Download FACULTY OF COMMERCE MIDLANDS STATE UNIVERSITY

FACULTY OF COMMERCE
MIDLANDS STATE UNIVERSITY, ZIMBABWE
INDUSTRIAL MARKETING .PRESENTATION AND NOTES
PREPARED FOR THE ATTENTION
OF
MRS NKALA
STUDENT DETAILS:
FULL NAME CONNIVANCE MUGUVU
PROGRAMME BCOMM MARKETING MANAGEMENT
HONOURS DEGREE
MODE OF ENTRY VISITING
LEVEL 3:1
13: DEVELOPING THE INDUSTRIAL SALES FORCE
Selecting and recruiting industrial sales-people
Developing professional sales .people
Areas of sales training
Directing (motivating) the sales force
Effective use of sales compensation
PRESENTATION AND NOTES
Unit Outline
Ensuring an Effective Sales Team
Defining Successful Sales Management
Selecting Sales Professionals
Unit Content
Ensuring an Effective Sales Team
Defining Successful Sales Management
What is the role of a sales manager?
The two main roles of a sales manager are to manage and to lead. To be a successful sales
manager, you need to be an effective leader. Some of the responsibilities of leading a sales team
include creating a sales vision and inspiring and motivating team members. The responsibilities
of managing a sales team include planning, organizing, and ensuring that your sales team
successfully implements the sales vision. Managing your time as a manager and leader is an
important aspect of ensuring that your sales team is successful.
You should ask yourself these questions when making the transition from sales representative to
sales manager:
What percentage of my time will I spend leading and what percentage of my time will I
spend managing?
Am I a stronger leader or manager?
How can I leverage my strengths while improving my weaknesses?
What skills should a successful sales manager have?
One of the most important skills of a successful sales manager is the ability to effectively
manage time. Learning to balance the responsibilities of managing and leading can be one of the
most difficult obstacles that new sales managers need to overcome. One way that successful
sales managers are able to manage their time is through their demonstration of strong
interpersonal skills. Successful sales managers use their interpersonal skills to accomplish tasks
through others.
For example, if sales managers want to ensure that their sales visions are implemented properly,
the best way to accomplish this objective would be to communicate the sales vision to sales
professionals and motivate them to use sales methods effectively. In order to manage time
successfully, sales managers also should have good coaching skills since they need to coach
sales professionals to sell successfully. Coaching skills include the ability to ask good questions,
the ability to listen, the ability to provide members of your sales team with unconditional
support, and the ability to hold employees accountable.
What are the daily tasks of a sales manager?
The daily tasks of a sales manager include analyzing reports, forecasting, conducting one-on-one
sales reviews, and motivating the sales team. For a sales manager to accomplish all of these daily
tasks effectively, he or she must be a successful communicator. If a sales manager is able to
communicate his or her business goals effectively, daily tasks are more likely to be accomplished
without wasted time or effort. Effective communication enables sales managers to empower
sales professionals by providing them with information, which helps ensure that tasks will be
completed in a timely and effective manner.
What expectations are placed on a sales manager?
Sales managers need to be good leaders. Consequently, the expectations that are placed on sales
managers are directly related to maintaining effective leadership skills. Sales managers are
expected to effectively communicate their goals and objectives and to create a culture conducive
to successful selling. Creating a culture conducive to successful selling involves ensuring that
sales professionals are aware of what is expected of them and that processes exist that facilitate
accomplishing goals and objectives.
What guidelines can I follow to ensure a successful culture and effective processes?
In order to ensure that you create a culture and develop processes conducive to successful
selling, follow these guidelines:
Develop and document goals
Create the team sales strategy
Be proactive
Develop and document goals
One guideline for ensuring that you create a successful culture and develop effective processes is
to develop and document team goals. When developing goals, you should make sure that they
are specific, challenging, have a timeframe, and are achievable.
Goals should be specific. If your goals are abstract or unspecific, it will become difficult to
determine how to accomplish them or whether they have been accomplished. For example, ''Sell
as many widgets as possible this week'' is an unspecific goal. To make this goal more specific,
you could change it to, ''Sell five widgets per week at a profit margin of thirty percent for the
next two months.'' Making goals specific gives you and your sales team direction and provides a
way to measure whether goals have been accomplished.
Goals must be challenging. Goals that are challenging will motivate you and your sales team. If
goals are easy to achieve, you and your sales team may neglect accomplishing them, thinking
that they can be accomplished any time. Setting goals that are challenging will help you create a
culture conducive to successful selling by inspiring a sense of enthusiasm in your sales team.
Goals must have a timeframe. If you do not designate a timeframe for goals, your sales team may
not take them seriously. Timeframes instill a sense of urgency that motivates team members to
take action to achieve the goal. Timeframes also provide you with a way to determine progress.
For example, having a chart in the office that outlines team goals and their timeframes will help
you determine your sales team's progress.
Goals must be achievable. If your goals are impossible to attain, you and your sales team will
become frustrated and unmotivated. While goals should be challenging to instill a sense of true
accomplishment, they should never be so lofty that they are unattainable. Unachievable goals
will diminish your team's enthusiasm and spirit.
Create the team sales strategy
Another guideline you should follow to ensure that you create a successful culture and develop
effective processes is to create the team sales strategy. Since results are often direct
consequences of either effective or ineffective planning, it is important that you take time now to
plan for the future.
Focusing your efforts on the future means thinking about your objectives and goals and
determining what processes will enable them to be accomplished. You should try to set longterm
goals that you would like to see accomplished in three to six months.
Once you have set these goals, you should develop a plan for meeting them. Set short-term goals
that will enable your sales team to accomplish the long-term goals successfully. In addition, you
should consider what culture would enable your sales professionals to accomplish your goals.
Once you have formed a sales team, you should discuss your ideas for processes and culture with
members of your team and ask for feedback.
Be proactive
Be proactive is another guideline you should follow to create a successful culture and develop
effective processes. While it is natural for sales professionals and sales managers to be reactive
in certain situations, the goal for sales managers in particular is to be proactive as often as
possible. Since it is important that sales professionals are reactive to situations in order to sell
successfully, making the transition from being reactive to being proactive may be difficult for a
sales professional who has been promoted to sales manager.
Specifically, a successful sales manager should be proactive sixty to seventy percent of the time.
Being proactive involves concentrating on managing the processes you have in place and
creating and maintaining a successful culture.
You should consistently try to evaluate your processes and determine how they can be improved.
If you see that a process you have in place could be made better, do not wait until the process
fails before you make changes to it. You should also try to improve the culture of your sales
team by constantly determining what changes could be made to the culture to make it as
conducive to successful selling as possible.
If you plan for the future and develop effective processes, you will spend less time managing
sales professionals. If your sales professionals are given effective processes to follow and work
in a culture conducive to selling, they will be able to manage themselves. While being proactive
involves developing effective processes and creating a successful culture, once you have
accomplished these goals, being proactive also involves taking steps to re-evaluate and adapt
your processes and culture as needed.
Selecting Sales Professionals
What qualities should a sales professional have?
Selecting sales professionals to join your sales team is one of the most important aspects of sales
management. If you are able to hire competent and qualified individuals, you will spend less
time and money correcting employee problems later. When determining whom to hire as a
member of your sales team, keep in mind the top five qualities of a successful sales professional:
Integrity
Communication skills
Persistence
Ability to solve problems
Ability to plan and organize
Integrity
Integrity is one of the most important qualities of a successful sales professional. A sales
professional needs to have integrity in order to sell successfully. If one of your sales
professionals sells a product by manipulating a customer or by intentionally misrepresenting
him- or herself, your product, or your company, your company's reputation will suffer.
Customers need to be able to trust and respect sales professionals.
Communication skills
A successful sales professional must also have strong communication skills. Since selling
requires frequent interactions with customers, the ability to communicate persuasively is crucial
to the sales professional's job. Sales professionals should not only be able to communicate
successfully verbally, but should also be able to understand and react to the communication
patterns of others. Evaluating the body language of potential clients and responding
appropriately are ways to help ensure the success of a sales call.
For example, suppose that a sales professional is in the middle of a sales call with a potential
client. While describing the product's benefits, he or she notices that the potential client seems
distracted and is looking through some papers on his or her desk. A successful sales professional
would respond to the client's body language by trying to gain the client's attention in another
way, such as by asking the client engaging questions to try to discover which aspect of the
product or service will satisfy the client's needs.
Persistence
Another quality that a sales professional should have is persistence. Since a sales professional's
job requires persuading others to buy a product or service, members of your sales team should be
willing to convince a potential client of the benefits of buying that product. A successful sales
professional should try to overcome a potential client's objections to buying a product before
taking ''No'' as a final answer.
Ability to solve problems
Another quality you should look for when evaluating candidates for your sales team is the ability
to solve problems. Since sales professionals will be required to work with clients on a daily
basis, it is important that they are able to solve potential customer problems. Hiring sales
professionals who show the ability to solve problems will help ensure that accounts will not be
lost due to then inability of the sales professional to handle customer complaints or problems.
Ability to plan and organize
The ability to plan and organize is another quality you should look for when selecting sales
professionals. It is important that members of your sales team have the ability to plan since sales
professionals work independently every day. Generally, sales professionals manage themselves
ninety percent of the time. Therefore, they need to plan their schedule and organize their time in
the most productive and efficient way.
Sales professionals need to plan for a sales call by creating questions to ask during the call and
by preparing to overcome objections that the potential client may make. In addition, if a sales
professional makes a sales call in a disorganized manner, your company and its product may lose
credibility in the eyes of the potential client.
How should I prepare to interview a candidate?
Before interviewing a candidate, you need to determine and write down the qualities the
candidate will need to be a successful member of your sales team. Once you have documented
these qualities, you need to prepare for the interview. In order to establish a plan for the
interview, you need to take these steps:
Review the resume. Reviewing the resume includes developing an individual line of
questioning for the person you are interviewing and identifying any ''red flags,'' such as
exaggerated work accomplishments or gaps between positions. You should review the
resume a couple of days before the interview and make notes about the candidate. Then,
review the resume again briefly before the interview.
Think of possible questions the candidate may ask. Before the interview, you should think
about the questions you may need to field from the candidate. Your ability to answer
candidate questions will ensure your credibility and professionalism. Some common
candidate questions include, ''Why is the position open?'' and ''What are some short-term and
long-term objectives of this sales position?''
Write lead questions. Once you have identified the requirements and skills needed for the
job, you need a plan for gathering information from the candidate to assess his or her fit with
the job and your culture. Lead questions will enable you to gather this information from a
candidate. The lead questions you write need to be open-ended, behavioral questions.
What are behavioral questions?
Behavioral questions are questions that ask for examples or proof of a candidate's performance
and begin with words like, ''how,'' ''why,'' ''what,'' ''tell me about,'' ''describe a time,'' and ''give me
an example of.'' For example, the question, ''Tell me about a situation in which you were unable
to convince a client of your product's benefits--what did you do?'' is designed to gain information
about a candidate's past performance.
Studies have found that behavioral questions are the most effective types of questions because
they reveal actual examples from the candidate's past. If a candidate has a difficult time
providing examples, he or she may not be the best person for your sales team.
In order to make sure you have gained the most complete understanding of an example of past
performance, the candidate should provide information about three things:
The Problem: What specific problem they addressed and what circumstances surrounded the
problem
The Action: What actions the candidate took to solve the problem
The Results: What happened as a result of the candidate's actions
You can remember ''Problem, Action, and Results'' with the acronym PAR.
How should I conduct the interview?
The primary intention of the interview is for you and the candidate to decide whether the
candidate is a good fit for your sales team. Since you need to gather information to do so, it is
important that you spend the majority of your time in the interview listening.
However, when the candidate asks you questions about the position, it is also important that you
thoroughly answer them so that he or she can determine whether this is the right position for him
or her. Good interviews flow smoothly when both the interviewer and the candidate take part in
an information exchange.
However, the interview is controlled by the interviewer and follows a specific structure:
1. Open the interview to put the candidate at ease, make a positive impression, create an open
dialogue, and set expectations for the interaction.
2. Gather information about the candidate by asking questions, listening to the responses, and
transitioning between areas of inquiry.
3. Close the interview to provide information, create a positive impression of your organization,
and thank the candidate for their candor and time. You should also let the candidate know when
he or she can expect to hear from you concerning whether he or she will be hired.
What guidelines can I follow to interview successfully?
In order to interview successfully, you need to be able to determine whether the candidate has
the qualities needed to successfully work on your sales team. By evaluating the candidate's
professionalism throughout the interview and by listening to his or her responses to the
behavioral questions you ask, you will be able to accomplish your objective of deciding whether
you should hire the person. There are several guidelines to follow to ensure that the interview
successfully accomplishes this objective:
Evaluate the candidate's integrity
Determine planning and organizational abilities
Determine the candidate's ability to solve problems
Assess the candidate's persistence
Appraise the candidate's communication skills
Evaluate the candidate's integrity
Since one of the qualities of a successful sales professional is integrity, you should use the
interview to determine whether the candidate exhibits this quality. One way to do so is to ask
behavioral questions that focus on decisions the candidate had to make in past work experiences
that dealt with integrity.
For example, you could ask the candidate the following behavioral question: ''Tell me about a
time when you felt your job required you to do something that conflicted with your values--what
did you do?'' In order to follow the PAR acronym, you would then ask the candidate what
happened as a result of his or her actions.
Determine planning and organizational abilities
You should also use the interview to determine whether the candidate has the ability to plan and
organize well. One way to accomplish this objective is to evaluate how well the candidate has
prepared for the interview. You can determine how well the candidate has prepared for the
interview by listening to the types of questions the candidate asks about the sales position.
If the candidate mostly asks questions about fringe benefits and does not ask questions that lead
you to believe that he or she has planned for the interview, it is likely that the candidate is not an
efficient planner. However, if the candidate asks you specific questions such as, ''How will I be
trained for this position?'' and ''Do you promote from within?,'' you can conclude that the
candidate is an efficient planner.
Another way to determine whether the candidate has the ability to plan and organize well is to
determine whether he or she has done research about the company. To accomplish this objective,
you could ask the employee, ''What do you know about this company?''
In addition, you should ask questions to determine how well the candidate plans and organizes.
An example of a question you could ask to determine the planning and organizational
capabilities of a candidate is, ''Tell me how you prepare and organize before you make a sales
call.''
Determine the candidate's ability to solve problems
Since it is important that the person you hire to work as a member of your sales team is capable
of solving problems, you should determine whether the candidate is able to do so. One way to
accomplish this objective is to ask behavioral questions such as, ''Describe a time when you had
a deal with a customer complaint--what did you do?'' Then, ask the candidate what happened as a
result of his or her actions.
Assess the candidate's persistence
Assessing the candidate's persistence is another guideline for determining whether the candidate
is a good fit as a member of your sales team. In order to assess the candidate's persistence, you
could encourage the candidate to fight for the sales position. For example, you could mention
obstacles that the candidate may face as a member of your sales team and evaluate whether he or
she persistently insists that he or she is the best person for the job.
Another way to assess the candidate's persistence is to ask behavioral questions such as, ''Tell me
about a time when you tried to sell a product to a potential client who seemed uninterested in
buying the product.'' Then, ask what actions he or she took to try to ensure the sale and what
happened as a result of those actions.
Appraise the candidate's communication skills
Another guideline for determining whether the candidate will work successfully as a member of
your sales team is to appraise his or her communication skills. One way to do this is to analyze
whether the candidate is articulate and persuasive throughout the interview. For example, a good
question to ask yourself at the end of the interview is, ''Did this candidate do an effective job of
persuading me to hire him or her?''
Another way to appraise a candidate's communication skills is to ask behavioral questions such
as, ''Give me an example of a time when you were misunderstood by a client or co-worker.''
Then, ask the candidate what actions he or she took to solve the misunderstanding and what
happened as a result of those actions.
Unit Outline
Building Sales Team Unity
Building Relationships
Building Trust in Sales Teams
Unit Content
Building Sales Team Unity
Building Relationships
Why is building relationships important to increasing motivation?
Building relationships with members of your sales team is important for increasing motivation.
You cannot manage people in the same way you would manage a project; individuals need
special attention. You cannot expect sales professionals to be motivated if they do not feel as if
they are both a valued part of your team and of the organization as a whole.
What steps can I take to build relationships that will increase motivation?
In order to build relationships that will increase the motivation of individual members of your
sales team, conduct one-on-one meetings with each member of your sales team and follow these
steps:
1. Schedule a meeting with each sales professional
2. State your goals and intentions
3. Listen to the sales professional's goals and intentions
4. Determine whether changes need to be made
5. Determine how the sales professional can improve
6. Determine how you can improve
1. Schedule a meeting with each sales professional
The first step to building relationships with members of your sales team is to schedule one-onone
meetings with them. You should have these meetings at least once a month, so set up a
recurring meeting date. Tell each sales professional that you would like to discuss his or her
goals at these meetings. Make each member of your sales team feel comfortable about the
meeting by stating that it is an informal setting for the sales professional to discuss his or her
expectations of the job and of you. Make it clear that you will also use this opportunity to discuss
your expectations of the sales team member.
2. State your goals and intentions
The second step you can take to build a relationship with members of your sales team is to state
your goals and intentions. Start the meeting by telling the sales professional exactly what your
goals are and how he or she can help implement those goals. Clearly state what you expect from
the sales team member and tell him or her what your intentions are as his or her manager. After
you state your goals, be sure to include why they are important. When sales professionals
understand why specific team goals have been chosen and how they impact the company, they
feel included and fully informed. You should also address issues such as how you plan to support
the sales professional as he or she completes his or her work.
3. Listen to the sales professional's goals and intentions
The third step to building relationships with each member of your sales team is to listen to his or
her goals and intentions. Show genuine interest in the sales professional's goals and intentions by
asking him or her questions such as, ''How do you plan to implement that goal?'' and ''How can I
help you accomplish your goals?'' Take notes during the meeting and keep a list of the sales
professional's goals and intentions in his or her employee file. Later on, if a team member's
motivation lags, you can refer to the file and use the information to determine the best
motivational tool.
4. Determine whether changes need to be made
The fourth step you can take to build relationships with members of your sales team is to
determine whether changes need to be made. If you find that your goals and intentions are vastly
different from the sales professional's, you should determine with the sales professional what
changes could accommodate both of you. Remember to view this situation as an opportunity to
create a ''win-win'' solution. You will earn the sales professional's respect if you show him or her
that you want to support his or her goals as well as your own.
5. Determine how the sales professional can improve
The fifth step you can take to build relationships with members of your sales team is to
determine how they can improve their performance. After you have listened to the sales
professional, tell him or her which goals and intentions you would like him or her to focus on
achieving. State your expectations clearly and address any aspects of the sales professional's
performance that need improvement. You should also offer sales team members feedback on
how to improve their performances and provide them with information on how they can leverage
their strengths.
6. Determine how you can improve
The final step you can take to build relationships with members of your sales team is to ask the
sales professional what he or she thinks of your performance as a manager. Ask the team
member what he or she thinks you are doing well and how you can improve your job
performance. You should also ask him or her to give you suggestions to avoid past mistakes.
Building Trust in Sales Teams
Why is building trust important to your sales team?
Building trust is important to your sales team because if the members of your sales team feel that
they work in an environment in which they can openly communicate ideas for improvement or
solving problems, they will provide an abundance of feedback, and sales results will exceed
expectations. However, if members of your sales team work in an environment in which they
cannot openly communicate, feedback will become limited and so will the professional growth
and development of your sales team. By coaching team members individually and by addressing
the issue of trust with the team as a whole, you can ensure that team members will trust you and
each other.
What steps can I take to build trust among sales team members?
Since building trust is an important action to take in order to ensure an effective sales team, take
the following steps to build trust among sales team members.
1. Define what trust means to the team
2. Explain how the team should communicate
1. Define what trust means to the team
The first step you should take to build trust among sales team members is to define what trust
means to the team. When defining what trust means to the team, you should explain the
advantages of team members trusting each other and the disadvantages of team members not
