Chap 013

CRAVENS PIERCY

8/e McGraw-Hill/Irwin

© 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.

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Chapter Thirteen Sales Force, Internet, and Direct Marketing Strategies

McGraw-Hill/Irwin

© 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.

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SALES FORCE, INTERNET, AND DIRECT MARKETING STRATEGIES  Sales Force

Strategy  Internet Strategy  Direct Marketing Strategies

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OFFICE DEPOT’S SUCCESSFUL INTERNET STRATEGY  Using a seamless network, Web operations are integrated into Office Depot’s existing businesses.  An easy-to-use electronic link is provided between the online store and internal networks.  Purchasing authorizations and limits are incorporated into the system.  Ease of use rather than technology is the key priority for improving the online network.  Bonuses are offered to salespeople to encourage corporate customers to use online ordering.  Sales applicants are tested concerning Internet familiarity, and informed of the importance of Office Source: Charles Haddad, “Office Depot’s E-Diva,” Business Week e.biz, August 6, 2001, EB22-EB24. Depot’s online initiatives during the hiring process.

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DESIGNING AND IMPLEMENTING SALES FORCE STRATEGY A company’s sales force strategy determines how the organization will use the personal selling function to maintain

contact with customers and develop the relationships that management wants in order to achieve marketing and promotion objectives.

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Sales Force Strategy Determine the role of the sales force in promotion strategy Define the selling process (how selling will be accomplished) Decide if and how alternative sales channels will be utilized Design the sales organization

Recruit, train, and manage salespeople

Evaluate performance and make adjustments where necessary

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Challenges in Selling and Sales Management Two sets of ethical dilemmas are of particular

concern to sales managers. The first set is embedded in the manager’s dealings with the salespeople. Ethical issues involved in relationships between a sales manager and the sales force include such things as fairness and equal treatment of all social groups in hiring and promotion, respect for the individual in supervisory practices and training programs, and fairness and integrity in the design of sales territories, assignment of quotas, and determination of compensation and incentive rewards. Ethical issues pervade nearly all aspects of sales force management. The second set of ethical issues arises from the interactions between salespeople and their customers. These issues only indirectly involve the sales manager because the manager cannot always directly observe or control the actions of every member of the sales force. But managers have a responsibility to establish standards of ethical behavior for theirSales subordinates, Source: Mark W. Johnston and Greg W. Marshall, Force Management, 7 ed., Burr Ridge, IL: McGraw-Hill/Irwin, 2003, 21. communicate them clearly, and enforce them th

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Business and Marketing Strategy Influences on Sales Strategy Business Strategy Promotio n Strategy

SALES STRATEGY Pricing Strateg y

Market Target(s ) Strategy

Product Strategy Distribution Strategy

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Marketing productivity crisis

Escalating customer expectations

Intense global competitio n

SALES FORCE CHALLENGES

Blurring of industry boundaries

Technology Advances

Mergers and acquisitio ns

Range of Personal Selling Roles Transactional Selling

Feature/Benefi t Selling

Solution Selling Value-Added Selling

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DEFINING THE SELLING PROCESS

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Finding Prospects

Opening the Relationship Qualifying the Prospect Presenting the Sales Message

Closing the Sale Source: Mark W. Johnston and Greg W. Marshall, Sales Force Management, McGraw-Hill/Irwin, 2003, 51-56.

Servicing the Account

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As radical change sweeps through today’s marketplace, managers face daunting questions about just how to adapt. Most of those questions focus on the structure and deployment of sales forces: What is the right mix of outside salespeople, inside reps, independent reps, brokers, telemarketers, and support staff? Are sales reps even necessary? Or can they be replaced by 800 numbers, catalogs, shopping channels, or the Internet? James Champy, “Strategy Session,” SAMM, 1997, 32.

