Business Decision Making ADMN2167 Marketing and sales

1. Business Decision MakingADMN2167Marketing and sales Professor: Bob Carpenter

2. Marketing and Sales

3. Marketing vs.Sales Corporate awareness Brand awareness Brand Consideration Marketing Brand Preference Purchase Intention Sales Purchase Loyalty Advocacy

4. Marketing and Sales in Conflict? • Sales and Marketing functions evolve as company matures • Can end up with sales in marketing and marketing in sales. (depends on the industry and the product) • Friction can occur as a result of : • Economics and shared budget • Cultural differences …. Different sorts of people

5. Four Types of Relationship • Undefined • Defined • Aligned • Integrated • See HBR “Ending the War between Marketing and Sales”

6. Four Types of Relationship

7. Marketing versus Sales

8. Research into Sales • Learning International has researched: • How customers are changing and how sales staff develop stronger business relationships with them • How the competitive environment is changing and how organizations can differentiate themselves

9. Research into Sales (2) • Customers are: • More knowledgeable • More analytical and systematic • Need agreement at higher levels in the organization • More demanding about what they want and value • More willing to share information

10. Research into Sales (3) • Sales staff need: • To sell strategic solutions • Sell to a wider and higher level group of decision influencers • Become a trusted business consultant by • Demonstrating business knowledge • Demonstrating product knowledge • Helping customer understand and satisfy needs

11. Research into Sales (4) • The most effective sales staff seen by customer in roles of: • Long term ally • Business consultant • Strategic orchestrator

12. Research into Sales (5) • Sales staff competencies and characteristics: • Personality • Skills • Attitudes • Other characteristics

13. Determinants of Salespeople’s Performance

14. Sales Cycle • From segmentation to after sales service

15. Typical Sales Cycle: Tasks Performed Through Sales Process

16. Direct and Indirect Channels

17. Channel Integration Map: Sales task Lead generation Qualification Bid & proposal Negotiation/ sale closure Fulfillment Customer care & support Channel $$$ Direct sales channel (field reps) Business partners Occasional support by sales reps to help partners close key strategic deals Telechannels Direct mail Internet $ Sales Cycle

18. Channel Management • Must choose channel participants and arrange to ensure all obligations are assigned. • Motivate members to perform tasks necessary to achieve channel objectives. • Control any inter-channel conflict • Control and evaluate performance regularly

19. Direct or Indirect? • Criteria for channel decisions

20. Decision Criteria for Channels • Product fulfillment complexity • Extend of product customization • Accessibility • National vs. international • Cost • Customer preferences/wishes • Concentration vs. horsepower

21. Three Important Sales Territory Traits Potential: measure of total business opportunity (commissions or compensation) for all salespeople in particular market Concentration: degree to which potential confined to few larger accounts in territory Geographic Dispersion: if high, sales effort will be wasted in travel time.

22. Organizing Territories Geographical Organization • Most common form • If reduces travel distance and time between customers, this method usually minimizes costs. • Major disadvantage of geographical sales organization: each salesperson must be able to perform all selling tasks for all firm’s products and for all customers in territory. Product Organization • Salespersons specialize in relatively narrow components of total product line. • Prime benefit: enables sales force to develop deeper product knowledge level--enhances value of firm’s total offering to customers Market-Centered Organization • Salespeople learn specific requirements of industry or customer type; salespeople better prepared to identify and respond to buying influentials.

23. Direct Sales Used When: • Product and service are complex so that seller needed to ensure proper fulfillment • Sales demand extensive negotiation • Segments are concentrated and ROI on direct costs is good • There are no viable indirect channel partners • Financially better deal

24. Distributor Channel Used When: • Product availability is important. • Product is standard or software modifiable. • Local value added is important to customer • Product needs to be seen to sell. • Good fit with speciality distributors. • Advantageous to pass off credit issue to distributor

25. Manufacturer’s Rep: Used When: • Product is not standard--closer to made-to-order. • Product has identifiable companions sold by MR to a particular industry. • MR serves customers beyond direct cost reach. • Relatively few customers, concentrated geographically and concentrated in few industries. • Customers order relatively infrequently and allow fairly long lead times.