trusting one another.
The advantages of trust within a team include cooperation, open communication, increased
motivation, and increased productivity. If team members trust each other, they will be more
likely to share ideas, solve problems together, and work hard not only for individual benefit, but
also for the benefit of the team.
The disadvantages of distrust within a team include limited feedback, decreased motivation and
productivity, and an increased level of fear in the workplace. For example, a team member may
be afraid to share information about a difficult account because he or she believes that doing so
may lead other team members to try to steal it. As a result, the account may be lost because the
team member failed to get the assistance he or she needed.
2. Explain how the team should communicate
The second step you should take to build trust among sales team members is to explain how the
team should communicate. Following these guidelines can help you remember what you need to
explain to team members regarding how they should communicate with each other to build trust:
Actions should reflect words. Be sure that the members of your sales team understand that
they need to follow through with what they say they will do. In order to build trust, it is
important that the actions of the members of your sales team reflect their words.
Team members need to respect each other. Make sure that team members understand that
they need to show other team members respect even if they do not know each other well of
even when they do not agree with each other's viewpoints. Make sure that team members
know that the best way to show respect for other team members is to listen to them.
Team members should communicate needs and requirements. If two team members plan a
joint sales call together, the likelihood that problems will occur that could cause distrust
between the team members decreases. For example, if two sales professionals go on a joint
sales call, they should be clear and specific about their needs and requirements. The two sales
professionals should agree on what their individual roles will be during the call and on which
segments of the call each sales professional will lead. They could also plan to use certain
signal words or phrases to use in case a misunderstanding occurs.
Team members should be true to themselves. State that team members should use language
that is self-appropriate. Although team members may want to please other team members by
adapting their language to fit other team members' needs, it is important that all team
members are honest about individual feelings and opinions. However, be sure that team
members know that individual feelings and opinions need to be shared in a manner sensitive
to other team members.
Team members should use team-appropriate language. Talk to your sales team about using
team-appropriate language. If team members do not use language that is team appropriate,
they risk offending or excluding one or several teammates. An example of a team-appropriate
question is: ''What does everyone think about John's idea?''
What steps can I take to build trust between sales professionals and myself?
Since it is important that members of your sales team are able to come to you with ideas,
problems, or feedback, follow these steps to build trust between sales professionals and yourself:
1. Agree on a sales vision
2. Encourage open communication
1. Agree on a sales vision
The first step you should take to build trust between members of your sales team and yourself is
to agree on a sales vision. You should schedule a meeting with your sales team to discuss your
sales vision and ask for feedback. If team members have ideas for how to improve the vision, be
sure to document those ideas and follow up on them. If team members have concerns about the
sales vision, encourage them to express those concerns. Then, you should explain how those
concerns will be addressed.
Once you have agreed on sales vision, you should print and laminate copies of it. Printing and
laminating the sales vision will enable you to provide each member of your sales team with a
copy of the sales vision. Then, members of your sales team can refer to their copies of the sales
vision while they are making sales calls. You should also update and discuss the sales vision
every year to ensure that it still motivates your sales team.
Agreeing on a sales vision with your sales team will give team members the opportunity to voice
their opinions. Showing that you value the thoughts of the members of your sales team will
create an atmosphere of trust and will encourage them to come to you with feedback or problems
in the future.
2. Encourage open communication
The second step you should take to build trust between members of your sales team and yourself
is to encourage open communication. Let team members know that you have an open-door
policy and that you are interested in hearing their ideas, feedback, and concerns. Show interest in
the needs of members of your sales team and do not hesitate to express your needs to the team.
Encouraging team members to openly communicate with you will build trust and improve your
relationship with each member.
Unit Outline
Ensuring Effective Sales Performance
Training Sales Professionals
Setting Sales Performance Standards
Evaluating Sales Performance
Unit Content
Ensuring Effective Sales Performance
Training Sales Professionals
What information should I cover when training a sales professional?
When training members of your sales team, it is important that you cover certain aspects in order
to ensure that your members learn how to perform their jobs successfully. The following areas
are ones you should be sure to cover with your new sales professionals:
Information about the company
Information about the product or service
Training about the sales process
Training about customer service standards
Information about the competition
Information about the company
One of the most important areas you should be sure to cover with new members of your sales
team is information about the company. When providing the trainee with information about the
company, you should cover areas such as the history of the organization, background
information on the territory structure and accounts, existing policies, and the different positions
within the company.
After you have provided information to the new sales professional personally, continue the
training by having him or her gain office work experience in the company. If you cannot have
the new team member gain office work experience in your company, have him or her attend
regular sales meetings or create workshop sessions in which you or an experienced sales
professional can explain information about the company in detail. Be sure to meet with the new
sales professional after he or she has had an opportunity to absorb the information to answer any
questions.
Information about the product or service
Another area you should be sure to cover when training a new sales professional is information
about the products or services your company offers. If your company offers products instead of
services, you should discuss the materials used to make the product, how it is designed, the
processes and systems used to sell the product, and its benefits and features.
If your company sells a service, provide the sales professional with information about the
features and benefits of the service. You should also provide information about the processes and
systems used to sell the service to customers. If your company provides a service, give the sales
professional information about how it is unique and how it differs from similar services provided
by the competition.
After you have provided information to the new team member personally, the best way to
continue training him or her about the product is to have the sales professional gain experience in
the plant where the product is manufactured. If you are unable to have the sales professional train
in the plant, have him or her learn about the product by participating in office work that will
teach him or her about the materials used to make the product or that is directly related to
product design. If your company provides a service, you should have the sales professional talk
with a seasoned sales professional about the features and benefits of the service and the
processes and systems used to sell the it. After you give the sales professional time to learn the
information, you should have a meeting with him or her to answer any questions.
Training about the sales process
You should also provide the new sales professional with training about the sales process. You
should cover information such as how to open a sales call, how to ask probing questions, and
how to present the features and benefits of the product or service. You should also offer
information about how to handle objections, such as misunderstandings, skepticism, and
drawbacks, how and when to negotiate, and how to close a sale. Sales process training also
includes giving the new sales professionals any tools that he or she may need to use during the
selling process and providing an explanation of how those tools should be used.
After you have provided information about the training process personally, the best way to
continue training the new team member about the sales process is to have him or her accompany
you on a sales call. If you are unable to go on a sales call with the sales professional, you should
assign an experienced member of your team to be a mentor for the new team member. The new
sales professional should go with his or her mentor on sales calls. After you or the mentor leads a
few calls, the sales professional can take the lead on the next call, and you or the mentor
observes.
Even if you are available to accompany the new sales professional on initial sales calls, you
should assign a mentor to work with him or her. However, you should make sure that the new
team member is comfortable with his or her mentor and encourage him or her to ask the mentor
questions. After the sales professional goes on several sales calls with you or the mentor,
schedule a meeting with the new team member to gather feedback and answer his or her
questions.
Training about customer service standards
Customer service standards is another area that you should cover when training a new sales
professional. When you train the new team member about customer service standards, you
should explain existing customer service standards and their benefits.
After you have provided the new sales professional with information about customer service
standards personally, you should have him or her work with an experienced customer service
representative. You should also encourage the new team member to attend regular sales meetings
so that he or she can learn how to best serve customers by listening to the ways that other team
members serve them. Be sure to follow up training by scheduling a question and answer session
with the new team member in order to ensure that the sales professional understands the
information.
Information about the competition
You should also provide information about the competition when you train a new sales
professional. When you provide information about the competition, you should include
information about the competition's products and services, strategies and processes, and strengths
and weaknesses.
Once you have provided information about the competition personally, you should have the new
team member work closely with an experienced sales professional so that the new sales
professional can learn how to competitively sell against the competition. You should also
encourage the sales professional to attend sales meetings in which you think he or she might gain
information about the competition.
What is the most effective way to train sales professionals?
The most effective way to train sales professionals is field training. There are two types of field
training that are effective:
Field training with a mentor sales professional. After you have established who on your sales
team will mentor the new team member, the new team member should accompany his or her
mentor on several sales calls. Field training with a mentor sales professional will enable the
new team member to see how the selling process works.
Field training with the sales manager. When field training a new sales professional, you
should have the sales professional accompany you on several sales calls. You should lead the
first couple of sales calls while the new team member observes. Then, you should have the
new sales professional lead some sales call while you observe. After each sales call, you
should talk with the new sales representative about what aspects of the call went well and
which aspects need improvement.
What steps can I take to ensure that field training is effective?
Ensuring that the field training you provide to the new sales professional is effective will
increase the likelihood that the new member of your sales team will perform his or her job
successfully in the future. To help ensure effective field training, follow these steps:
1. Provide information about the account
2. Explain the selling plan
3. Ask the sales professional to paraphrase the plan
4. Conduct the sales call
5. Debrief the sales call
1. Provide information about the account
The first step you should take to ensure that field training is effective is to provide the new sales
professional with information about the account. You should provide information about the
background of the account and where you are in the sales process with the client.
2. Explain the selling plan
The second step you should take to ensure that field training is effective is to explain the selling
plan. Include all details of the sales call, from how you will approach the receptionist to the
conclusion of the sales call. As you explain the sales process, you should gather and organize the
tools you will need for the sales call.
3. Ask the sales professional to paraphrase the plan
After you have explained the selling plan, you should ask the sales professional to briefly
paraphrase the plan for you. Asking the sales professional to paraphrase the selling plan for you
will enable you to determine how well he or she absorbed the information.
4. Conduct the sales call
The fourth step you should take to ensure that field training is effective is to conduct the sales
call. On the first sales call you make with the trainee, you should conduct the sales call while he
or she observes. However, after the first or second sales call, you should have the new sales
professional lead the sales call while you observe.
Before you make the sales call, it is important that you explain to the sales professional who will
be leading the sales call and why. If you will lead the sales call, be sure the sales professional
knows what aspects of the call he or she should closely observe. If the sales professional is
leading the call, make sure you explain the criteria you will be using to evaluate the sales call.
While the sales professional leads the sales call, you should remember not to intervene unless
necessary. Since more is learned from failure than success, the only times it would be necessary
for you to intervene would be if the sales professional collapses under pressure and is unable to
finish the sales call or if the sales professional looks to you for guidance.
You should also remember to show respect for the new member of your sales team by not
correcting his or her mistakes in front of the client. Wait to discuss the sales professional's
strengths and areas for improvement until after both of you have left the location of the sales call.
If you intervene when on a sales call with a client, you should be sure to explain to the sales
professional why you intervened.
5. Debrief the sales call
The fifth step you should take to ensure that field training is effective is to debrief the sales call.
After leaving the location of the sales call, the two of you should reach an agreement regarding
the areas in which the sales professional showed strengths and those in which he or she will need
to improve. While debriefing the sales call, you should also encourage the sales professional to
ask questions or express concerns about the sales process.
Setting Sales Performance Standards
Why is it important to set performance standards?
It is important to set performance standards because they outline exactly what expectations you
and the organization have for the sales professional. Documented and up-to-date performance
standards provide the sales professional with a clear list of his or her responsibilities. Effectively
created performance standards are a valuable tool to use as a basis for establishing a team
member's performance plan each year. Therefore, performance standards are a fundamental
element of managing performance.
What steps should I take to set performance standards?
1. Define job responsibilities
2. Identify performance measurements
3. Define desired results
4. Explain how results and compensation are linked
1. Define job responsibilities
The first step you should take to set performance standards is to set a meeting with the new sales
professional during which you will define job responsibilities. The greater part of your
discussion with the sales professional will consist of defining what is expected of him or her and
talking about the major responsibilities he or she will hold in the new position.
It is important to explain to new sales professionals how their responsibilities fit into the larger
goals and structure of the team and organization. During this discussion, you should provide new
team members with organizational charts or any other documents that could help them
understand how and where they fit into the team and organization and how each department in
the organization relates to other departments.
2. Identify performance measurements
After you have defined job responsibilities, you should explain to the sales professional how he
or she will be evaluated on his or her job performance. It is not necessary at this point to discuss
every aspect of the performance management process, but it is important to give the employee
some idea of how evaluations will be carried out and how often they will be conducted.
3. Define desired results
Defining desired results is the third step you should take to set performance standards. When you
define desired results, you should tell the sales professional about your expectations for his or her
performance. It is important that the sales professional is aware of your expectations and of what
results you would like to see him or her achieve. Therefore, it is important that you are as
specific as possible when defining desired results.
4. Explain how results and compensation are linked
The final step to setting performance standards is to explain how results and compensations are
linked. You should explain to the sales professional how he or she will be compensated if he or
she achieves desired results. Explaining how results and compensation are linked will help
motivate new sales professionals.
Evaluating Sales Performance
What is the purpose of a performance evaluation?
The purpose of a performance evaluation is to help members of your sales team perform to the
best of their abilities. When conducting a performance evaluation, it is important for you to
remember to show respect for the sales professional. You should try to guide the sales
professional toward growth and success. Remember that your job is to help, not judge.
How should I prepare for a performance evaluation?
Properly preparing for a performance evaluation can ensure that the evaluation goes smoothly for
you and for the sales professional. There are three important actions you should take before
conducting the performance evaluation:
Create an evaluation form
Create a plan
Prepare mentally
Create an evaluation form
The first action you should take to prepare for a performance evaluation is to create an evaluation
form. The evaluation form that you create will be based on several documents. The documents
you should use to create an evaluation form include the performance standards that you
discussed with the sales professional and his or her most recent performance evaluation. It is also
important to include any information that will influence the sales professional's performance
goals, such as documents that describe the organization or team goals for the upcoming year.
If your company requires it, it is important that you have your sales professional's performance
evaluation form reviewed by your supervisor and any other appropriate levels of management.
Seeking approval of your evaluation forms can be beneficial since it ensures that you will not
make any promises or commitments to a sales professional that are not supported by upper
management.
Create a plan
A day or two before meeting with each sales professional, you should create a plan for leading
the performance evaluation. Develop this plan by reviewing the evaluation form and all the
documents you used to write it. Decide what the main message is that you want to communicate
to the sales professional.
Creating a plan for the meeting ensures that the discussion will communicate your message.
Without a clear plan of what and how you want to communicate, your message can get lost, and
the evaluation may not accomplish your goals. Therefore, you should focus the discussion plan
on the one or two most important points that you want to communicate.
Prepare mentally
Since appraisal discussions can produce some anxiety, it is important to prepare yourself for the
discussion. If you anticipate that a particular appraisal discussion may be challenging, you
should take actions to help you remain calm and positive. Visualizing yourself successfully
leading the meeting can ease your mind, or you may want to take a brisk walk or use deepbreathing
exercises before the meeting.
Just before the appraisal discussion, take a few minutes to review your purpose and the exact
message you want to communicate to the employee. Remember that performance evaluations
can be very intimidating for sales professionals. Remind yourself that your goal is to show the
employee that you care about his or her success and that you want to help make improvements in
his or her performance.
What steps should I follow when conducting a performance evaluation?
While conducting the performance evaluation, it is important that you remember to accomplish
certain objectives, such as giving the sales professional positive and constructive feedback. In
order to ensure that you conduct performance evaluations successfully, follow these steps:
1. Ask for the sales professional's perspective
2. Discuss the sales professional's performance
3. Give positive feedback
4. Give constructive feedback
5. Discuss the sales professional's best trait
6. Agree on a plan to improve performance
1. Ask for the sales professional's perspective
Begin the performance evaluation by asking the sales professional to share his or her perspective
on how well he or she performed over the last year. Ask the sales professional to comment on
whether he or she has met each of the goals established by the performance standards.
Your goal at this point is to allow the employee a chance to discuss his or her perspective.
Therefore, you should withhold any opinions you have about his or her performance. You should
practice active listening to show the employee that you are truly interested in what he or she
says. Active listening includes maintaining eye contact with the sales professional, nodding or
providing verbal reassurances, and keeping an open body posture, which means not crossing
your arms or legs.
2. Discuss the sales professional's performance
The second step you should take when conducting a performance evaluation is to discuss the
sales professional's performance. After the sales professional has explained his or her evaluation
of his or her past performance, you should revisit each established goal and discuss how you
evaluated his or her performance. Start the discussion with the areas on which you agree. Doing
so gives you an opportunity to build rapport with the employee before you move on to areas on
which you disagree.
When you discuss areas of the sales professional's performance on which you disagree, you
should describe to him or her how you reached your conclusions. Provide examples to support
your evaluation. When necessary, you should refer to any of the documents you used to write the
evaluation. Members of your sales team will be more willing to accept your evaluation of a
particular aspect of their performance if they understand the reasoning behind your evaluation.
3. Give positive feedback
Giving positive feedback is the third step you should take when conducting a performance
evaluation. After you and the sales professional establish whether he or she accomplished each
of the goals from his or her performance plan, take some time to learn from the sales
professional's successes. Since the main objective of performance management is to improve
performance, you and the sales professional need to identify what factors led to the successes.
When you examine the sales professional's successes, determine what factors contributed to each
success. The sales professional may have succeeded due to hard work, organization, creativity,
or efficient use of resources, among many other possibilities. It is important to identify these
factors so the sales professional can continue performing at his or her current level. In addition, it
may be possible to apply these success factors to areas in which the sales professional is
struggling.
4. Give constructive feedback
The fourth step you should take when conducting performance evaluations is to give constructive
feedback. You and the sales professional need to identify what could have been done differently
to achieve the goals that he or she found too challenging.
As you and the sales professional examine the goals he or she did not accomplish, identify what
factors prevented success. For example, maybe the sales professional needs more training, or
maybe he or she can take a different approach toward reaching his or her goal. Keep in mind that
your goal in this discussion is not to place blame but to help the sales professional learn from his
or her mistakes.
5. Discuss the sales professional's best trait
After you have given the sales professional constructive feedback, you should end the feedback
portion of the performance evaluation positively by discussing the sales professional's best trait,
such as a flair for teamwork or an innate ability to build rapport with clients. If you are
evaluating a sales professional who you believe does not have a best trait, you can move on to
agreeing on a plan to improve performance.
6. Agree on a plan to improve performance
The sixth step you should take when conducting performance evaluations is to agree on a plan to
improve performance. Discussing how the sales professional can learn from successes and
challenges naturally leads to a discussion about setting new performance goals.
Therefore, when you have finished examining each of the sales professional's goals, you should
take a moment to schedule a performance-planning meeting with the sales professional to
establish performance goals for the coming year. When establishing these goals, you should
remember to be sure that they are specific, challenging, timely, and achievable. Do not wait more