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The Selling Process Guides  Recruiting  Training  Effort

Allocation

 Organizational

Design  Selling

Support Activities

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Selecting Sales Channels to Value Chain Members and End Users 

Major Account Management



Field Sales Force



Telemarketing



Electronic/Mail Contact

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DESIGNING THE SALES ORGANIZATION Organizational Structure

Deployment of Selling Effort

Sa les F orce De plo yme nt

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Size of the Sales Force  Allocation of Selling Effort Sales person skills and effort PLUS Market potential Number and location of customers Intensity of competition Market (brand) position of the company 

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Alternative Designs Customer needs different

Market-Driven design

Product/ MarketDriven design

Simple product offering

Complex range of products

GeographyDriven design

ProductDriven design

Customer needs similar

Selec tin g an Orga nizatio na l Desig n  





 



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What is the selling job? How much customer/product specialization is necessary? Role of value chain (channel) relationships? How many sales management levels (hierarchy versus process)? Will sales teams be used? Sales channels in addition to the field sales force? Are there any sales structure danger signals (high costs, turnover, large sales variations across territory?

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Sales Force Size Example Sales

40 35

Current level

$ millions

30

Maximum profit contribution level

25 20 Gross profit contribution

15 10 Selling expense

5 0 60

70

80

90 100 110

Number of salespeople

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MANAGING THE SALES FORCE  Finding

and Selecting Salespeople

 Training/Developme

nt  Management

Monitoring Directing Evaluating Rewarding

Control

The Swiss Drug Maker Novartis Strengthens Sales Force Capabilities 13-21

Novartis’ 1999 sales growth was very low compared to rivals’ double-digit sales increases. Top management launched a major turnaround strategy, spearheaded by new product initiatives and strengthening of provided the sales force. Salespeople were customer

research information to focus their targeting efforts.  The size of the sales force was increased from 2,815 to 6,200 in 2002.  Collaboration and persistence were determined to be key traits of high performance Novartis salespeople.  Major efforts were initiated to upgrade Source: “New Prescription: It’s Rivals in Funk, Novartis Finds a Way to Thrive,” The Wall Street the August 23, 2002, A1 and A5. Journal, sales force and improve selling and

SALES FORCE EVALUATION AND CONTROL

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Performance Measures

Performance Standards Activities Focus of Management Control and/or Outcomes

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REINVENTING THE SALES ORGANIZATION

A Te pp ch ly no ing lo gy

Performance Huddles

Customer Relationships

ng i h

ac o C

SALES MANAGER CHALLENGES

er m ls o t ne s n Cu ha C

Sales Structure

Re In la ter tio n ns al hi Keeping ps Score

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INTERNET STRATEGY 

Strategy Development



Internet Objectives



E-Commerce Strategy



Value Opportunities and Risks



Measuring Effectiveness



The Future of the Internet

Internet Strategy Alternatives

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Promotional Medium

Communication Tool

Value-Chain Channel

Separate Business Model

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Deciding Internet Objectives  Creating Awareness and Interest  Information Dissemination  Obtaining Research Information  Brand Building  Improving Customer Service

DESIGNING THE STRATEGY 1. Customer Groups Targeted 2. Value Proposition 3. Communications Strategy 4. Designing the Website 5. Structure of the Organization 6. Alliance Partners 7. Shareholder Value Source: J. F. Rayport and B. J. Jaworski, e-Commerce, McGraw-Hill/Irwin, 2003, 12.

8. Tracking Performance

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Measuring Internet Effectiveness

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Challenging but capabilities are developing. What should be measured and how? Major changes are likely through trial and error. Alternative measures: Ad impressions, clicks, unique visitors, total visits, page impressions

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DIRECT MARKETING

Kiosk Shopping

Electronic Shopping

Radio/Magazine / Newspaper

Catalogs

DIRECT MARKETING METHODS

Direct Mail

Telemarketing Television

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Adva ntag es of Dire ct Mar ke ting

 Socio-economic Trends Time constraints/ convenience  Low Access Costs Much lower than face-to-face contact  Data Base Management Facilitates direct marketing initiatives  Value An attractive bundle of value