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sales management ch.1

behavioral forces
• Rising customer expectations
• Globalization of markets
• Demassification of domestic markets:
technological forces
• Sales forces automation
• Virtual sales offices
• Electronic sales channels
managerial forces
• A shift to direct marketing alternatives
• Outsourcing of sales functions
• Blending of the sales and marketing functions
Trends affecting long-term management in the 21st century
1) transactional paradigm
2) nimble and adaptable
3) removing functional barriers
4) management styles have to change
5) leveraging available technology
6) performance evaluation
transactional paradigm
building long term relationships with customers
nimble and adaptable
change and adapt quickly to satisfy customer needs
removing functional barriers
gaining greater job ownership and commitment from salespeople (make sure everyone is on the same page)
management styles have to change
shift from commanding to coaching
leveraging available technology
using technology to make the business as efficient as possible
performance evaluation
incorporate the full range of activities and outcome relevant within sales jobs today (make it useful)
willingness to think outside the box, do things differently and embrace change (start thinking of failure as success training)
the broad spectrum of technological tools now available to sales managers and organizations (changing how organizations work)
capability to make things happen for the benefit of the sales organization and its customers (title doesnt make you a leader)
transactional selling
-A series of transactions, each one involving separate organizations entering into an independent transaction involving the delivery of a product or service in return for compensation
-Used to be the dominant sales approach
relationship selling
building long-term relationships between customers and their suppliers
relationship selling EXAMPLE
– Xerox has identified fewer than 500 vendors with which it wants to do business with now, but in 1989 they had more than 5000 vendors supplying them.
(buyers are narrowing their vender pool)
– P&G has aggressively reorganized its client teams so they are stationed very close to the company’s major accounts
strategic relationships
multilayered sales strategy that seeks to create unique relationships with the best customers while streamlining a transaction-based relationship with others who demand less service
strategic relationships EXAMPLE
Shell Oil fount that some smaller buyers didn’t want or have time for personal visits by salespeople so they reallocated personal sales efforts to lager accounts and began using only telemarketing to call on smaller accounts. They found that all customers were more satisfied, selling costs were reduced, sales increased, and profits soared
sales effectiveness enhanced through technology
The internet has the ability to inform, persuade and enhance the personal selling component makes it a critical part of sales management in the 21st century
sales effectiveness enhanced through technology EXAMPLE
Dell and Hewlett-Packard (HP) has primary strategies of direct selling and selling through retailers, both now experience strength in sales, customer satisfaction and loyalty that are greatly enhanced by their web presence
Electronic data interchange (EDI) and efficient consumer response (ECR)
Enable companies to tie their computers directly to their customers
– when a customers computer recognizes a low inventory, it can generate an order directly to the vendors computer, which them schedules the product for delivery
Traditional top-down bureaucratic style managers
• Supervisors responsible for administering the sales force
• Held directly accountable for the actions of their salespeople
• Words like control and manage were used to describe their activities
Modern managers
• Work in a highly dynamic and competitive environment
• Demands a more responsive, flexible approach to sales management
• Sales forces are becoming less hierarchical with fewer layers of management
• More responsibility is given to the sales person
effective leadership of salespeople includes
1. Communicating with salespeople rather than controlling them
2. Becoming a cheerleader and coach instead of a supervisor or a boss
3. Empowering salespeople to make decisions rather than directing them
– Mentoring rather than directing salespeople
– view customers in their culture core values and appreciate it
– understand their business practices
– see each other honestly and from their prospective
challenges of diversity
Managers need to understand a wide range of environmental differences (cultural, legal, behavioral) in the selling process
unethical behavior EXAMPLE
US government has developed Federal Sentencing Guidelines that are designed to punish firms that allow salespeople to engage in unethical behavior
-> Penalties are reduced for firms that have required ethics training and have adopted other polices that encourage ethical behavior
communication is key
– Long term relationships and customer loyalty are impossible to maintain in an atmosphere of distrust brought on by unethical sales approaches
sales management
All activities, processes, and decisions involved in managing the sales function in an organization
*sales management process
1) the formulation of a sales program
2) the implementation of the sales program
3) the evaluation and control of the sales program
formulation of a sales program
– sales strategy
– consider environmental factors
– organize and plan companies personal selling efforts and integrate them with other elements of their marketing strategy
implementation of the sales program
– selecting the right sales personnel
– designing and implementing approaches that will direct their efforts toward the desired objective
evaluation and control of the sales program
– developing methods for monitoring and evaluating sales force performance appropriately
– allows for adjustments when performance is unsatisfactory
external environmental factors
something you cant control
external environmental factors EXAMPLES
o Demands of potential customers
o Actions of competitors
o Energy prices, technological advances, government regulations and social concerns
internal (organizational) environmental factors
factors within the company
internal (organizational) environmental factors EXAMPLES
o Human and financial resources
o The firms production capacity
o Research and development
sales management: the environment
external or internal
sales management: marketing strategy
marketing activities
sales management: activities
– account management policies
– sales force organization
– sales planning
– deployment
– supervision
– selection, training, and motivating the sales force
sales management: determinants of the salesperson’s performance
– salespersons view of the job requirements, role perceptions
– personal characteristics
sales management: outcomes
sales management: control
evaluation and control of sales force performance
external factors impact success in selling
1) environment can keep the company from pursuing certain marketing strategies or activities
2) environmental variable determine success or failure of marketing strategies
3) environmental changes can create new marketing opportunities
4) environmental variables are affected and changed by marketing activities
1) environment can keep the company from pursuing certain marketing strategies or activities
when the government declares the sale of a product to be illegal or when a well-enriched competitor makes it unattractive for the firm to enter a new market