than a couple of weeks to conduct the performance-planning meeting, or you and the sales
professional may forget some of the important points of the performance evaluation.
14: PLANNING, ORGANISING & CONTROLLING THE SELLING FUNCTION
Actualising the marketing concept
The industrial selling environment
Managing the industrial sales force
Planning for the sales force development
Organising the sales force
Controlling sales force activities
The future of sales force strategy
PRESENTATION AND NOTES
The environment of industrial selling
Although effective selling and sales management are often critical to marketing success, the
stature of this research domain--and progress of knowledge within it--have fallen behind other
areas. Difficulties in data access and the perception of some that sales is not integral to marketing
may have contributed to this situation. Sales forces are caught in the middle. On one side, their
customers have changed dramatically in terms of how they purchase and what they expect. On
the other side, their own corporations have shifted, going through downsizing, restructuring,
and cost cutting. Traditional boundaries such as those between sales and marketing have
crumbled. Salespeople have to cope with more products, introduced faster with shorter
life cycles, and less competitive differentiation. The following challenges are being face by
sales force:
* A rising tide of new products and imports.
* A growing saturation of markets for older products.
* An increasing invasion of markets by firms formerly regarded as non-competitive.
* The spread of automation with its enormous output
The comparison of these perspectives, so similar across four decades, suggests that dynamism in
the selling environment occurs, at least to some (perhaps significant) extent, along dimensions
that remain consistent over time. It also seems likely that the same types of change that managers
confront today will present challenges for sales managers twenty and more years from now.
Even so, change presents challenge, and it is critically important for research in selling and sales
management
DIMENSIONS OF CHANGE IN THE SELLING ENVIRONMENT
We shall discuss external environmental changes affecting the sales force in terms of four
categories of influences, including customers, competitors, technology, and the ethical and
regulatory environment. The organization's efforts to adapt itself to, and, in some respects,
control, changes in the external environment result in changing internal structures and processes
(Dyer and Singh 1998; Eisenhardt 2002; Harrigan 2001) that have important implications for
sales force management. Collectively, these changes in the external and internal organizational
environments challenge salespeople's and executives' capacity to adapt and perform to meet
rising standards. They also suggest needs and opportunities for research.
1. Customers
Customer expectations of salespeople and their organizations continue to ratchet upward.
Evidence of this can be seen in declining customer satisfaction ratings for many organizations,
even as they invest heavily in process improvements and customer relationship management
(CRM) technology. In particular, customer expectations are increasing in relation to salesperson
knowledge, speed of response, breadth and depth of communication, and customization of
information and product/service offerings. Indeed, customer expectations change, often faster
than organizations can effectively respond (e.g., Colletti and Chonko 1997). Failure to adapt and
respond is likely to lead to obsolescence of the sales force, and, indeed, some have questioned
whether the sales force is in the process of becoming obsolete (cf. Jones, Chonko, and Roberts
2004).
Further evidence of escalating customer expectations can be found in marketing strategy
research, which has evolved to include market turbulence, including customers' changing
preferences. Organizations that respond most effectively to market turbulence are likely to build
a competitive advantage over those who respond less effectively. From its position on the front
line, the sales force has the best perspective from which to observe and respond to market
turbulence and to inform the organization regarding what is occurring in the marketplace. As
such, an important consideration in organizational adaptation to the environment may be the
extent to which the firm utilizes salespeople as "listening posts" to monitor and anticipate market
developments (Heskett, Sasser, and Schlesinger 1997). Too few organizations leverage their
sales forces' full potential to provide actionable market intelligence (LeBon and Merunka 2004).
In ongoing research, it will be important to understand the role of the sales force in guiding
organizational efforts to adapt, as well as to study ways in which sales forces are adapting to
environmental changes.
2. Salesperson Knowledge
In addition to the increasing burdens on salespeople for technological expertise and product
knowledge, customers also expect the salespeople calling on them to become familiar with
information available in the public domain and over the Internet prior to calling on the account.
One executive commented that the first sales call on an account used to serve the purpose of
informing the salesperson about the firm, its buying center personnel and procedures, and its
buying requirements. In contrast, in today's environment, salespeople who attempt to use the first
call to obtain background information--because they had not accessed available information prior
to the first sales call--will make a poor first impression and likely fail to penetrate the account.
Thus, precall preparation has taken on new meaning (cf. Jones, Stevens, and Chonko 2005).
The various dimensions of change in the selling environment discussed here all tend to create
heavier cognitive demands on salespeople. Increasing product complexity, customer demands,
technological innovation, regulatory oversight, and competition all require salespeople to
process, internalize, and manage increasing information loads. Sales research has built usefully
upon established theory regarding scripts and knowledge structures to describe salesperson-customer interactions . Given the increasing complexity of sales environments, with an
accompanying increase of cognitive demands, it will be useful to strive toward greater
understanding of how salespeople cope with information overload (Jacoby 1984). Given these
increasing demands, greater understanding of salespeople's capacity to manage and extract
practical benefits from overwhelming amounts of information would be useful. Such
understanding can help organizations provide product and market information in more actionable
formats. It can also inform efforts to select salespeople and plan and implement automation tools
more effectively. Specific questions might include, for example, what knowledge-based
characteristics should managers assess during the sales force selection process? And, because
salespeople are becoming less lone wolves and more team players, what knowledge does one
need to improve team dynamics?
3. Speed of Response
Technological facilitation of communication through e-mail and the Internet have enabled
salespeople to communicate more effectively with customers, as well as with their own firms. At
the same time, however, the same communication advances have had the ancillary effect of
increasing customer expectations regarding response time to their requests and inquiries. Given
the capacity to communicate quickly and effectively, customers expect that salespeople will use
it to serve their needs more quickly and completely. Collectively, customer demands for quick
response are overwhelming to salespeople, who must simultaneously balance a multiplicity of
other responsibilities. This has led to some early research on the effect of role overload on sales
people .However, more needs to be done in this area to fully address the multitude of demands
placed on the sales force in an environment that is becoming increasingly complex. Although
increasing the size of the sales force may have some positive effect on alleviating workload
demands on sales people, information intensity, technology demands, and increasing customer
expectations still create overload conditions that are likely to affect salesperson productivity.
4. Breadth of Communication
To effectively serve customers' needs with increasingly sophisticated products, services, and
applications, salespeople must become capable orchestrators of organizational resources. They
must be able to appeal to and coordinate the efforts of technical experts and executives in their
organizations to assist in efforts to sell and provide service to customers over long periods of
time. The role of "orchestrator" has been noted in the literature ( Jones, Stevens, and Chonko
2005; Weitz and Bradford 1999), as has internal selling . These issues are clearly important in
key account management. Yet little empirical research exists on communication issues
underlying salespeople's efforts in orchestrating the relationships between selling and buying
organizations.
5. Depth of Communication
To establish and maintain strong customer relationships, salespeople must also deal with a
greater number and variety of individuals within client organizations. Understanding influence
dynamics and decision-making processes has become significantly more challenging, as they
become more diffuse in teams and networks embedded within the buying organization. Buying
(and selling) centers have existed for a number of years, and the notion of salespeople identifying
key influencers when selling to industrial accounts is not new. However, given the blurring of
boundaries on both the selling and buying sides, more work needs to be done to advance
knowledge in this area. For example, as the business environment becomes more complex, more
strategic alliances are being formed between companies. Executives typically mention that,
through alliances, their companies are better positioned to package "total solutions" for their
customers. At the same time, depending on the circumstances, alliance partners are often
competitors as well. Research to date has not addressed issues related to this type of boundary
blurring. Salespeople need to become, in a sense, social scientists capable of analyzing lines of
power and influence across blurring boundaries in order to sell in today's business environment.
6. Customization
Closely related to the issues of increased need for knowledge, communication, and coordination,
noted above, is the need to provide individualized solutions for each customer. In most
organizations, both buyers and sellers are dissatisfied with commoditized "one-size-fits-all"
products and services. For buyers, such products will generally require adaptation to provide a
viable solution, and for sellers, they represent low-margin, easily duplicated products with little
differentiation from competitive offerings. Therefore, selling organizations generally seek ways
to move these commodity products up the value chain with some form of differentiation (e.g.,
bundling services, adapting for specific types of applications, etc.). The need for customized
solutions places additional burdens on salespeople in terms of information gathering and
dissemination (e.g., to others in the organization assisting with sales and service, as well as to
customers), and communication and coordination within both buyer and seller organizations.
7. Customers as Co-producers
Relationship selling and customization of products and services to suit customer needs
increasingly involves customers as co-producers of services rendered. As such, the value realized
by customers often depends on their own efforts as much as it does on the salesperson and the
selling organization. Yet customer dissatisfaction is likely to be attributed to the seller, even
when service failure occurred as a result of the customer's own error or omission. Thus, beyond
orchestrating the delivery of customer value from the selling organization, the salesperson must
also make sure customers perform their roles effectively in a manner that assures that they
receive maximum benefit from their purchases. This involves ensuring that customers know
exactly what is expected of them and that they are motivated to do it. In this regard, salespeople's
responsibility for educating customers extends well beyond informing them of features and
benefits, and their role as motivator extends beyond orchestrating the efforts of selling-team
members. Research on these aspects of the sales role (and of the customer's role as well) remains
sparse.
8. Competitors
Typical markets today can be described as hypercompetitive (D'Aveni 1994; Schultz 1997). At
the same time, the squeeze between revenue and profit targets and the cost to serve customers
places great pressure on salespeople to produce under intense competition. As product life cycles
decline in duration, with firms leapfrogging one another in attempts to gain product advantage,
salespeople must continually update their market knowledge (i.e., of products and competitors),
exacerbating the seemingly ever-increasing cognitive load they must carry. The number of
contingencies to which they must be able to adapt (e.g., different variations of competitive
selling situations) continues to expand at a rapid rate.
Recently, scholars outside the sales and sales management discipline have advanced the notion
that companies must embrace customer lifetime value (CLV) precepts, upon which more
efficient and effective market strategies can be implemented. By better allocating resources to
customer segments, companies can improve their profitability . These key developments in the
marketing literature have straightforward relevance to the relatively under-researched sales
issues of call selection (i.e., allocation of available effort over customers and prospects). The
"received wisdom" in this regard is that "targeting the switchable customer" (i.e., customers or
prospects who can be influenced on the margin by incremental sales effort ) results in greater
sales productivity. Use of CRM technology to avail salespeople of knowledge of metrics such as
actual or projected CLV or responsiveness to sales and marketing efforts would provide the basis
for more informed allocation of selling effort. This line of inquiry is ripe for interesting research
with the objective of improving prospecting and account management.
9. Technology
In order for salespeople to meet the rapidly changing customer expectations, they must know
more--faster. Technology enables salespeople to store, retrieve, and analyze customer data and
make specific recommendations that are customized for long-term business solutions.
Technology also helps salespeople manage important information during sales cycles. The need
for salespeople to communicate in real time with their companies and teammates is ever
increasing. Technology advances the practice of selling and the maintenance of
interorganizational relationships in many ways but also creates substantial additional burdens on
salespeople. As previously mentioned, although it facilitates more rapid and frequent
communication, it increases the demand on salespeople to provide information and services
needed by customers in real time. Moreover, organizational adoption of CRM and sales force
automation (SFA) systems requires salespeople to incorporate new technology and procedures
into their already busy work routines without pausing from their primary selling responsibilities.
Thus, technology adoption by the sales force is lagging, and firms lament the financial losses
occurring as a result of huge technology investments that produce lackluster returns on
investment . Moreover, existing research on technology use in the sales force indicates
unintended negative consequences, such as unfavorable job attitudes and turnover intentions as a
result of adopting technology .
10. Ethical and Legal Environment
The ethical and legal environment can constrain the sales organization's ability to effectively
pursue certain marketing activities. As corporate scandals fill the pages of the business press and
class-action lawsuits become commonplace, the public demands greater transparency in
corporate operations and more ethical, as well as more effective, leadership. Sales managers have
a responsibility to ensure that salespeople become more cognizant and vigilant with regard to the
representations they make to customers. As a result, sales organizations are placing standards
and limitations on claims that can be made and standards that must be upheld in selling. Thus, in
highly competitive selling situations, salespeople must be particularly careful about the
arguments they use and inducements they offer in attempting to win sales.
Moreover, salespeople need to be more judicious with managing expense accounts, giving gifts,
managing unethical demands from buyers, making promises about product performance and
delivery, and selling products that can be perceived as "unnecessary." Also, globalization has
resulted in different interpretations of cultural expectations and has led to the need for more
thoughtful consideration of various cultural idiosyncrasies when selling globally. What is ethical
in one country may be unethical in another.
The current ethical and legal environment puts an additional burden on sales companies to select
the "right" individuals. And with turnover costs continuing to skyrocket, sales companies can
hardly afford to hire salespeople who make ethical and legal errors and then terminate them.
Selecting and developing sales personnel has always been an important topic; today's
environment increases the importance of doing this right.
SALES FORCE ADAPTATION TO INTERNAL CHANGE PRESSURES
Whereas external forces such as customer evolution, environmental shifts, technological
advances, and competitive intensity challenge selling organizations, internal forces also affect
the selling organization. The best sales forces not only adapt quickly and effectively to external
events, they also implement new customer strategies, launch new products, innovate in the sales
process, and seek constant performance improvement. These internal change forces fall into two
linked categories: shifts in company strategy and the hunt for greater productivity through the
management of performance challenges
Responding to Shifts in Company Strategy
Public companies face constant pressure from shareholders pushing for sustained growth and
challenging sales leadership to find and implement innovative and effective strategies. Initiatives
rooted in strategic shifts include building a sales force for a new product line, integrating sales
forces from merging companies, and managing the changing role of the sales force now that
customers can place orders using a company's Web site (e.g., partner relationship management
and e-business technology).
In response to these challenges, sales managers must be sensitive to indications of impending
decline. If ignored, these can escalate into long-term downward spirals. Typical indicators
include the following:
* sales force turnover among the best salespeople,
* conflict between the sales and marketing functions,
* waning customer focus because salespeople are spending too much time on nonselling
activities,
* declining customer satisfaction ratings, and
* missed performance goals on a consistent basis by the sales force.
Sales forces continually need to adapt to internal strategy shifts and performance challenges
Managing change ultimately implies changes in behavior and culture over time .Several
adaptations to these changing trends are sufficiently pervasive that they are consistently noted in
the papers that follow in this issue, including (1) the increasing importance of key account and ad
hoc selling teams relative to "lone-wolf" salespeople, and (2) the focus on building and
maintaining profitable long-term customer relationships relative to short-term revenue goals. As
the following papers suggest, these developments have far-reaching implications for ongoing
sales management research.
Clearly, sales force research and practice have arrived at a critical juncture. Against this
backdrop, the papers that follow in this issue discuss research implications of these major trends
with respect to the sales and marketing interface; selecting and developing sales personnel;
leadership; motivation, compensation, and control; technology and CRM; and key accounts and
team selling. We hope that they spark new ideas for research to advance the theory and practice
of selling and sales management.
Managing the industrial sales force
1. Plan your sales team's activities using your sales strategy.
Clearly communicate your
sales objectives.For example, in relation to new and existing
businesses.
Outline
Agree
how you want to deal with different accounts.
how much time is to be allocated selling different products, to different types of
customer, in different areas.
Agree
a sales budget. For example, for any promotional material or equipment the sales
team require.
Tell the team
Set
about sales margins and pricing.
out your policy on incentive pay.
2. Allocate responsibility for different accounts, products or geographical territories.
It
is wise to negotiate responsibility with individuals in the sales team.
Keep
to a minimum the number of people handling each account. Many customers prefer
a single account manager, even if other individuals are involved in selling particular
products.
Maximise your
sales team's productive time by using sales support and customer service
employees.
Put
your best sales people into new sales initiatives, letting you benchmark what can be
achieved.
Where
different sales people are handling the same account, set out how they will
communicate (see 5.4).
Be
aware of the danger of creating conflict between team members.For example, if two
people both feel they have contributed to making a sale, or both want to be allocated a
profitable client.
3. Set clear ground rules for the level of responsibility and freedom sales people have. For
example, agree whether they decide when to contact customers, or if they have to follow
a set call plan.
Outline
how far sales people can plan and carry out customer contacts independently.For
example, telesales might follow a script, routine sales contacts would be handled
independently, and key sales people would plan (and attend) key meetings.
Set
out what budgets are available for travel and customer entertainment.
Tell
sales people what freedom they have to negotiate discounts.
4. Organise and communicate information.
Get
sales people to complete weekly sales activities reports.
Hold
weekly team meetings, monthly for field-based employees. Share news and discuss
problems.
Get
sales people to report back customer comments, enquiries and complaints.
Agree
priorities for the next week or month, including specific objectives.
TUTORIAL QUESTIONS:
1. The success of any business to business marketing strategy depends largely on the
capabilities of the sales force. Describe ,giving practical examples, what qualities should
an industrial sales professional have.[20 marks]
2. A sales manager has to follow some guidelines when interviewing a sales professional,
list and assess these guidelines using practical scenarios.[20 marks]
3. What steps can a sales manager take to build relationships that will increase motivation of
his industrial sales force?[20 marks]
4. With reference to practical examples, explain fully the information that should be
covered when training industrial sales professionals.[20 marks]
5. . How should a sales manager prepare for a performance evaluation? What steps should I
follow when conducting a sales professional performance evaluation?[20 marks]
REFERENCES
1. Reeder, R.R; Reeder, B.H; Brierty, E.G.; .Industrial Marketing: Analysis, Planning and
Control.
Prentice Hall (1991)
2. Corey, E.R. .Industrial Marketing: Cases and Concepts.
3. Prentice Hall (1983
4. Ames, B.R.; Halvacek, J.D. .Managerial Marketing for Industrial Firms.
5. www.businessballs.com
INDUSTRIAL MARKETING IN THE INTERNATIONAL ENVIRONMENT
THE CASE FOR INTERNATIONAL MARKETING
International trade is both an opportunity and a threat. Domestic markets are often limited for some type
of industrial goods. The increased volumes of going international can lead to lower marginal costs of
distribution and help pay for heavy capital investment that accompany many new technologies. Global
markets also allow a firm to take advantage of comparative advantage of supply sources, not only
companies supplying inputs but labor and facilitating institutions such as financial organization. It is
interesting however to note that the same marketing strategies used in domestic marketing are used in
the international marketing, they become more complicated to apply due to the difference in industrial
environment.
THE INTERNATIONAL MARKETING ENVIRONMENT
The international marketing environment consists of forces and actors that are uncontrollable and
have got a direct and indirect impact on organisation that operate in the overseas market place. The
environment comprises of Technological, Economical, Political, Legal and Socio-cultural influences which
should be considered in the context of international market.
Economic environment
There are fairly wide extremes in relation to the economics of varying countries. World economic
instability and currency variations are potentially very damaging to organisations. For example a
rapid drop in our currency can wipe away almost immediately the benefit of doing business abroad in
fact it can be the difference between organisations managing to sink or swim. The issues of exchange
rates and balance of trade are affected.
When exchange rates change making one nation’s currency more expensive that the other the effect is
change in prices. On the other hand a rise or fall in interest rates can have significant effects, as foreign
industries that might want to invest in the country with such interest rates can be discouraged to do so.
A rise in inflation affects prices and shuns potential customers from across abroad. Industries can not
be able to buy raw materials form across the boarder and imports become difficult to price as inflation
can rise twice in one day as was the case in Zimbabwe in 2008. Balance of payment
.
Political/ Legal environment
International marketing is significantly influenced by the politics of host nation - thus international
markets can be significantly erratic and volatile politically. What takes place in the political environment
affects whether or not a firm will engage in international marketing into a particular country, its form of
entry into the international market and how it employs marketing strategies as given by Reeder (1991).
The political and legal implications that normally affect the international marketer are restrictions on
imports, establishing market and monetary controls, and taking control of foreign owned assets. For
instance with the current political environment in Libya it might hinder industries to do business with
other industries across its boarders.
Legal systems will invariably be different in terms of context, content and meaning. Law has to be
contemplated as being rulers of the game for international trading. Therefore there are four key
considerations suggested by Beamish (2001) which are domestic laws, international laws and
international marketing activity, all of which will affect the marketing mix in different ways, for example