26. Direct or Indirect? • Pros and Cons

27. Pros of Indirect Selling • Can use partners local industry knowledge. • Can access geographies that are beyond direct reach • Can accommodate market cultural differences (language, selling techniques) • Can retain focus / resources for other key activities

28. Cons of Indirect Selling • Lose customer intimacy/visibility/ownership • Lose control of salesperson management • Share sales staff with other principals • Pay greater amount for coverage when sales have grown • Difficult to change back to direct

29. Needs Satisfaction Selling Opening Probing CUSTOMER NEEDS Supporting Closing

30. Needs Satisfaction Selling - Opening Your goal in opening is to reach agreement with the customer on what will be covered during the visit • Propose an agenda • State the value to the customer (of the agenda) • Check for acceptance

31. Needs Satisfaction Selling - Probing Your goal in probing is to build a clear, complete and mutual understanding of a customer’s needs • To obtain a clear mutual understanding of: • What customer wants • Why its important • A complete understanding for a particular buying decision means you know • All customers needs • The priority of those needs • Mutual understandiing means you and customer share the same understanding

32. Needs Satisfaction Selling - Probing • Use open and closed questions to understand circumstances and needs. • Open probes obtain richer information • Search for the “need behind the need”

33. Needs Satisfaction Selling - Supporting Your goal in supporting is to help customer understand the specific ways in which your product and organization can satisfy an expressed need • Acknowledge customer’s need • Link need to benefit and features of product • Check for acceptance

34. Needs Satisfaction Selling - Closing Your goal in closing is to reach agreement with the customer on the appropriate next steps, if any, for moving a mutually beneficial decision forward. • Review previously accepted benefits • Propose next steps including actions summary • Check for acceptance

35. LaserQC Case • Segmentation • Develop benefits and features • Who will be in the buying center • Should there be micro segmentation • Selling cycle / key selling events • Channel design • Sales force organization

36. Sales Management Direct and Indirect

37. Direct Sales Force Management Issues • Selection • Training • Motivating • Weed and feed policy • Pricing discretion • Whose customer is it? • Setting goals and expectations

38. Indirect Sales Force Management Issues • Selection • Training • Motivating – battle for mind space • Weed and feed policy • Pricing discretion • Whose customer is it? • Setting goals and expectations

39. Selection Direct • Cost and risk of recruiting • Promotion from within • Balancing interpersonal skills and product knowledge

40. Selection Indirect • Where do you find a partner? • How do you evaluate potential partner? • How do you get them started?

41. Factors Limiting Choice of Industrial Channel • Availability of Good Intermediaries • Traditional Channel Patterns • Product Characteristics • Company Financial Resources • Competitive Strategies • Geographic Dispersion of Customers

42. Training • Direct trained in product • Indirect have to train several staff (e.g. You are getting 1/10th of 10 people) • To be effective with indirect, you need windshield time • Indirect should already know selling, industry and customers

43. Motivating • Direct can be intrinsically and extrinsically motivated • Indirect is a battle for mind space. • Indirect you must work through management to control rewards as directly as possible • Other products in indirect’s product offering competes with their own incentives

44. Weed and Feed • Direct can be coached and mentored • Direct can be severed • Indirect is that. You can not intervene positively or negatively. • Difficult to change indirects

45. Pricing Discretion • Direct can be some discretion but concern about selling on price • Indirect must have protecton in multi-channel situation • Who determines price, indirect or principal • Difficult to change indirects

46. Whose customer is it? • Direct can sign non compete, no poach agreement • Indirect has greater ownership of customer than does principal • Can you access customer on any subject or have you foregone that right

47. Setting goals and expectations • Direct should have clear goals agreed and close monitoring • Indirect should have clearly documented expectations, goals and division of tasks. What should be included? • Indirect goals may be with its management rather than reps:

48. Ethics in Selling • You are selling an expensive ($23.5M) piece fabrication line to a business in an African country where it is customary to show appreciation to the decision taker by contributing to his/her personal wealth. There are 4 other bidders, 2 from Western Europe, 1 from South Korea and 1 from Brasil. You have an in country agent who looks after customer relations. The agent requests a commission structure which is 3% above his normal rate and says that it will be OK if the price is raised 3%. He’s in the know and that is why you recruited him. What would you do?