– drug commercials: pharmaceutical sales have been impacted because of a change in the legal/political environment
2) environmental variable determine success or failure of marketing strategies
the rapid growth in the number of women in the labor force in recent years helped ensure the success of lean cuisine and other quality brands of convenient frozen entrees
3)environmental changes can create new marketing opportunities
technology allows development of new products
-> emergence of electronic commerce software enabled HP to develop solutions to problems such as security, design, and flow of data over the Internet
4) environmental variables are affected and changed by marketing activities
New products and promotional programs help change lifestyles and social values
->in view of increased activity by consumer groups, environmentalists, and other public interest groups and agencies, marketers today must consider how proposed programs will effect the environment and how the environment will effect the programs
external environment variables
o Economic (including competition)
o Legal and political
o Technological
o Social and cultural (focused on ethics)
o Natural
economic environment EXAMPLES
– disposable income
– competition
– distribution channels
legal and political environment EXAMPLES
– antitrust laws
– consumer protection laws
– equal employment opportunities
natural environment EXAMPLES
– resource availability
– raw materials
– weather
social and cultural environment EXAMPLES
– changing population demographics
– cultural diversity
– ethical values
technological environment EXAMPLES
– new product technologies
– changing information
– communication technologies
economic environment
• Total potential demand for a product within a given country depends on that country’s economic conditions (amount of growth, unemployment rate, level of inflation)
global economic conditions EXAMPLE
companies as diverse as Intel or caterpillar have been adversely impacted at the bottom line in their European operations due to the unfavorable exchange rate between the US dollar and the euro
the amount of competition in an industry
Both the number of competing firms and their relative strengths in the marketplace
ways to deal with competition
salespeople – observe changes by competition first
reprots – analyses of lost sales
CRM software – gives a lot of information
antitrust laws
– Aimed primarily at preserving and enhancing competition among firms in an industry
– Restrict marketing practices that would tend to reduce competition and give one firm a monopoly through unfair competition
consumer protection laws EXAMPLES
belt laws, consumer bill of rights, safe drinking water bands on plastics and chemicals, no call lists
consumer protection laws
– Set standards of quality and safety
– Requires that consumers be provided with accurate information to use in making purchase decisions
– prevent misrepresentation
equal employment opportunities
It is lawful to discriminate against a person in either hiring or promotion because of race, religion, nationality, sex or age
equal employment opportunities EXAMPLES
civil rights act 1964, women’s right to work, but not for equal pay; equal pay act didn’t start until the 70’s
technological environment
New product technology lowers costs and makes us more efficient
using technology to enhance business EXAMPLE
By improving the processes of filling and storing tanks, blue rhino has begun to dominate a market that was largely populated by small, independent dealers
social and cultural environments: ethics
Firms develop new products in response to trends in consumer tastes and preferences
demographic trends that affect selling
– again society
– Greater influx of minorities (as a % of total population)
– Two-income households
– Greater mobility
– Desire for more leisure time
– Desire for more convenience oriented products
aging society
america is getting older
• Next generation is going to be smaller than ours
• More older people than there are younger people
• Economic downturn changes how many kids we have
– Concerned with the development of moral standards by which actions and situations can be judged
– Actions that may result in actual or potential harm of some kind (economic, mental, physical) to an individual, group, or organization
o More proactive than the law
o Anticipate and avoid social problems
avoid ethical dilemmas by:
– written policies
– clear guidelines
– clearly communicate policies
cultural diversity
o Important to learn another language
o Sales people have to be multilingual
availability of raw materials
The source of all the raw materials and energy resources needed to make, package, promote and distribute a product
o Natural disasters such as tornadoes and floods can influence demand for building products
o Unseasonable weather can damage or enhance sales, depending on the type of product
not marketing part or all of a product line when resources are scarce
natural resources
owing social concern about the possible negative impacts of products and production processes on the natural environment
failure to forecast changes in the environment
Many companies do not use sophisticated techniques for environmental scanning and forecasting
internal (organization) environment factors
1. Goals, objectives and culture
2. Human resources
3. Financial resources
4. Production and supply chain capabilities
5. Service capabilities
6. Research and development and technological capabilities
goals, objectives and culture
Successful management of customer relationships begins with top management’s specification of a company mission and objectives that create a customer-centric organization
company culture
o Mission statement
o Styles of management
o Personalities of executives
human resources (personnel)
Sales and situations are complex and dynamic
o Ability to attract talent that has the capability to make sales in the market place
o If you shrink the pool, you have less elite to chose from
financial resources
An organizations financial strength influences many aspects of its customer relationship initiatives
lack of financial resources
Can (1) constrain the firms ability to develop new value-adding products, (2) reduces our promotional budget and (3) limits the size of our sales force
merging with a larger firm
To obtain the financial resources necessary to realize their full potential in the marketplace
Production and supply chain capabilities
The organizations production capacity, the technology and equipment available in its plants, and even the location of tis production facilities can influence the relationship selling initiative
lack of capacity prevents
o Expanding its product line
o Moving into new geographic areas
o Serving increased demand
o Competitive product price caused by transportation costs
can we meet the demands of the market? EXAMPLE
action figures: successful before they were ready to be, didn’t have enough that Christmas to meet demands
where to produce
o Most things are not produced in the US
o Have to be able to export easily
service capabilities
• Delivering a high level of service quality is an important organizational capability
– always servicing the account
– If you do it right, customers are reluctant to switch, even because of price
– strong competitive advantage
Research & development, and technological capabilities
An organizations technological and engineering expertise is a major factor in determining whether it will be an industry leader or follower in both the development of value-adding products and high-quality service delivery
– A sales reps job is to overcome the rate of adoption, still has to be functional

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