products patents, or advertising restrictions.
Market and monetary control – such controls are put in place by a government to protect their homes
industries for example requiring that local foreign owned companies be owned in part by local business
or the local government. The 51% share on foreign owned companies in Zimbabwe was an example of a
market and monetary control measure.
Other factors include tariffs, quarters and import restrictions.
Technological environment
The biggest single influence of recent times on international trade is the internet and technological
revolution. Principally, the effect of the internet has manifested itself by reducing the world to a global
village, with trade, communication and information being easily and readily available. With the
evaluation of satellite and digital and mobile/video phone technologies, the market place has become
much more accessible, without there necessarily being a physical presence. Therefore the continuing
levels of innovation may go same way in the future to easing some of the burdens an international
trade, as there may be a sharp decrease in trade barriers as a result of the internet as proposed by
Webster et al( 1984).
Technology enables accessing of global markets through e-marketing and e-banking. International
banks such as stanbic bank and standard bank can be used to settle business accounts. This however
can be costly for organisations who might want to keep up the ever-changing technology to beat its
competitors.
Legal environment
Legal systems will invariably be different in terms of context, content and meaning. Law
has to be contemplated as being rulers of the game for international trading. Therefore
there are four key considerations suggested by Beamish (2001) which are domestic laws,
international laws and laws and international marketing activity, all of which will affect
the marketing mix in different ways, for example products patents or advertising
restrictions.
Socio-cultural environment
Cultural differences are apparent from one end of the country to the other and are much enormous
between different countries. Socio-cultural considerations include religion, languages, education,
symbols and are often termed as cultural gap. Clearly these will cause operational problems with the
marketing mix and the ability to develop global brands. For example Delta Beverages had to remove
its red colour on their coca cola bottles sold in India because red is associated with evil. Personal
selling on the other hand, presents the industrial marketer with special problems because o the
differences in cultural attitudes among nations. These differences influence behavior of people within
international organisation and they include, time perceptions materialism perceptions, spatial
perspectives friendship perceptions and contractual agreements.
Time perceptions - Americans for example are known for being time conscious.
Spatial perspectives - Americans, Greeks and Japanese prefer to conduct business while standing or close
to their counterparts.
In such cases international marketers must be well based with the socio cultural environment in the
international market.
Forms of international market entry
On whatever background or reason, once the decision has been made to expand into
foreign operations and market choices have been made, it is vital that the strategy for
market entry be well conceived for successful penetration as was recommended by
Reeder(1991).
The commitment to international market is described in terms of "strategic" and
"operational" in any case which reflects the degree of commitment to international
marketing. "Operational" indicates the least company commitment and is reflective of tactical
actions taken to implement strategies. Operational strategies include the following;
Exporting
Exporting is the marketing and direct sale of domestically-produced goods in another country.
exporting is a traditional and well established method of reaching foreign markets. Since
exporting does not require that the goods be produced in the target country, no investment in
foreign production facilities is required.
Indirect exporting
This is the most popular and risky form of market entry where the firm sells to
intermediaries who in turn sell to foreign markets. This is mostly preferred when the firm has
little knowledge of exporting to foreign markets, where markets are limited in size and when
the firm does not wish to commit its resources.
For example Tanganda Tea Company uses Tensen as agents in Botswana.
Direct exporting
This is characterized by high investment and risk. In this case the firm has to establish foreign
distribution, increase production capacity, and adapt products for foreign markets. The firm is
placed in overseas markets through either sales branch or subsidiary, or an agent who
represents the firm exclusively in the host country.
Foreign licensing
This involves an agreement between a firm in one country (licensor) and a firm in another
country (the licensee) whereby the farmer permits the latter the use of its manufacturing
process, patents, or trademarks in exchange for a royalty fee. In this set up the firms gains
market entry at little risk. However foreign licensing limits foreign profit potential, and licensees
may become competitors.
For example Nike and Bata Shoe Company.
"Strategic" on the other hand indicates that a firm is more committed to become involved internationally,
and devises major strategies to allow it to do so such as entering faint ventures or foreign production
as suggested by Reeder (1991).
Joint ventures
This is a set up where two or more firms or investors share ownership and control over operations and
investments. Such ventures -are necessary for political and economic reasons and they provide better
knowledge of local markets, local identity and' a shared risk. Local government may require joint
ownership as a condition for entry, or the firm may lack the essential financial or managerial resources
to undertake market entry by itself.
For example Dairy Board Zimbabwe and Malawi Dairy set a joint venture in Malawi.
Foreign production
This involves the largest commitment, thus it bears the greatest amount of risk due to the chances of
blocked or devalued currencies or expropriation. Foreign prohibition is often referred to as direct
investment. It affords the firm to establish a company image and gain knowledge of the foreign market,
as well as to reduce costs of transportation and distribution. This set up offers the greatest profit
potential and market control. However direct investment is recommended when the market and potential
for sales are substantial.
For example Sino Zimbabwe.
Company acquisition
This actually refers to gaining market entry by buying an existing company in the country
where you wish to trade. The advantage of this that you are buying an existing going
concern and therefore the infrastructure is in place, but the financial risk involved is
considerable.
Sisk bought by Goddard but this acquisition was later abandoned.
International adaptation of conventional marketing strategies
Conventional strategies differ as firms enter international markets and this is best
illustrated by market segmentations which in the international context is referred to as
comparative analysis (segmenting countries on the basis of their similarities and differences. The
information for assessing the differences may be obtained from such sources as departments of
commerce and state, major banks, foreign governments, international organisations and many other
sources although information may prove to be inadequate or even deceptive as commented by Reeder
(1991). This is aggravated by product variations internationally due to economic cultural and political
variables.
International Product strategies
Although products in the international industrial market are more homogeneous than consumer products
there are more product variations internationally than domestically due to a greater number of
international economic cultural and political/legal variables.
Economic factors
Infrastructures vary among nations. This refers to the basic enabling facilities on which a country
depends, such as transportation, finance, education and power as given by Beamish (2001).
Cultural factors
They affect product strategy in many ways such as symbols value norms and beliefs. It
should be noted that cultural differences mostly affect services more than products
because of continuous personal contact with host nationals in the sale of services. For adaptation
marketers should be constantly searching knowledge. They should be knowledgeable in terms of
foreign cultural considerations.
Political/Legal
Different countries have different political and legal systems that impact on the marketing of products.
Legal requirements mean strict legal requirements regarding products in terms of standards, weights,
length, resistance etc.
International pricing strategies
Pricing also poses a challenge-to implement conventional strategies from this perspective differences
occur in the areas of transfer pricing, dumping and governmental influence over price.
Transfer pricing
These are prices placed on products as they are transferred between units belonging to the same
company. Transfer prices are adjusted for the purpose of circumventing government regulations and
therefore most governments avoid them.
Dumping
Meek et al defined dumping as the selling with a disposal intent, of goods in a foreign
country' at less than their full cost. Goods are sometimes sold at prices that only cover
direct costs to dispose excessive inventories. Companies sell their excess inventories
overseas to avoid disturbing their own national markets by causing price wars. This is
minded more by firms that produce the same products in the nations where goods are
dumped. Low transfer prices can for example, lead to charges of dumping and investigation.
Government influence
The play field for the project of any business venture is greatly influenced by the government of the
day. Government influence prices through trade restrictions and its expenditure can influence economic
activity in a country. It can influence national output and employment levels to name a few.
Indirect subsidiaries in the form of grants' and inexpensive loans from government enable a nation's
manufacturers to sell at lower prices. In countries like Zimbabwe, the state has the monopoly over
all the pricing, monitoring and implementation by governments.
International promotional strategy
The main factor to consider hinges on personal selling. Trade fairs as part of sales promotion is
playing an important role in international marketing. Trade fairs are generally held at one designated
venue helps prospective customers compare prices and products within the same place.
Direct mail is also becoming popular, although mailing lists are usually difficult to obtain. The use of
publicity although growing in popularity is limited due to language difficulties and media coverage.
Domestic versus foreign sales people
A firm's international sales force may be comprised of domestic, foreign personnel, or
both. Domestic sales people tend to be more knowledgeable about the company and its products,
which is an important industrial criterion. They tend to be better "connected" to obtain concession such
as special product adaptations, from the parent company.
The primary disadvantage of having domestic sales people working abroad is their lack of familiarity
with cultural differences. So in" many cases, they will need extensive foreign language and other
cultural training. Because of these factors many companies prefer to live local nationals for their overseas
sales forces. Such people offer a means of overcoming the shortcomings of using a domestic sales
force and often are already familiar with foreign marketing procedures.
International Distribution Strategies
The primary goal of international marketing is achieving a wider distribution. International distribution strategies
involve handling, storage, inventory, paperwork and forecasting. One aspect of distribution has already been talked
about, there are however three more aspects namely international supply chain, the product life cycle and
differential advantages in international distribution.
International supply chain
Involves a not easily attained but essential, shared managerial philosophy among international
channel firms. It requires developing trust and cooperation between and within firms separated
by great distances affected by different political, economic, socio-cultural, legal and
technological factors.
The international product life cycle
The international product life cycle includes the local and overseas innovation, maturity,
worldwide imitation and reversal. A firm wishing to take advantage of the international product
life cycle should distribute to nations that are in the more profitable growth or maturity stage.
However any model that describes the evolution of worldwide distribution processes offers the
industrial marketer an excellent starting point for developing strategies.
Differential advantage in international distribution
These are the differential advantages of competitive firms over less competitive international
competitors, for example world wide brand dominance such as Microsoft. These can be
overcome by employing the principles of comparative advantage that is producing where
production is less expensive and selling where the greatest profits are achievable.
REFERENCES
1. Beamish K. (2001) Marketing Operations Linacre House, Oxford.
2. Donald K. and Clifford Jr.
(1965) Managing the Product Life Cycle New Delhi, Pitman Publishers.
3. MeekH. et al
(2001) Strategic Marketing Management Linacre House, Oxford.
4. Reeder R. R. et
(1991) Industrial Marketing - Analysis, Planning and Control
Prentice Hall, USA.
MIDLANDS STATE UNIVERSITY
FACULTY OF COMMERCE
DEPARTMENT OF MARKETING
NAME
GRASHAM DHLULA
REG NO
R0722565R
MODULE
INDUSTRIAL MARKETING
LECTURER
MS D. NKALA
DATE
06 MARCH 2011
PRESENTATION TOPIC:
MARKETING CHANNEL PARTICIPANTS
INDUSTRIAL MARKETING
MM 404
According to Solomon (2000), B2B distribution channels facilitate the flow of goods from
producer to an organizational or business customer. Business to business channels parallel the
consumer distribution channels, they maybe direct or indirect.
According to Berman (1996:5), marketing channels are defined as “an organized network of
agencies and institutions which, in combination, performs all the activities required to link
producers with users to accomplish the marketing task. If a channel has an organized network,
there is need for channel participants to work together in an integrated and coordinated
manner, like sharing common objectives as far as customer and product image is concerned.
Why use channel distributors
A distributor or middleman is a business firm that renders services directly to the sale and or
purchase of a product as it flows from producer to the final consumer. A distributer other owns
the product at some point or actively aid the transfer of ownership. In most cases, a distributor
takes physical possession of the product. The role of middleman or intermediaries is critically
analyzed basing our facts on the demand size factors and supply side factors of a distribution
marketing channel.
Demand size
a) Facilitation of search
Uncertainty on the part of both the seller and the buyer facilities information searching in a
marketing distribution channel. The manufactures of products and services are not sure what to
produce and who wants what, while end users are uncertain about where to find products and
services that they want. It is, therefore, the role of the middlemen to facilitate this search on
both sides of the distribution.
b) Adjustments of Assortment Discrepancies
Manufacturers produce a narrow variety of goods in large numbers while retailers produce a
large variety in small quantities.
Supply side
a) Reutinisation of transactions
Dealing with a few organizations who purchase in bulk, helps in making routine transactions as
compared to saving customers who buy many goods in small quantities.
Marketing intermediaries increase efficient availability of products in target markets in a lesser
number of transactions. Distributors offer the manufacturer benefits of large and more efficient
customer service through contacts, experience, specialization and scale of operation, for
instance, Zimpost handles all mail but when it comes to transportation, the organization relies
on DHL and at times SWIFT or Clan Transport. Intermediaries smoothen the flow of products
from sellers to buyers by performing key functions such as informing, promoting and physical
possession.
The main functions of distributors
a) Information
Information is concerned with gathering and disseminating intelligence and market research
about a certain marketing environment for the purposes of long ad short term plans.
Distributors are in constant touch with customers and through research; they have an
understanding of what the customers want better than the manufacturers
b) Promotion
This involves developing and spreading persuasive communications about an organizations
product offering. The intermediary formulates communication strategies which will benefit the
customer best after having studied their purchasing behavior.
c) Financing
Distributors need funds to cover costs such as storage and transportation among others
d) Physical possession
This relates to transporting and storing of products. Intermediaries help to create possession
and place utilities. The distribution is a position to negotiate on the price and other credit
facilities. The risk take function assumes the risk of carrying the product and receiving payment.
Dual channel strategies
Some firms use a dual channeling of strategies or multichannel distribution whereby they are
appeal to different market segments or diversify business by selling through two or more
separate channels. For instance, Nyaradzo Funeral Services has a group funeral policy for firms
while at the same time they can allow individuals to open up funeral policies and the same goes
for life policies. Another example is that of Van Heusen shirts, although they are distributed
exclusively to some firms they are also distributed selectively to well known leading i.e. you can
find a Van Heusen or Perri Cardin shirt in an Edgars shop and still find the same brand at
Greatermans.
Choosing the right distributor
Even though all distributors perform the same primary functions i.e. carry inventory, selling,
providing credit etc, the relative importance and effort they assign to each will vary. For
instance, the type of customers pursued by distributors, the emphasis placed on price and the
time spent on selling the manufactures products. It is not the size of the distributor that is of
concern to the manufacturer, but the type of business being conducted. There are marketing
functions that are critical to every distribution strategy and the markets must decide which ones
need to be performed by outside agencies. Manufactures have two alternatives, either to use
“push” or “pull” marketing.
a) Push marketing strategy
A push strategy involves the manufacturer using its sales force and trade promotion money to
induce intermediaries to carry, promote and sell product to end users. Example Dairiboard
products.
b) Pull strategy
This strategy involves the manufacturer suing advertising and promotion to induce consumers
to ask intermediaries for the product and thus inducing the product to be ordered Paviano
shirts.
When a channel of distribution is to be put in place, the manufacturer needs to consider the
following facts.
Analysis of consumer’s needs- (lot size, waiting time, spatial convenience, product variety,
service back up).
Objective of the distribution channel- (target service output levels, perishables require more
direct marketing)
Distribution channel alternatives
Each channel has weaknesses and strengths which need to be evaluated. For instance,
exclusive, selective and intensive distribution strategies can be evaluated and used.
There are also product considerations like, quality, packaging, attributes that are very crucial in
choosing a distribution strategies.
Brings together sellers and buyers from different countries. Export agents work in the country in
which the product is made. Import agents are based where the product is to be sold. product
perish ability, technical nature, unit value etc.
There are also middlemen to consider in areas like, services provided and service delivery.
Manufacturer’s representatives
Manufacturer’s agents represent buyers or sellers on a more permanent basis. Manufactures
agents represent two or more manufactures of related lines, for instance, Dunlop is an agent of
Firestone and Bridge stone tires besides selling their own brand of Dunlop tyres.
Manufacturers agents have formal agreement with each manufacturer concerning prices,
territories, order handling procedures, delivery and warranties and commission rates. For
example, in real estate, sales agents have territories in which they operate in and the price of
properties is classified according to commercial. Industrial and domestic properties. In domestic
properties are further divided into
high density, medium density and low density. The
commission rates also differ according to geographical locations.
Manufacturers’ agents know each manufacturer’s product line very well and they use wide
contacts to sell the product to customers. Most manufactures agents are small business with
only a few employees who are skilled sales people. They are usually hired by small producers
who cannot afford to maintain their own field sales force and by large companies who want to
open new territories or sell in areas that cannot support a full time salesperson. A
manufacturer’s agent usually represents a number of manufacturer’s that produce noncompeting but related product lines.
1) Selling agent
Selling agent essentially substitutes for a marketing department by marketing a manufacturer’s
entire output. Selling agents play a critical role in distributing textile products and coal.
2) An import or export agent
Brings together sellers and buyers from different countries. Export agents work in the country in
which the product is made. Import agents are based where the product is to be sold.
Participation of Reps in the industrial markets
Reps are used mainly by small manufacturers’ that market only one product to many users. For
instance, in the Real Estate agents are hired to sell properties, both domestic and commercial to
many users. Reps are not employees of the manufacturers, they are independent firms.
Although technically independent, reps have little or no control over prices or terms of sale
which are established by manufacturers they represent. Agents usually serve several non
competing manufacturers of related products, for example, in the transport industry. An agent,
for instance, can represent a freight company and passenger company. These two companies
are in the same trade but non competing. An agent is expected to provide knowledge aggressive
selling because of specialization. A manufacturer’s agent can be cost effective because its major
expenses are spread over a number of manufactures lines, and also, because manufacturers pay
them commission. The reps are paid only what they actually sell.
Other channel participants
1) An auction company
This company helps assembled buyers and sellers complete their transactions. Traditional
auction companies provide auctioneers who do the selling and physical facilities for displaying
the seller’s product.
2) Brokers
A broker is an independent agent wholesaling middlemen that brings buyers and sellers
together and provides market information to one party or the other. A broker furnishes
information about the price, product, or the general market conditions e.g. insurance brokers.
Usually brokers do not handle physically the products being distributed. Brokers are mainly used
to sell real estate and securities. Brokers have no authority to set prices. They simply negotiate a
sell and leave it to the producer to either accept or declare the offer.
Indirect channeling effectiveness
The key members of a channel of distribution are manufacturer’s intermediaries, suppliers and
end users. The presence/ absence of a particular channel member is detected by its ability to
perform the necessary channel flows to add value to end users. Often one channel member is
considered the channel captain and it is often the organization taking a key interest in the
working of the channel for the product/ service and the organization acts as the prime mover in
establishing and maintaining channel links. In most cases, the manufacturing firm is always the
channel captain particular for branded products.
Channel conflicts can also render a channel ineffective. The channel captain needs to identify
sources of conflict and resolve them. Channel conflict is generated on one channel member’s
actions to prevent the channel from achieving its objectives. Basically there are 3 types of
conflicts
1) Goal conflict
This is when a channel member’s action are perceived to be in sharp contrast with objectives of
the manufacturing firm for example.
2) Dormain conflict
This conflict arises when the channel members are not sure whose responsibility it is to
advertise the manufactures products. Is it the manufacturer, the wholesaler or the retailer who
is supposed to advertise the manufacturer’s products.
3) Perceptual conflict
This has to do with product attributes and quality. The channel member might feel that the
manufacturer’s product is inferior whilst the manufacture thinks otherwise.
The manufacturer, in most cases, as the channel captain, must be seen to be stamping his
authority in the channel so as to maintain control of the channel. If the product and the market
do exist, then there is supposed to be an effective channel of distribution in place.
a) Essential training
Sales reps are trained people in their chosen field, but the do require training in new products
and will greatly benefit from product competition and different market trends. Product
complexity requires that distributors train their sales reps to handle and present the product to
the customer.
b) Realistic Goals
manufacturers must set very realistic goals which distributors can achieve rather than expect
distributors to sell inferior and unattractive goods and expect an in increase in the market share
within a short period. Objectives should encompass level of commitment from the distributors
and get support from the manufacturer who must produce quality goods. Quantitative goals
alone are not enough.
c) Compatibility
channel participant must be very careful when it comes to issues like,target markets, pricing
strategy, customer service levels and growth. The reps must be committed to serving the
interests of the manufacturer.
d) Two way communications
manufacturers and distributors are unwilling to communicate about their customer plans and
results. If manufacturers could only treat distributors as equal partners will they then be able to
treat also with respect and work for a common goal.
A channel as a partnership
Despite being composed as a fragmented collection of independent, competing firms, a channel
should be viewed as a partnership aimed at satisfying end user’s needs. In a distribution
channel, partnership can entail a variety of cooperative activities that can benefit both parties
involved.
Benefits of partnering

