selling.
Firms that selling to large, geographically dispersed, consumer markets place primary emphasis on
the more cost-efficient advertising and sales promotion methods.
Product Characteristics
Promotional mixes for industrial goods concentrate heavily on personal selling; those for consumer
durables \goods utilise a combination of personal selling and advertising and producers of nondurable consumer goods rely most heavily on advertising and sales promotion. This is because
industrial goods and consumer durables tend to be more complex than nondurables, son potential
buyers need more information to make a purchase decision. Also industrial goods are very often
designed to meet the needs of individual customers, and consumer durables (as well as complex
services, such as financial or insurance services) often present the buyer with a range of options.
A company’s website can:
Communicate large amounts of product information
Generate leads for the firm’s field sales force to follow up
Allow interested customers to bypass face-to-face contact with a salesperson and order the
firm’s products electronically.
Distribution Policies
The importance of the salesforce’s role in building a distrib ution channel is influenced by the
firm’s strategy for inducing resellers to buy its product.
When a firm follows a Pull Strategy, it attempts to build strong customer demand for its brand.
This encourages wholesalers and retailers to carry the product to satisfy their customers and reap
the resulting sales and profits. A strong advertising programme is the key to such a strategy.
When a firm uses a Push Strategy to build strong reseller support, it offers direct inducements to
potential wholesalers and retailers to encourage them to stock the product. Various inducements that
can be offered to resellers include :
Development of “just in time” delivery and reorder programmes and logistical alliances
Efficient customer response or category management programmes that help resellers
improve their sales volumes and margins on the firm’s products
Price promotions
Volume discounts
Contests for reseller’s sales people
Training programmes
Cooperative advertising programmes
POP purchase materials
The manufacturer’s salesforce plays a principal role in implementing a push strategy. The salesforce
must explain the advantages of carrying and promoting the supplier’s products to prospective
channel members, persuade them to stock and aggressively merchandise those products and
maintain cooperative relationships with the firm’s channel partners over time.
Pricing Policies
Expensive products like industrial goods and consumer durables typically require substantial
amounts of personal selling as they are technically or aesthetically sophisticated and customers
receive substantial amounts of personal selling.
Personal selling price is essential in marketing products or services where the ultimate selling price
is open to negotiation. Negotiated selling prices are commonly found in cases of industrial goods
and services and also in some consumer durables.
Advertising is relatively important when:
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Large number of customers
Buyer’s information needs are low
Size and importance of purchases is small
Little post-purchase service is required
Low product complexity
Pull strategy for distribution
Pre-set pricing policy
Many resources available for promotion
Personal selling is relatively important when:
Small number of customers
Buyer’s information needs are high
Size and importance of purchases is large
Much post-purchase service is required
High product complexity
Push strategy for distribution
Negotiated pricing policies
Few resources available for promotion
ADVERTISING
Non personal communication the organisation pays to have transmitted to a target audience through
a mass medium, such as TV, radio, newspapers, magazines, direct mail, transit cards, billboards,
catalogues or directories.
SALES PROMOTION
Activities and materials that induce potential customers to purchase the firm’s product or service,
usually by drawing the customer’s attention to the product or by offering an added incentive for
purchase. Sales promotion methods are usually classified into two types based on the audience
towardwhich they are dircted. Consumer sales promotion activities are designed to produce shortrun sales increases among ultimate customers by offering such things as “cents off” coupons, free
samples and contests. Trade sales promtion activities encourage wholesalers or retailers to stock and
aggressively market the firm’s product by offering such things as quantity discounts, free goods,
display materials and sales contests.
PUBLICITY
Nonpersonal communication of information about a firm or its products is transmitted through a
mass medium at no charge to the firm. Examples : Magazines, newspaper, radio or television news
stories about new pproducts, new stores or pe4rsonnel, or policy changes in an organisation.
ACCOUNT MANAGEMENT POLICIES
Account management policies specify which individuals within each type of customer organisation
the salesperson should attempt to contact, what kinds of selling and service activities should be
engaged in, and how these individuals within each type of customer organisation the salesperson
should attempt to contact, what kinds of selling and service activities should engaged in, and how
those activities should be conducted. Some companies have explicit policies concerning such things
as:
whether salespeople should work through customer’s purchasing departments or attempt to
call directly on higher level decision makers
the amount of effort and detail to be included in preparing the proposals for different types
of accounts
the kinds of information to be reported back to the home office after a sales call.
THE ACCOUNT MANAGEMENT PLANNING PROCESS
marketing objectives, strategy and company constraints
estimates of sales potential; forecasts based on marketing information systems
plan allocation of effort across accounts
sales force organisation
sales force size
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territory design
classification of accounts
plan allocation of effort across members of the buying centre within each account
plan selling activities : type and content of sales presentation
sales call
follow-up and customer service
call reports and other information
The maturing of many industries and the increased concentration of those industries due to mergers
and acquisitions is prompting many firms to focus more of their marketing and sales efforts on
satisfying, retaining an d winning increased sales from established accounts.
Sales to established customers are usually less costly to obtain, and therefore more profitable than
sales to new accounts. As many industries mature and as more global competitors enter regional
markets, competition for available sales dollars is intensifying.
POLICIES CONCERNING MAJOR OR KEY ACCOUNTS
Maintaining Relationships with Major Accounts
The major account management selling philosophy stresses the dual goals of making sales and
developing long-term relationships with large customers. The salesperson can provide expert advice
and counsel to the customer, including advice on the engineering, design and installation of
complete product systems.
System Selling
Sellers are engaging in systems selling more frequently as one way to provide better service and
satisfaction to major customers. Systems selling involves two components :
the design of well-integrated groups of interlocking products
the implementation of a system of production, inventory control, distribution and other
services to meet a major customer’s needs for a smooth-running operation.
Computerised Ordering and Customer Alliances
To further strengthen relationships with major customers after an initial sale has been made, firms
are forming logistical alliances with those customers involving the development of joint information
and reorder systems.
Improving Postsale Customer Service and Loyalty
Loyal customers tend to:
tend to concentrate their purchases, thus leading larger volumes and lower sellin g and
distribution costs
provide positive word-of-mouth and customer referrals
may be willing to pay premium prices for the value they receive
Periodic measurement of customer satisfaction is important because a dissatisfied customer is
unlikely to remain loyal to a company over time. However, customers who describe themselves as
satisfied are not necessarily loyal. Thus, satisfaction measures shouls be supplemented with
examinations of customer behaviour, such as measures of annual retention rate, frequency of
purchases, and the percentage of a customer’s total purchases captured by the firm.
Thus, major account policies often emphasise activities to be performed by the salesperson after a
sale has been made. These activities typically include such routine servicing as expediting credit
approval and delivery. They can also include more extensive service where the salesperson acts as
the customer’s representative to the selling company and attempts to ensure that the company is
adequately meeting the needs of the buyer.
As major account management requires that a salesperson devote almost constant attention to the
needs of a single customer, firms that use this approach typically have two separate salesforces :
one that calls on smaller customers and one that is a force of account managers who devote all their
time to one or a few major accounts.
Major Account Teams
Some national accounts are so large and important that a firm may assign a team of representatives
consisting of people from various functional departments of the company to a single customer. The
sales team may include representatives from different levels in the company’s management
hierarchy. Each deals with purchase influencers and decision makers at corresponding levels in the
customer’s organisation.