Lowering of inventory and operating costs

Improved quality of products and services

More filling of orders are done rapidly
Disadvantages
i) Working together entails disclosing very sensitive information which might be misused
by the other partner and might end up in competitor’s hands.
ii) Partnership is aimed at reducing the number of competing firms; they might be few
options if the partnership fails to work.
Conclusion or summary
A distribution channel is a system put in place that ensures the movement of the product from
the manufactures side to the end. Channel members of a distribution will ensure that the
distribution channel will, among other things, create time and place utilities, stabilize prices and
reduce costs associated with distribution. Channel conflicts arise when channel participants are
perceived not to promote the interest of the manufacturer’s products. The manufacturer of the
product must monitor and evaluate channel participants periodically in order to resolve only
conflicts associated with distribution.
References
Kapoor. K and Kansal. P (2003): Basics of Distribution Management, a Logical Approach, Prentice
Hall (Pvt0 Ltd New Delhi, India
Katsande C.K and Kuvhinga T. (2003): Industrial Marketing Module MKT 209, ZOU, Zimbabwe
Kotler .P and Armstrong G. (1993): Marketing, An Industrial, 3rd Edition, Prentice Hall, New
Jersey, USA
Reeder RR et al (1997): Industrial Marketing, Analysis, Planning and Control, 2nd Edition,
Prentice Hall Ltd, New Delhi, India
Solomon MR et al (2000): Marketing, Real People, Real Decision, Prentice Hall, New Jersey, USA.
MIDLANDS STATE UNIVERSITY
Faculty of Commerce
Name
:
Georgina M. Mufunda
Programme
:
Marketing Management
Reg. No.
:
R09127C
Mode of entry
:
Visiting
Module
:
Industrial Marketing
Lecturer
:
Mrs. D. Nkala
Level
:
4.1
Assignment Question.- An
analysis of Onesteel
Select a company that uses business- to-business marketing and answer the following questions:
Introduction
www.essortment.com defined business-to-business marketing as, “the marketing of goods and services
to businesses in order to keep those companies operating.” Boone and Kurtz (1998, pp297), defined
business-to-business marketing as dealing with organizational purchases of goods and services to
support production of other goods and services or daily company operations or for resale. The most
common business-to-business markets are manufacturers, resellers, the government and non-profit
institutions. Most businesses that fall into these categories do make some money off of a consumer
base; however, the majority of their capital is made off of other businesses. These businesses must make
themselves and their products and services attractive to both individuals and other business, by
identifying a competitive advantage, thereby demonstrating why a company should by goods and
services from them rather than competitors.
Business-to-business marketers promote goods and services that will help other companies run. Some of
the things businesses produce for other businesses include equipment, components, raw materials,
processing services and supplies.
a. Describe the business and the industry in which it operates. (2)
OneSteel is a fully integrated, global manufacturer and distributor of steel and finished steel products. It
is self-sufficient in both iron ore and scrap metal, with revenues in excess of $6 billion Australian dollars.
OneSteel's major manufacturing facilities are located in Whyalla, South Australia, Melbourne, Victoria,
Western Sydney and Newcastle, New South Wales and Brisbane, Queensland. It is also critical to note
that smaller manufacturing and distribution facilities are also located throughout regional Australia.
Additionally, OneSteel has more than 40 operating facilities in New Zealand, Asia, Africa and the Pacific
that encompass major manufacturing sites and recycling locations. OneSteel also operates eight facilities
in the United States consisting of Grinding Media, LiteSteel Technologies, Recycling and a ferrous
shredder in Tampa, Florida. From the information given about this company, it is important to note that
OneSteel is a giant global company with operations through out the world majoring in mining,
manufacturing, processing and recycling of iron ore and scrap metal. It is critical to note that business to
business marketing is vital for OneSteel as it operates throughout the world and produces varied
products for business markets and other vital operations.
b. Describe the products and services of the company you have selected. (2)
Given the fact that OneSteel operates at a global scale and produces varied products for varying
operations. It manufactures and distributes the following for the world markets; structurals, rails, rods,
merchant bars, cold finished bars, chrome plated bar, reinforcing, wire, tube, pipes, fittings, valves and
actuation, rail wheels and axles, lite steel beams, grinding media and recycled metals. OneSteel’s
products are used in the construction, manufacturing, housing, mining and agricultural industries. It is
important to note that the products of this company cover a wide spectrum of industries vital for the
world’s development.
c. Describe and list the type of customer you would target with your products and services.
(5)
OneSteel products are used in a wide range of applications; the target market includes construction
companies, mines under construction, manufacturing or servicing, OneSteel has a range of steel
solutions available. The OneSteel businesses offer a range of products and specialised services to the
construction, manufacturing, mining and rural markets. Below is a list of types of customers that are
targeted with OneSteel manufactured products:
Sector
Agriculture
Customers
Product Offering
Fish Farmers for example Lake The MarineMesh anti predator system which puts a solid
Harvest in Kariba,
defensive barrier of unappealing steel mesh between the
stock (fish) and hungry predators.
Automotive
For example Willovale Motor Bright Steel- Martin Bright Steels unit produces cold drawn,
Industries Zimbabwe, Toyota peeled and hard chrome plated steel bars used in
Japan, Mercedes Benz and automotive applications. The products are widely used in
BMW Germany, and Renault Shock Absorber Piston Rods, Rack Bars, Head Rests and
France and many more
General Automotive Parts.
Rod & Bar-The products are widely used in Coil Springs and
Stabiliser Bars and for the manufacture of Forgings,
Fasteners, Tyre Cord and Bead and Bright Bar (either Cold
Drawn or Peeled).
Wire products are used in spring, tyre and seating
applications and for the manufacture of fasteners and
cables.
Construction:
Harare International Airport, Airport Terminal - form and function of the building are
Buildings
Heathrow London, O.R. Tambo critical elements in the design of airports. OneSteel offers a
South Africa, Frankfurt airport range of products and solutions that can achieve large, clear
Germany
and
many
international
other span, open areas to allow for unimpeded movement of
terminals people.
throughout the world.
Educational -Educational buildings include schools, and
Recent construction at
Midlands
State
and
universities. For such buildings OneSteel is able to provide a
NUST, range of structural steel framing and reinforcing solutions.
Harvard Institute of Learning in
USA, Tokyo University in Japan
Sporting Facility -Sports Stadia have utilised the flexibility
and strength of OneSteel products and solutions to create
structures that are both functional as well as aesthetically
World Cup Stadias in South
pleasing.
Africa, Olympic Stadias in
China, World Cup Stadias in
India
Construction:
Government
of
Zimbabwe Steel is used in the construction of bridges, stations or
Infrastructur
administration buildings, recent service buildings construction. Railway bridges can be
e
highway
construction
in constructed very economically through a combination of
Botswana and Zambia
using composite welded beams and reinforced concrete.
OneSteel provides a range of steel and concrete
Transport
and Storage
Unki Mine plant construction in
Zimbabwe
reinforcement
products to enable the
design and
Botswana Meat Commission
Cold Storage facilities for warehousing perishable
construction of such mine infrastructure.
foodstuffs. OneSteel makes a range of structural steels that
are able to be used at temperatures as low as minus 20
degrees Celsius without loss of ductility.
Warehouse requires large areas or column free space for
the flexibility to store a range of goods in different
National Foods ware house in
configurations. OneSteel provides a range of steel and
Harare.
concrete reinforcement products to enable the design and
construction of such a facility.
1.4 Draw a simple illustration of the supply chain of your chosen company’s products/services. (5)
Chopra et al (2004) posit that a supply chain consists of all parties involved directly or indirectly in
fulfilling the customer’s request. The supply chain not only includes manufacturer and suppliers but also
transporters, warehouses, retailers and customers themselves. Nargurney (2006) defined a supply chain
as, “a system of organizations, people, technology, activities, information and resources involved in
moving a product or service from supplier to customer. Supply chain activities transform natural
resources, raw materials and components into a finished product that is delivered to the end customer.
The supply chain for OneSteel
Suppliers
Iron Ore from Middleback range and Rizhao
China
Rizhao’s 10 year contract with One Steel
OneSteel
Procurement
procurement team and management
OneSteel
Whyalla Rolling Mill and Sydney steel works
Production
OneSteel
OneSteel Distributors
Distribution
Railways, Governments, Mines, Fish farms,
Customers
Contractors
An illustration of Onesteel's supply chain; the arrows stand for supplier-relationship management, internal SCM and customer-relationship
management (diagram modified from Chen/Paulraj, 2004)
1.5 Using the relationship development process as a guide, discuss how you would develop
relationships with the customers you have identified. (10)
Klabunde (2010) puts forward that success in business starts with successful relationships. Because of
this, the relationship development process is often the guide that is used to govern the marketing and
business development roles in companies. As one looks at the stages of the relationship development
process, marketing plays a pivotal role of effectively laying the foundation for relationships, while
business development facilitates the initiation of those relationships. He illustrated the relationship
development process in the diagram below;
Name Recognition
Klabunde (2010) says, during the name recognition phase a company or an individual goes from being an
unknown, to being known. This foundation sets the groundwork for a relationship as others are at least
aware that the individual or company exists. It is one of the primary objectives of a strong marketing
department and it often takes the form of advertising, promotions, mailers, and press. It is also handled
in business development and sales when a new relationship starts. A common introduction when I meet
someone new for the first time often builds name recognition: for example: “I’m Georgina Mufunda with
Onesteel company.” To initiate a relationship with the Onesteel customers for example the mining and
construction industry I would make publications where OneSteel products will be advertised and
technical advice is given the same way the Metal Bulletin works. For the farmers, governments, and
institutions I will make use of press releases for example, television broadcast of the Whyalla Steel works
tour by government officials, I will also make use of an interactive website where scholarly articles are
published which showcases Onesteel products and gives a platform for idea generation from web
surfers. This helps the prospective customers to know of the existence of the company and its products.
Develop Understanding
Klabunde (2010) gave “develop understanding” as the second stage of the relationship development
process. At this stage a company or individual goes from just being a name, to being recognized for how
they fit into the world. This stage establishes a thorough understanding of the company, the services it
provides, and how others see the company in the industry. Most importantly, it is during this stage that
others will learn how the company can be of benefit to another individual or company. The marketing
department are responsible of this stage at the company level and business development at the
relationship level. In marketing, this often takes the form of websites, brochures, newsletters, and
articles. In business development, it often happens during conversation and should include how the
individual fits into the corporate structure. I will make use of Trade fairs, Agricultural, Mining Indaba
shows to develop understanding between OneSteel and its customers. At these trade shows I will display
and give brochures of Onesteel products such as the MarineMesh anti predator system, a sports stadium
prototype, rails and sleepers for those customers who are into railroads construction as well as mining
infrastructure models such as head gears so that OneSteel customers will have a feel of our products.
The use of the Onesteel website also will help the prospective customers to know who Onesteel is what
business they are into and where and how they can be contacted.
Interactive Communication
During this part of the relationship development process one must begin to engage at the human level.
This is no longer about facts or information; it is about building a personal relationship (Klabunde 2010).
Because of this, business development should take the lead at this stage with minimal marketing
support. To encourage this interactive communication I will, make visits to the different key customers,
such as the Government of Zimbabwe for me to understand the projects they are doing, how best they
may make use of Onesteel products as well as enhancing the relationship between Onesteel and the
individual customers.
Solidify Relationship
According to Klabunde (2010), relationships are solidified when one engages in mutually beneficial
action. When one calls someone that they have a solidified relationship with, communication is easy and
most of the time one will be able to quickly find direct and indirect topics of conversation. With business
development staff in conjunction with project management staff heading this stage, new projects are
implemented. For example Onesteel projects and business development team, in conjunction with the
Mimosa Mine team puts up a bridge in Rural Zvishavane at discounted rates as part of Mimosa’s social
responsibility activity.
Whenever a strong relationship is formed with clients, business negotiations are easily completed as well
as guarantees of repeat business from delighted customers as both parties because of the good
relationship, are able to communicate their needs. Where there are displeasures, Onesteel and the
individual company are able to solve them amicably. Strategic alliances or partnerships are also fostered
when relationships are maintained well between Onesteel and its customers, for example, Onesteel may
give Makudo investment a MarineMesh anti predator system on account basis for their fish farming
business to boost Makudo’s capital.
1.6 Discuss the importance of product supply, quality and lowest total cost in purchasing decisions. (6)
(a) The importance of product supply to purchasing decision
According to Zikmund and D’Amico (1996, pp218), for many organizations the assurance of reliable
delivery of purchases is essential as well as inventory management in the buying criterion. As a
procurement person, it is important that they find suppliers who are consistent in quantities, quality,
price as well as delivery time leads, as this determine the subsequent production cycles. Thus product
supply is a very important determinant in purchase decision. This has found many companies, including
Onesteel coming into strategic alliances with Rizhao Steel a Chinese mining operation by signing a 10year export iron ore sales agreement involving in excess of six million tonnes of iron ore. The sales
agreement between Onesteel and Rizhao includes a freight component for mutually agreed forward
periods.
Such an arrangement will guarantee OneSteel with timely delivery of the required iron ore, at agreed
grades consistently. It is important to note that, consistence in product supply is a critical determinant,
although companies at times may have to take costs which come with such an arrangement as
mentioned above, for example Onesteel is responsible for the shipping.
(b) The importance of quality to purchasing decision
Mason, Rath and Husted (1986, pp 104) suggests that an industrial buyer bases buying decisions on the
company’s need to make a profit. He or she does not always buy the best possible grade of product, but
they choose a quality best suited to the use the company will make of the product. For example when
Onesteel buys iron ore which is their main raw material, they look for inexpensive low grade ore and
scrap metal which will later be profitably turned into steel products.
Many organisations have adopted the Total Quality Management (TQM) approach, Fiegenbaum and
Ishikawa, advocated that (TQM) involves management and control of quality throughout the entire
organization or the entire supply chain. A manufacturer that gives its customers an assurance that its
products will be defect free will not tolerate suppliers that have not adopted TQM programs. Thus not
only must product quality conform to customer requirements, but it may also have to exceed the buyer’s
expectations, as high quality as the customer defines it is the major reason for buying (Zikmund and
D’Amico 1996, pp216). However, organizations may also make certain purchases without careful
considerations on quality of the products if the costs and risks involved in making a bad choice are not
great for example when buying stationery at Onesteel.
(c) The importance of lowest total cost to purchasing decision
Price is the single most important determining factor in many organisational buying decisions (Zikmund
and D’Amico 1996, pp217). Organizational buyers compare prices of products they want to buy by
gathering competitive bids from suppliers. Other costs such as transport, customs duty are taken into
consideration when making the price comparison, as buyers’ wants to get products from a supplier
presenting the lowest cost, all other things being equal. Other aspects as discounts, credit opportunities
and terms of sale allow buyers to make detailed comparisons of value, increasing the potency of price as
a buying criterion. The important fact to note is that, the lower the total cost the more profitable the
business venture, hence it is very critical that when purchases are being done, the suppliers who reflects
the lowest costs should be considered.
However it is not always the case, as costs are affected by many other factors such as the exchange rate,
supply and demand, the quality of the products as well as the importance of the product to the buyer
market. In such a scenario the lowest cost rule does not apply, instead if there is a shortage of raw
material, for example, the buyer does not consider the cost as they will pass the costs to the end-user,
and if the company takes TQM programs, cost is not an issue, but the quality of the product, as quality
products can be sold at a premium.
1.7 List and discuss the various steps your customer will take in their decision- making process. (10)
Steps in a business buying decision based on Boone and Kurtz (1998, pp. 314-316),
Anticipate or recognize a problem/need/opportunity and a general solution
Recognition of problems, needs or opportunities triggers the buying process. For example, the crack
on the Birchnough Bridge will trigger the buying process for the bridge construction steel
infrastructure for the Government of Zimbabwe.
Determine the characteristics and quantity of a needed good or service
According to Kotler and Armstrong (2005 pp182) the buying organisation develops the product
technical specifications through the use of Civil and Mechanical Engineers for an effective value
analysis. For example, Mimosa Mine will do test runs to determine how much of the grinding media
and of what size they will need from Onesteel.
Describe precise product specifications and critical needs
After determining the characteristic and quantities of needed products, organisational buyers
translates these ideas into detailed specifications, for example establishing specifications such as
High carbon ferrochrome mill balls by Mimosa mine production team, a specification which a few
suppliers can meet. This will then help the business buyers shortlist their prospective suppliers, for
example suppliers of High carbon ferro-chrome are Onesteel, Radar Chemicals, Feizhong Mill balls.
Search for and qualification of potential sources
This stage is when business buyers are searching for good suppliers of the products. This can be done
by reviewing trade directories, internet search or phone other organisations for recommendations.
The business marketers must make sure they are listed in major directories for example the new
Zimbabwe National Chamber of Commerce(ZNCC) directory and build good reputation in the
market place, for example Trevor Dollar are the most reputable when it comes to real estates as well
they are a member of ZNCC.
Acquire and analyse proposals
At this stage the business buyer invites qualified suppliers to submit detailed written proposals for
complex and expensive products, and just catalogues or a salesperson for low involvement products.
For example Cat will send a detailed business proposal to Mimosa Mine for their forklift while a work
suit manufacturing company may just send a sales representative or a catalogue.
Evaluation of proposals and selection of suppliers
At this stage the buyer compares vendor’s proposals and choose the one that seems best suited to
their needs. For example proposals for complex equipment such as the floatation cells for Mimosa
Mine, can include differences in product offerings. Evaluation is therefore important, as it will help
the buyers to choose the best deal in terms of product offer, discounts offered or a favourable
payment plan as well as pricing of the product.
Selection of an order routine
Once a supplier has been chosen, buyer and vendor must work out the best way to process future
purchases. Most orders include product descriptions, quantities, price, delivery terms and payment
terms.
Obtain Feedback and evaluate Performance
At this stage buyers measure the vendor’s performance, for example Mimosa Mine does quarterly
performance evaluation of its transporters, of which Pioneer came out the best last quarter.
1.8 Use the buying determinants theory to explain how environment, markets, organisational and
individual factors influence buying behaviour. (10)
Kotler and Armstrong (2005, pp 178-179) says business buyers are subject to many influences when they
make their buying decisions. Some marketers assume that the major influence are economic, they think
buyers will favour the supplier who offers the lowest price or the best product or the most service they
concentrate on offering strong economic benefits to buyers. However business buyers actually respond
to both economic and emotional factors, they react to both reason and emotions. Kotler and Armstrong
(2005) gave the following as other factors which influence the buying behaviour:
Environmental factors
Kotler and Armstrong (2005, pp179) posit that business buyers are influenced heavily by the current and
expected economic environment, such as the level of primary demand, the economic outlook and the
cost of the money. As economic uncertainty rises, business buyers cut back on new investment and
attempt to reduce their inventory. According to Boone and Kurtz (1998,pp 313), environmental
conditions such as economic, political, regulatory, competitive and technological considerations
influence organisational buying decisions. For example for Onesteel rail products, if their major customer
the South African Government decides to defer the purchase of the rails, wheels and sleepers for the
Gauteng railway line project due to recession. Thus the economic environment can be a critical
determinant in the buying behaviour, because the South African government is forced to shelve their
project due to the economic downturn, implying that capital expenditure is cut. This means the
marketers must watch out for these environmental factors, and determine how they will affect the buyer
and try and turn these challenges into opportunities.
Organisational Factors
According to Kotler and Armstrong (2005, pp179), each buying organisation has its own objectives,
policies, procedures, structures and systems. The business marketer must understand their customer’s
organisational structures, policies and purchasing systems (Boone and Kurtz 1998, pp313). An
organisation like the Ministry of Culture, Sports and Recreation in Zimbabwe, with a centralised
procurement function operates differently from a company with decentralised procurement function like
Anglo American. A marketer from Onesteel must know that they can not successfully sell steel
infrastructure for a new stadium in Gweru to the local Gweru office of the Ministry as all procurement is
done at the head office in Harare. He or she must understand that most centralised buyers emphasise
long term relationship, while decentralised is more focused in short term results and personal selling
skills are preferable. Thus the organisational factors can affect buying decisions, as some buyers may not
be capacities to make the buying decision due to the corporate structure, thus if a marketer is make
headway, he or she must understand each organisational structure or system, know the influential
people who make the buying decisions before a successful sell.
Individual factors
Kotler and Armstrong (2005, pp179) posit that each participant in the business buying –decision process
brings in personal motives, perception and preferences. These individual factors are affected by personal
characteristics such as age, income, education, professional identification, personality and attitudes
towards risk. Also buyers have different buying styles. Some may be technical types who make in-depth
analyses of competitive proposals before choosing a supplier. Other buyers may be intuitive negotiators
who are adept at pitting the sellers one another for the best deal. For example most government
institutions require suppliers to tender for the supplies, while companies such as ZIMASCO would prefer
referrals before buying, for example if Onesteel supplies material for Mimosa headgear, ZIMASCO would
buy from Onesteel for that reason. As a marketer, he or she must be well versed with the buyers’
individual factors preferences, perceptions and motives before crafting a marketing strategy as these
affect the buying decisions.
Markets or Interpersonal factors
According to Kotler and Armstrong (2005, pp17), the buying centre includes many participants who
influence each other, so interpersonal factors also influence the business buying process, although it is
difficult to assess them. They said, managers do not wear labels that identify them as important or
unimportant buying centre participants, and powerful influencers are often behind the scenes. Therefore
business marketers must understand these factors and design strategies that take them into
consideration. Boone and Kurtz (1998, 314) said business marketers must know individuals who
influence the buying decision for their products and each one’s priorities. For Example Onesteel should
know that for them to sell grinding media to Sabi Gold Mine, they must convince the Metallurgical
Superintendent and the Plant Manager, before they can go to procurement team.
1.9 How would you go about finding opportunities for your chosen company with:
1.9.1 Your existing/current customer base? (5)
According to Zikmund and D’Amico (1996), situational analysis is the diagnostic activity of interpreting
environmental conditions and changes in light of the organisation’s ability to capitalise on potential
opportunities and ward off problems. It involves environmental scanning which includes information
gathering designed to detect indications of changes that may be in the initial stages of development. For
example, as a result of environmental scanning, Onesteel may learn that in the aquamarine industry, the
farmers need a Marine-Mesh anti predator system which is portable and easy to handle as well as large
commercial type systems. I will also do an environmental monitoring, where I will track a certain
phenomena such as sales data to observe whether any meaningful trends are emerging. This process will
help me understand the effects of certain factors such as recession on company performance. If trends
show that Onesteel premium priced steel products are not selling due to cheap imports, I will come up
with cheaper products which are affordable, to defend as well as gain the market share.
This will then help Onesteel to come up with products which match the customers needs. Environmental
analysis and monitoring will help companies to have an insight as well as a close analysis of the
environment they are serving with their product offerings and see if their products can be modified to
find new opportunities in the existing market. Scanning and monitoring the environment provide
information that allows marketers to interpret environmental conditions and to determine the timing
and significance of any changes, hence they alerts managers of benefits associated with certain
opportunities.
1.9.2 New Customers? (5)
To find opportunities to new customers, I will do an environmental scan which will bring out issues as the
customer needs, legal factors regulating that market, the competition and substitutes that can affect our
products in that market. On getting this information, I will then profitably offer a product that meets the
customer’s needs and wants competitively in terms of price and quality. For example Onesteel can do an
environmental scan for Democratic republic of Congo, to find information such as: what are their needs,
at what price and quality? Onesteel may find that DRC has got some areas which are inaccessible, due to
poor road infrastructure.
1.10. Using your knowledge of segmentation, explain possible customer segments relevant to your
chosen company. (5)
Kotler and Armstrong (2005 pp, 47) defined market segmentation as the process of dividing a market
into distinct groups of buyers with different needs, characteristics or behaviour who might require
separate products or marketing programs. Through market segmentation, a company divides large
heterogeneous markets into smaller segments that can be reached more efficiently and effectively with
products and services that match their unique needs. Business markets are segmented geographically,
demographically (industry and company size) or by benefits sought, user status, usage rate and loyalty
status.
By segmenting the markets, Onesteel can deliver just the right value proposition to each segment served
and capture more value in return. The following are possible customer segments for Onesteel;
i. User Status based segmentation
Onesteel markets can be segmented into groups of potential users, first time users, and regular users of
their products. Company market position also influences its focus. Market share leaders focus on
attracting potential users whereas smaller firms focus on attracting curved users. The following list
shows segmentation by user status;
(a) First time users
Makudo Investments- MarineMesh anti predator system.
(b) Regular Users
Mimosa Mine- Mine infrastructure construction material.
(c)Potential Users
The Government of Zimbabwe railway wheels, rails and sleepers.
ii. Demographic based segmentation
Boone and Kurtz (1998) posit that firms can be grouped by size, based on sales revenues or number of
employees. Onesteel may segment its market according to firm size for example Elvington Gold Mine will
be put in the small firms group and large operations such as Zimplats and Selous Metallurgical Complex
under the Large firms segments.
iii. Segmentation by customer type
Another useful segmentation approach according to Boone and Kurtz (1998) is the type of customer.
Onesteel may use this approach by broad categories such as manufacturers, government agency, or non
profit organization:
Segment
Customers
Product Offering
Agriculture
Fish Farmers for example Lake The MarineMesh anti predator system.
Harvest in Kariba
Automotive
For
example
Willovale
Motor Bright Steel -The products are widely used in Shock
Industries
Absorber Piston Rods, Rack Bars, Head Rests and
General Automotive Parts.
Construction:
Harare International Airport
are critical elements in the design of airports.
Buildings
Construction:
Airport Terminal -The form and function of the building
Government of Zimbabwe
Infrastructure
Steel is used in the construction of bridges, stations or
service buildings construction.
Transport and The Cold Storage Commission or Cold Storage -Cold storage facilities are increasingly in
Storage
the Botswana Meat Commission
demand for warehousing perishable foodstuffs
1.11 List and examine the strengths, weaknesses, opportunities and threats of your chosen company.
(10)
Strengths
iii) Vertically integrated operations
Onesteel's operations are vertically integrated from the mining of low cost iron ore through to steel
production, processing, marketing, sales and distribution of steel products. This vertical integration
should create opportunities for Onesteel to expand its existing internal e-commerce costs and maximise
operational efficiency. Onesteel management believes that vertical integration also enhances the
successful development and introduction of new products. For example, One Steel’s strong position in
the metals distribution market has facilitated the successful penetration of the Duragal product range
into the market.
iv) Low cost and flexible steel production and
This is enabled by the access to low cost iron ore and the use of Morden technology for example at
Sydney Steel mill, which can be varied cost effectively to match market requirements.
v) Leading market positions
Onesteel is the leading manufacturer of steel long products and leading distributors of metals in Australia
and globally, with strong position in their market segments.
vi) Strong brand names
Onesteel has strong and well established brand and business names with high market recognition and
contribute to Onesteel’s competitive advantage for example 300 Plus structurals, Duragal and Metaland
distributors
vii) Distribution network
Onesteel has 83 own outlets and 89 Metaland franchises for its products which provide superior
customer service and delivery.
Challenges
viii) Increased global competition
Onesteel faces competition from imported and domestic manufactured steel long and tubular products,
some of which may have lower manufacturing costs than Onesteel. A significant increase in competition,
including through imports, materially affect the future financial position and performance of Onesteel by
putting downward pressure on steel prices or by reducing Onesteel‘s sales volumes.
ix) Reduction in Australia’s steel tariffs
This move by the Australian government encourages dumping of cheaper imports by other producers
such as the Chinese into Australia, thereby forcing the prices of steel down and prohibiting Onesteel of
price premiums.
x) Increased market share by foreign importers.
Due to the reduction in steel tariffs by Australia, the cheap imported steel merchants are gain market
share as they charge their products low prices against Onesteel‘s premium prices.
Opportunities
1. China’s economic growth
China's rapid industrialization requires imports of minerals from abroad. In particular, steel and iron ore
imports from Australia and the United States as steel production rapidly outstripped domestic iron ore
production. Onesteel can supply china at a premium their products as well as supply them with iron ore
profitably.
2. Increase in price of steel
The price of steel is steadily going up due to China’s industrialization.
Threats
xi) Cyclical nature of the steel industry
Onesteel revenue is sensitive to the level of activity in global construction, manufacturing, mining and
agriculture. Construction and mining industries for example are highly cyclical in nature and sensitive to
factors beyond Onesteel such as recession.
xii) Competition
Competition in steel long product markets globally is based mainly on the price, timely customer service,
distribution capabilities and the ability to provide value adding products. BlueScope is the major
competitor for Onesteel. Historically Onesteel was able to sell at a premium due to superior customer
service and distribution capabilities, but now, there is no guarantee that they will be able to maintain the
price premium. There is also stiff competition from substitutes of Onesteel‘s building material such as
high strength concrete, timber, plastics, ferrous castings and alloys.
xiii) Environmental regulations
Onesteel operations are subjected to many environmental laws and Regulations in their areas of
operations. These control the use of land, emissions of substances into the water, atmosphere and on
land, the storage, handling and disposal of hazardous chemicals among others. There are no assurances
that the Laws and Regulations may not have adverse effects on Onesteel operations, financial operations
and prospects.
xiv) Changes in steel industry structures
Smorgon steel has acquired Email, Onesteel‘s competitor in the Distribution business as well as customer
at Whyalla steel works. This take over affects Onesteel‘s competitive and financial position as the
acquisition will make Smorgon and Email the largest metals distributors in Australia and globally.
Review and discuss your chosen company’s ability to withstand the following five forces of
competition:
1.11.1 Rivalry among firms in the industry. (2)
Onesteel’s main competition in the steel industry in Australia comes from Smogon and largely
BlueScope. On its own, Onesteel will struggle to withstand this competition as both Smorgon and
BlueScope are bigger players in comparison with Onesteel. However, Onesteel can still beat competition
from major rivalries through acquisition or a merger. For example, Onesteel merged with Smorgon Steel
to bring a powerful front against BlueScope. Onesteel is a major steel player in Australian domestic
market (market share of 30%) while Smorgon Steel is also a major player and key contributor in the
Australian steel industry. The merger will create a successful leadership position in Australian steel
industry, and combat competition from the main rival BlueScope.
1.11.2. Powerful customers/buyers (2)
OneSteel can withstand powerful buyers by acquiring a stake in the buyers’ business, such strategic
partnership will dissolve the customer’s bargaining powers. For example OneSteel can buy or sell shares
to Anglo American their largest buyer of grinding media, so that they become partners and hence
reducing Anglo American’s bargaining power.
1.11.3. Powerful suppliers. (2)
Onesteel is able to withstand the challenges presented by powerful suppliers, as this was shown by the
strategic partnership they made with Australia’ largest freight company. In a bid to enjoy economies of
scale, control and efficiency in the distribution of their steel products, Onesteel partnered with Pacific
National Australia's largest private rail freight business. They also signed a 10 year iron ore sales
agreement with Rizhao Steel a Chinese mining operation to enable them to consistently get their raw
materials as well as enhance their bargaining power in terms of prices.
1.11.4. Threat of substitutes (2)
Onesteel products competes with other forms of building products such as high strength concrete,
timber, plastics, ferro-castings and alloys. For them to withstand such substitutes, OneSteel can devise
new applications for their existing products to gain new markets as well as commit to research and
design for new products which will meet future customer needs.
1.11.5. Threats of potential entrants. (2)
To withstand the threats from new entrants, OneSteel can come up with an expansion strategy where
they capitalise on acquisition opportunities so that they continue to grow big and as well end up
consuming all the new players by merging or acquiring them.
1.12 With reference to your swot analysis and five forces discussion, make five strategic
recommendations that your chosen company should consider when writing its business to business
marketing strategy. (5)
OneSteel can consider the following recommended strategies when writing their business plan:
a) Being the customer’s preferred supplier
OneSteel management must aim to focus on delivering value to its customers. This may be achieved by
restructuring the sales and marketing activities to provide a single contact point thereby increasing the
marketing function effectiveness and efficiency. They may also capitalise on the OneSteel market
leadership position in metal distribution and direct sales to consumers to accelerate the introduction of
new products and services.
b) Improving operating performance by improving integrated logistics management
This reduces operational complexity thus enabling better production planning and inventory levels. The
use of e-commerce can help reduce operating and transaction costs, for example the use of OneSteel
website for product display and order taking reduces the overall marketing costs significantly.
c) Optimisation of the business portfolio
OneSteel can optimise its business portfolio by bringing together business which had been in the past
managed separately. This reduces cost and capital requirements as well as increase margins. For example
OneSteel may change and challenge existing distribution channels, and may bring the distribution to be
managed together with other units such as Whyalla Steelworks.
d) Using people to provide competitive advantage
This is achieved by aligning the employees with the customer and business needs as well as continuous
training and rewarding of employees for their contributions to the achievements of the total business.
e) Focusing on strategic expansion
OneSteel can actively participate in the Steel industry rationalisation and also take advantage of
acquisition opportunities existing for example merger between Smorgon Steel and OneSteel can make
OneSteel a giant in Australia, Europe and China. They may also enter new markets through the
development of new applications for existing products as well as committing to research and
development of new products aimed at meeting future customer needs.
References:
Armstrong G. and Kotler P. (2005), Principles of Marketing, 11th Edition, Prentice Hall of India.
Besterfield, D.H., (1999), Total Quality Management, 2nd edition, Prentice Hall.
Boone L.E. and Kurtz D.L., 1998, Contemporary Marketing: Wired, 9th Edition, Harcourt Brace College
Publishers.
Chen, I. J., Paulraj, A. (2004): Towards a theory of supply chain management: the constructs and
measurements. In: Journal of Operations Management, 22/2: 119-150
Chopra, Sunil and Meindl P., (2004), Supply Chain Management, 2nd edition, Pearson Prentice hall.
D’Amico M. and Zikmund W.G., (1996), Marketing, 5th Edition, West Publishing House, USA
Mason R. E, Rath P.M. and Husted S.W., (1986), Marketing: Principles and Practices, 4th Edition, McGrawHill
Nagurney A., (2006), Supply Chain Network Economics: Dynamics of Prices, Flows, and Profits, Edward
Elgar Publishing
http://www.essortment.com/business-business-marketing , date accessed 16/02/11
www.onesteel.com , date accessed 16/02/11
INDUSTRIAL MARKETING NOTES
TOPIC; SEGMENTATION, TARGETING AND POSITIONING
A CASE STUDY OF MANAGEMENT TRAINING BUREAU IN THE SERVICE INDUSTRY
INTRODUCTION
M.T.B was established under the Zimbabwe Manpower Development Fund (ZIMDEF), and has a long
history, 24 years of operating and during this period it has provided significant outcomes into the
development of manpower through offering staff development courses and professional courses with
HEXCO board. To compliment training some services are offered such as catering, accommodation,
conferencing facilities and hire of the garden for corporate functions.
Segmentation, targeting, and positioning are marketing tools used by MTB to gain competitive
advantage in the market. They help the company to differentiate its service offering from that of its
competitors and ensure that the same reaches the exact market profile for which it is intended. Market
segmentation is the process of dividing the market into similar groups according to the characteristics
intended for the product at hand. Targeting is the process of selecting the most lucrative market
segments for marketing the product. Positioning involves the formulation of a definitive marketing
strategy around which the service at hand would be finally marketed amongst the target audience
Segmentation, targeting, and positioning together comprise a three stage process which includes:
(1) Determine which kinds of customers that exist,
(2) Select which ones we are best off trying to serve and,
(3) Implement our segmentation by optimizing our products/services for that segment and
communicating that we have made the choice to distinguish ourselves that way.
Market segmentation can be defined as the process of breaking down the total market for a product or
service into distinct sub-groups or segments where each segment may conceivably represent a separate
target market to be reached with a distinctive marketing mix
Effective segmentation
SEGMENTATION
Segmentation involves finding out what kinds of customers with different needs exist. Industrial market
segmentation is a scheme for categorizing industrial and business customers to guide strategic and
tactical decision making, especially in sales and marketing. Most businesses create their own
segmentation scheme to meet their particular needs.
Segmenting industrial markets is different and more challenging because of greater complexity in buying
processes, buying criteria, and the complexity of industrial products and services themselves. Further
complications include role of financing, contracting, and complementary products/services.
WHY MTB SEGMENTS
To identify the most significant differences among current and potential customers that will influence
their purchase decisions or buying behavior, while keeping the scheme as simple as possible.
To allow MTB to differentiate their prices, programs, or solutions for maximum competitive advantage
Segmentation Variable
Segmentation variables are described as “customer characteristics that relate to some important
difference in customer response to marketing effort”. These are important factors that need to be
considered when segmenting markets. They include the following three criteria:
1. Measurability, the potential market should be measurable otherwise the scheme will not be
operational. Companies in the service sector use more qualitative and intuitive methods in
measuring customer data, and more persuasive methods while selling, hoping to compensate for
the gap of accurate data measurement. Here, the base(s) used should preferably lead to ease of
identification in terms of who is in each segment. MTB in each segment knows who are the
players in their target industry e.g in the mining sector there is UNKI mines, ZIMPLATS, Mbada
Holdings, ZIMASCO etc. The segments chosen by MTB should also be capable of measurement in
terms of the potential customers in each segment.
2. Substantiality, i.e. “the variable should be relevant to a substantial group of customers”. MTB
considers that the segments it chooses are the right size or balance. The company avoids the risk
of diluting effectiveness of a segment if it gets too large; and losing the benefits of economies of
scale if the group becomes too small. Webster rightly states, there are often very large
customers that provide a large portion of a suppliers business. These single customers are
sometimes distinctive enough to justify constituting a segment on their own. The base(s) used
should lead to segments which are sufficiently large to be economically and practically
worthwhile serving as discrete market targets with a distinctive marketing mix.
3. Operational relevance to marketing strategy. The base(s) used by MTB lead to segments which
have different preferences or needs and show clear variations in market behaviour and response
to individually designed marketing mixes. For example the agricultural sector has totally different
need as compared to the mining sector such that the courses provided are tailor made to suit
each segment.
4. Accessibility Here, the base(s) used should ideally lead to the company being able to reach
selected market targets with their individual marketing efforts.
APROACHES USED TO SEGMENT MARKETS
Yoran Wind and Richard Cardozo (1974) suggested industrial market segmentation based on broad two
step classification of macro-segmentation and micro-segmentation.
Macro-segmentation
Centers on the characteristics of the buying organization(as whole companies an institutions), thus
dividing the market by:

Company / organization size: it is a good rough indicator of the potential business for a
company.MTB looks at the size of the workforce that the company has which indicates the
number of people they would bring for training or conferences and workshops. To run a tailor
made course a company should register a minimum of five participants per running course.
However, it needs to be combined with other factors to draw a realistic picture.
ii) Geographic location is equally as feasible as company size. M.T.B adopts different marketing
strategies for different regions in terms of culture, communication requirements, language and
business attitudes. For example MTB offers training courses in the agricultural segment using
different languages according to the geographical location. When in Matebeleland the courses
are offered in Ndebele and when in Mashonaland they offer the same courses in Shona.

Purchasing situation, i.e. new task, modified re-buy or straight re-buy. As a result of increased
competition and globalization in most established industries, companies tend to find focus in a
small number of markets, get to know the market well and establish long-term relationship with
customers. The general belief is, it is cheaper to keep an existing customer than to find a new
one. MTB has particular customers which they visit and do follow ups to maintain the
relationships and they even offer consultancy in certain areas for free (Mavambo trust, Fidelity
Printers, Blue Ribbon) When this happens, the purchase criteria are more based on relationship,
trust, technology and overall cost of purchase.
Benefit segmentation: The services’s economic value to the customer (Hutt & Speh, 2001), which is
one of the more helpful criteria in some industries. MTB “recognizes that customers buy the same
services for different reasons, and place different values on particular service features. For example,
MTB offers courses in the health and safety at the work place. Companies like ZIMPLATS come for
that training with the concern of workers to reduce the number of accidents at the work place
whilst Olivine Industries wants its work force to be trained in the same area just because it is a
NSSA requirement on all heavy industries..

Type of institution. MTB takes into consideration that different institutions require different
courses eg banks would require accounting and financial courses while government
departments would require secretarial courses and the manufacturing would require technical
courses and therefore it tailor makes the courses to suite the different institutions.
.
Key Accounts- medium sized regional customers such as Tanganda Tea Company, Victoria Foods are a
source of 30% of M.T.B’s revenue as long as competitive offering is in place for them.
Customers’ business potential assuming supply can be guaranteed and prices are acceptable by a
particular segment. For example, ‘global accounts’ would buy Direct Accounts-form many Customers’
business potential is also used to segment markets. Market share of other customers gives a good
picture of whether supply is guaranteed and level of prices are acceptable by a particular segment. M. T.
B can form accounts of customers -those companies like City Council that brings large number of
personnel to be trained and are prepared to sign long term agreements.
Micro Segmentation
Requires a higher degree of knowledge. While macro-segmentation put the business into broad
categories, helping a general product strategy, micro-segmentation is essential for the implementation of
the concept. “Micro-segments are homogenous groups of buyers within the macro-segments” (Webster,
2003). Macro-segmentation without micro-segmentation cannot provide the expected benefits to the
organization. Micro-segmentation focuses on factors that matter in the daily business; this is where “the
rubber hits the road”. The most common criteria include the characteristics of the decision-making units
within each macro-segment, (Hutt & Speh, 2001) e.g.:
f)
Buying decision criteria (product quality, delivery, technical support, price, supply continuity
which are directly relevant to product, price and place). “The marketer might divide the market
based on services profiles that appear to be preferred by decision-makers, e.g. high quality –
prompt delivery – premium price a good example is Potraz vs. standard quality – less-prompt
delivery – low price” eg ZEC, Zimbabwe Prison services. (Hutt & Speh, 2001)
3. Purchasing strategy, which falls into two categories, according to Hutt and Speh: First, there are
companies who contact familiar suppliers (some have vendor lists) and place the order with the
first supplier that fulfils the buying criteria eg ZESA. These tend to include more OEM’s than
public sector buyers. Second, organizations that consider a larger number of familiar and
unfamiliar suppliers, solicit bids, examine all proposals and place the order with the best offer eg
ZIMRA. Using this criterion is highly beneficial, as the supplier can avoid unnecessary costs by, for
example not spending time and resources unless officially approved in the buyer’s vendor list.

Structure of the decision-making unit. Knowing the decision-making process has been shown to
make the difference between winning and losing a contract. If this is the case, the supplier can
develop a suitable relationship with the person / people that has / have real decision-making
power. This criteria has been adopted especially with Mutare city council, ZEC.

Perceived importance of the product/ service to the customer’s business (e.g. health and safety
at the workplace Zimplats does it to avoid / reduce accidents and Blue ribbon does it because it’s
a NSSA requirement to avoid penalties )
xv) Attitudes towards the supplier: Personal characteristics of buyers (age, education, job title and
decision style) play a major role in forming the customers purchasing attitude as whole. Is the
decision-maker a partner, supporter, neutral, adversarial or an opponent? Industrial buyers are
required to have at least 3 quotations before making a final decision thus with the case of ZIMRA
they would always collect quotations , but never came for training upon investigation the decision
maker preferred Mandel thus had an attitude towards MTB
TARGETING
In the next step, we decide to target one or more segments.
Factors to consider when targeting
1. Before choosing a segment MTB takes into account competition that is already in that segment. How
well are existing segments served by other training institutes? For example training in tourism and
hospitality is offered by Mandel, ZIPAM, ZIM but are they fully serving the segment. It will be more
difficult to appeal to a segment that is already well served than to one whose needs are not currently
being served well.
2. MTB considers the size of the segment how large is the segment, and how can we expect it to grow.
For example the mining industry is growing but not fast enough such that MTB is maximizing on
providing its services to the whole sector but also the pace at which it is growing is not fast enough to
invite competition(Note that a downside to a large, rapidly growing segment is that it tends to attract
competition)
3. Do we have strengths as a company that will help us appeal particularly to one group of consumers?
Firms may already have an established reputation. While MTB has a great reputation for fast, consistent
quality service, it would be difficult to convince consumers that MTB is now offering banking services to
companies industry. Thus, MTB would probably be better off targeting companies in search of consistent
quality service in offering training facilities, conferencing and upgrading services.
POSITIONING
It involves implementing our targeting. For example, MTB has chosen to position itself as a provider of
affordable training and consultancy services. Thus MTB has done a lot through its advertising to
promote itself.
Michael Treacy and Fred Wiersema suggested in their 1993 book The Discipline of Market Leaders that
most successful firms fall into one of three categories:
1. Operationally excellent firms, which maintain a strong competitive advantage by maintaining
exceptional efficiency, thus enabling the firm to provide reliable service to the customer at a significantly
lower cost than those of less well organized and well run competitors. The emphasis here is mostly on
low cost, subject to reliable performance, and less value is put on customizing the offering for the
specific customer. Wal-Mart is an example of this discipline. Elaborate logistical designs allow goods to
be moved at the lowest cost, with extensive systems predicting when specific quantities of supplies will
be needed.
2. Customer intimate firms, which excel in serving the specific needs of the individual customer well.
There is less emphasis on efficiency, which is sacrificed for providing more precisely what is wanted by
the customer eg ZIM.
3. Technologically excellent firms, which produce the most advanced products currently available with
the latest technology, constantly maintaining leadership in innovation eg Mandel. These firms, because
they work with costly technology that needs constant refinement, cannot be as efficient as the
operationally excellent firms and often cannot adapt their products as well to the needs of the individual
customer.
Treacy and Wiersema suggest that in addition to excelling on one of the three value dimensions, firms
must meet acceptable levels on the other two. MTB, for example, does maintain some level of customer
service. The emphasis, beyond meeting the minimum required level in the two other dimensions, is on
the dimension of strength.
Repositioning
It involves an attempt to change consumer perceptions of a brand, usually because the existing position
that the brand holds has become less attractive. MTB, for example, attempted to reposition itself from
a place that government institutions offered poor quality services but attractive prices. Repositioning
in practice is very difficult to accomplish. A great deal of money is often needed for advertising and
other promotional efforts, and in many cases, the repositioning fails.
To effectively attempt repositioning, it is important to understand how one’s brand and those of
competitors are perceived. One approach to identifying consumer product perceptions is
multidimensional scaling. Here, we identify how products are perceived on two or more “dimensions,”
allowing us to plot brands against each other. It may then be possible to attempt to “move” one’s brand
in a more desirable direction by selectively promoting certain points. There are two main approaches to
multi-dimensional scaling. In the a priori approach, market researchers identify dimensions of interest
and then ask consumers about their perceptions on each dimension for each brand. This is useful when
(1) the market researcher knows which dimensions are of interest and (2) the customer’s perception on
each dimension is relatively clear (as opposed to being “made up” on the spot to be able to give the
researcher a desired answer). A t MTB the clients are given summative evaluation forms where they are
asked about the services, training and hospitality given to them.
Patrick T Hokonya
Registration: R0722633Q
Presentation
Question:10 Government policies that have impacted positively or negatively which have been
introduced in the last 5 years
The post independence government of Zimbabwe inherited a fairly well diversified economy with an
industrial base stronger than that of most Sub-Saharan African countries north of the Limpopo River. In
pursuing its development objectives, the government developed several plans: the Transitional National
Development Plan (TNDP), the First Five Year National Development Plan (FFYNDP), the Second Five Year
National Development Plan (SFYNDP), the Economic Structural Adjustment Program (ESAP), the
Zimbabwe Program for Economic and Social Transformation (ZIMPREST) and, the Zimbabwe Millennium
Economic Recovery Programme and most recently the Short Term Emmergency Recovery Programme
(STERP). Most of the objectives of these plans were never realized and in almost all cases, the targets,
particularly growth targets, were never met. Some aspects of the plans were never implemented and an
outstanding example is an aspect relating to science and technology policy for industrial development
that was first mentioned in 1981.
At independence the government’s approach to policy making was inclusive with the key arms of the
economy contributing
Figure 9.1: Actors in Policy Formulation
Source: A Kambudzi, November 1998.
This policy formulation method was changed by the ZANU PF government at 1980 in the their quest to
introduce a Marxist state. In the process they introduced a Partocratic Policy System.
Figure 9.2: Partocratic Policy System
Source: A. Kambudzi, November 1998.
This however seemed to change after 1998 when the government seemed to face increasing pressure
from the war veterans who demanded compensation.
Figure 9.3: Emerging Multi-influencer Policy System
Source: A. Kambudzi, November 1998.

Murambatswina, The destruction of private and business properties in 2005/2006 caused a
instability in the property industry across the country and also saw some businesses closing
shop. Examples are businesses along Seke Rd in Harare which included manufacturing,
construction and transport companies whose properties were destroyed without compensation.
According to the United nations report of 2006 over 700 000 people lost employment while
2.4million people were made homeless. However the figures were disputed by the police who
estimated the figures to be around 120 000 people affected. www.wikipedia.com The
Washington Post of 2008 on February 7, 2008 described how some men and women displaced
from Harare were forced to walk 28km to work because they could not afford bus fare.

Price Control: In 2007, the government imposed a price freeze in Zimbabwe because of
hyperinflation. That policy led only to shortages in basic commodities which left most of the
shelves empty obviously when people cannot sell at a profit, they tend not to sell at all.
According to the Zimbabwe Independent of September 2, 2007, business lost over Z$40 trillion
since government declared war on big business. As a result government lost Z$13,1 trillion in
revenue and that is when the warning bells sounded, prompting a rapid policy shift on the
matter.
After the price controls had been called off, the Zimbabwe government slapped a six-month
freeze on wages, rents and service fees.This was as a result in what the analysts called an
increasingly desperate campaign to sustain an economy gutted by hyperinflation. (...) The new
freeze, was intended to combat an annual inflation rate that the government said exceeds 7,600
percent, and private economists said was twice that. It barred businesses from indexing wages or
fees to inflation, a method employed in many wage agreements. All increases were to be
approved by a government commission.
The freeze followed a decree issued in late June that forced merchants and wholesalers to
reduce all prices by at least 50 percent. Shoppers stripped store shelves of clothes, meat and
other basic goods after that decree, and producers failed to ship new stock because goods were
now sold for less than it costs to make them.Most commodities were available only on the black
market, where prices continued to skyrocket.

Forex policy; In an effort to save the little forex reserves that the government still had, the
government introduced restrictions on the movement of foreign currency. The government
deregistered bureu de changes which led to increase in the number of informal foreign currency
dealers popularly known as “Osipateleni” or the “world bank”. These dealers who were not
regulated increased rates depending on the amounts required rather than looking at the usual
economic factors. For most companies who relied on imports, this meant acquiring the forex
from the black market resulting in increase in prices and closure of some businesses. This led to
the arrest of a number of businessmen and company directors being on allegations of
externalising forex. Businessmen like Mutumwa Mawere, Nigel Chanakira, James Makamba just
to name a few were all at one point or another arrested for externalisation. Directors of large
corporations like Tregers, Econet, Meikles just to mention a few were arrested for dealing in
foreign exchange. This policy was largely seen as a government strategy of getting back at
cpmpanies perceived to be anti government.

Indigenisation Black Empowerment: of the economy is the deliberate economic empowerment
of indigenous Zimbabweans mainly through economic expansion. This is a long-term programme
for laying a strong foundation for the development of a fully fledged democratic society in which
all Zimbabweans equally enjoy economic and social justice. The importance of indigenising the
economy arises from the need to eliminate the socioeconomic development imbalances of the
past, to create employment and more wealth so as to eradicate poverty among the majority of
Zimbabweans and to expand the domestic market and tax base.
The positive side of the policy is the entrants of bankers and fuel merchants on to the
Zimbambean market thereby creating more business opportunities for local and at the same
time creating employment.
On the negative side, the policy has scared away most investors as they fear that most of their
business will be forcibly grabbed by the government in the same manner as land reform. The
issue of 51% shareholding for the locals has not been popular with foreign investors.

Retaliatory measures being mooted by the Zimbabwean government against foreign
companies whose governments have imposed sanctions on the country may further turn
away many investors.
Some potential investors from the European Union (EU), notably from Germany , have
been actively exploring business opportunities in Zimbabwe , despite yet to be effected
indigenization legislation which entitles them to only 49 percent of ownership of
companies. The rest is reserved for native Zimbabweans, according to the country’s
economic empowerment legislation.

Introduction of Multi currencies by the Government of National Unity has seen
stabilisation of the economy with inflation going down from around 1000% to around
3%. The positive side of this policy is the re-introduction of lending by the banks as they
see a more stable economy. However the interests rates remain high.

Compulsory Acquisition of alluvial diamonds in Chiadzwa. This has brought back
uneasy an uncertainty in the industry as there are fears that the government may
compulsory acquire any properties or mines that are deemed to be of strategic nature by
the government or those that are not so friendly to ZANU PF. The fears were also
increased by recent warnings by the president to Zimplats on his birthday speech. A move
which was seen to have been motivated by the presence of Muchadeyi Masunda the
MDC mayor for Harare on the board. This led to drop in the share price on the Zimbabwe
Stock Exchange.

Removal of taxes on ICT products: The Government of Zimbabwe (GOZ) recognises the
importance of information and communication technology (ICT) in development. Consequently,
the GOZ has committed to developing and improving new and existing physical infrastructure for
all sectors of the economy by implementing and integrating an equitable framework for
expedited ICT development. The GOZ intends to increase bandwidth for enhanced speed and
efficiency, while expanding access to rural communities. In addition, the GOZ wants to promote
domestic production of ICT to meet international standards and local needs.
To meet these goals, the GOZ removed tax and tariffs on ICT to increase affordability; establish
education and institutional planning, policy-making and direction that will take into
consideration the convergence of digital services, including broadcasting, telecommunications
and on-line computer services; and create a conducive environment for public and private
partnerships that will promote awareness of ICT and local development of software and
hardware relevant to all sectors of Zimbabwe.
This has seen growth in the ICT industry and in particular the communication industry
which has seen companies like Econet Wireless growing from 800 000 subscribers in
2008 to 4.6million subscribers in 2011. Net.One from 250k to 1.2m and Telecel
from165k to 1.8m.

Short Term Emergency Recovery Plan; this was introduced soon after the GNU came
into office. The plan asserts that detailed technical work has been done to produce “a well
balanced and realistic budget for STERP.” It names the plans priorities as food, water
treatment chemicals, education, health, public service employment costs, basic
commodity supply, social welfare payments, crop inputs and the rehabilitation of roads.
This has stabilsation in the agriculture industry which is now seeing some growth.

Look East policy: Has seen an increase in business activities from companies in the East
in particular China where companies like Sino Steel have invested in Zimasco. Recently
we had Essar Holdings an Indian owned company registered in Mauritius investing in
Ziscosteel. The has also been an upsurge in number of tourist arrivals from China which
is now contributing to almost 50% of the international visitors.
The last five years have seen a lot of changes in government policies which are political driven
rather than looking at the economic dynamics leading to desperate decisions being made. Some
of the policies have had a positive impact while some have been disastrous. The coming of the
GNU is seen as the best way of bringing stability to the country.
BUSINESS ASSOCIATIONS IN ZIMBABWE

Standard Association of Zimbabwe(SAZ)
One of the principal functions of the SAZ is to make available to producers and
consumers laboratory facilities for the testing of raw materials and manufactured
goods. Circumstances in the country have led to a reduction in the funding
available to the SAZ to equip its laboratories. At the same time, the type of
economic activities being undertaken by industry have been changing with the
times and the testing equipment available at SAZ laboratories has increasingly
become outdated or is no longer appropriate or adequate to cover the full scope
of testing demanded by clients.

Zimbabwe National Chamber of Commerce (ZNCC)
ZNCC is the primary business association in Zimbabwe representing enterprises
of every size and kind throughout the country. ZNCC is an independent,
voluntary, non-profit making and non-political organization. It is an organization
that provides services designed to support its members in business
development. ZNCC is a non-profit making membership organization. As an
independent organization, ZNCC represents the interests of its members through
lobbying, collaboration and facilitation. It provides a focus business
empowerment as the engine for economic growth and also encourages
competitiveness in the market place through the promotion of organized
communication.

Business Council of Zimbabwe (BCZ)
BCZ is a 9-member business association and its members comprise CFU,
Chamber of Mines, Confederation of Zimbabwe Industries, Zimbabwe Council of
Tourism, Zimbabwe Farmers Union, Bankers Association of Zimbabwe, EMCOZ,
National Chamber of Commerce and the Zimbabwe Commercial Farmers Union.
The council is in the process of establishing an economic research unit that will
provide independent research and analysis to guide stakeholders, including
Government and business, in policy decisions.

Automobile Association of Zimbabwe (AAZ)
AAZ is a business house which operates two or more private type vehicles
registered in the name of a business. Membership is gained with the more
enrolled, and it is discounted.

Commodity exchange in Zimbabwe (COMEZ)
This was launched in January 2011 after 2 years of planning. It is appositive step
for Zimbabwe’s financial and agricultural sectors as it will greatly assist in
mobilizing financial resources required in funding agricultural products and
eliminate monopolies enjoyed by various entities in marketing and purchase of
agricultural products.

Zimbabwe Farmers Union (ZFU)
It was founded in Midlands province in 1939. ZFU is an organisation for all
farmers in Zimbabwe, especially those in the rural setting. According to Masuku
Bafokazana, there are over one million (which embodies everybody who owns a
farm irrespective of status) in the the union. The ZFU’s objectives are:
xvi)
To discuss problems affecting farmers
xvii)
To represent farmers at meetings, workshops at all levels (village, district,
national and international)
xviii)
To achieve the vision and mission of farmers, alleviating poverty
xix)
To protect farmers interests
xx) To advocate for land reclamation from foreigners who reportedly owned 80% of
arable land
xxi)
To cater for irrigation schemes
xxii)
To have access to credit facilities
xxiii)
To solve farmers’ problems through negotiations and advocacy, among
others

Confederation of Zimbabwe Industries (CZI)
It develops and promotes business activities. It includes information on history,
activities, recent projects and events calendar and details on collaborators.
REGULATORY BODIES IN ZIMBABWE FOR VARIOUS INDUSTRIES
4. Transport and logistics Industry

Civil Aviation Authority of Zimbabwe (CAAZ)
It regulates the Civil Aviation. It is also the operator of airport and navigation
services for the industry. The CAAZ has the following duties:
iii) It promotes and maintain safety and secure Civil Aviation environment
iv) It regulates and oversees the functioning and development of the industry in an
efficient, cost effective, and customer-friendly manner
v) It promotes an enabling environment for development of the air service industry

Transport Regulatory Agency of Zimbabwe (TRAZ) and The Department of
Roads
They are responsible for oversight of the road transport industry.
5. Energy Industry

Zimbabwe Electricity Regulatory Commission (ZERC)
It was established under the Electricity Act. The board often made noble
decisions, especially on tariffs, but only to have these overturned by the ministry.
The Government has continued to interfere with the work and decisions of ZERC.
3. Music Industry

Zimbabwe Association for Recording Industries (ZARI)
It was formed in 2010. It has been welcomed by Art bodies who say it will bring
transparency in the way the industry operates. It regulates the operations of
music and film industry.
4.Agriculture Industry

Tobacco Industries and Marketing Board (TIMB)
It is a statutory and regulatory body responsible for the control and regulation of
tobacco sales in Zimbabwe and promotion of tobacco reports from Zimbabwe.

Grain Marketing Board (GMB)
5.Ministry of Industry and Commerce

Consumer Council of Zimbabwe (CCZ)
CCZ protects consumers from bad products. It has slammed ZESA for increasing
power tariffs at a time when employers are failing to award meaningful salaries.

Food and Food Standard Board
It is under the Ministry of Health and the Drug Control Council. It compels local
manufacturers to comply with the labeling requirements which give the
consumers enough information to make decisions.

The Drug Control Council
It sets standards for both locally produced and imported drugs.

Zimbabwe National Chamber of Commerce (ZNCC)

Confederation of Zimbabwe Industries (CZI)
6.Telecommunications Industry

Media Institute of Southern Africa ( MISA)
It was launched in 1992 and it is an independent regulator in the
telecommunications and broadcasting sectors in the telecommunications and
broadcasting sectors in Zimbabwe. It maintains order, facilitate the entry of new
players and the need to promote fair competition of speech and universal access.

Posts and Telecommunications Regulatory Authority of Zimbabwe
(POTRAZ)
It is a body corporate established in terms of the Postal and Telecommunications
Act Chapter (12.05). POTRAZ started operating in September 2001. POTRAZ is
mandated by law to issue licenses in the postal and telecommunications section
and to set the terms and conditions for activities in the sector. POTRAZ is
responsible for ensuring that all people in Zimbabwe are adequately provided
with postal and telecommunication services. These services must be provided
uniformly. All licensed operations contribute to the Universal Services Fund that is
used to finance provisions of services in under-serviced areas.

Broadcasting Authority of Zimbabwe (BAZ)
It is a mechanism that promotes freedom of an expression and access to
information by members of the public.
7.Medical, Environmental and Processing Industry

National Biotechnology Authority of Zimbabwe (NBAZ)
It ensures application of biotechnology in agricultural development, the
improvement of the country’s health delivery system, provision of environmentally
friendly energy, sustainable environmental management and sustainable
exploitation of the country’s abundant biological diversity.
8.Mining Industry

Mining Affairs Board
It deals with all mining issues and regulates the industry as well.

Zimbabwe Environmental Law Association (ZELA)
It ensures that there is transparency and accountability in the extractive sector,
especially mining sector which has been plagued by allegations of corruption,
conflict and viewed as contributing little to national economic developments.
LEGAL ACTS PASSED ON VARIOUS INDUSTRIES IN ZIMBABWE
Mining Industry

Mines and Minerals Act
In Zimbabwe, mining is regulated under the Mines and Minerals Act (Chapter 21
of 2005)
The Minister of Mines and Minerals Development is responsible for the
implementation of the Acts. The Act provides for:
g) Approval and insurance of exclusive prospecting licenses
h) Amendment, transfer, suspension and or cancellation or termination of such
licenses
i) Registration of mining blocks and mining locations
j) Issuance of mining leases and certificates of legislation
k) Issuance of rights to erecting or removing of temporary buildings
The Act also provides for environmental protection. The principal Act for
environmental protection is contained in the Environmental Management Act
(Chapter 20). Zimbabwe has gone further to enact the Indigenization and
Economic Empowerment Act (Chapter 14). The main objective of the Act is to
make provision for the indigenization of the mining industry. The spirit of the
Indigenization Act has filtered through the Mines and Minerals Act as
amended in 2007. Some interesting provisions include classes on ownership
that by the 5th year of operation after 2007, 25% of the shares of a mining
company should be owned by the State or one or more indigenous
Zimbabweans.
Telecommunications Industry

Access to Protection and Privacy Act (APPA), which was passed in 2008,
gave the Government, through Media and Information Commission the powers to
close down papers, to suspend them, to arrest, harass, ban and threaten
journalists.
Section 20(1) of the Constitution of Zimbabwe says, “No person shall be
prevented from exercising his or her expression, which includes the freedom to
hold opinions and to receive and/or communicate ideas and information without
interference.
In 2000, the Government made a policy position that ensured that there be 75%
local content in programming on both television and radio.
In 2003, Government gazette a statutory instrument 136 of 2003 that allows
artists to import musical, broadcasting, recording and PA systems duty free.
Government passed the Copyright and Neighboring Rights Act (Chapter 26.05) in
2004.
Education Industry

Education Act Amendment (2006)
It was meant to reduce drop outs ratio to improve retention, increase access and
participation at all levels including Early Childhood Development, promote ICT,
computer education and e-governance.
Other acts

Public Order and Security industry Act
In December 2010, the Zimbabwean Parliament passed amendments to the
country’s Public Order and Security Act

Indigenization Act
It was passed in 2008 when ZANU PF held the majority in parliament. It was put
into effect in the beginning of 2010, indigenization minister Saviour Kasukuwere
gave foreign controlled companies an initial deadline to submit detailed plans of
how they intend to comply with the rules. The law identifies as indigenous any
person who, before 18 April 1980 was disadvantaged by unfair discrimination on
the grounds of their race, and any descendant of such persons. This law takes a
stand in defence of the marginalized communities, who must now be organized
around community trusts for the purpose of empowerment.