Sales Management Course Summary and Review email: ggallagher@gmsproductions.com

1. Sales ManagementCourse Summary and Reviewemail: ggallagher@gmsproductions.com

2. Strengths and Weaknesses Personal Selling Strengths Interactive (questions can be answered and objectives overcome) Adaptive (presentations can be changed to meet customer needs) Complex arguments can be developed Relationships can be built because of personal nature Provides the opportunity to close the sale Personal Selling Weaknesses Sales calls are costly

3. Listening skills Follow up skills Ability to adapt Tenacity – don’t give up! Organisational skills Verbal communication skills Ability to interact with people at all levels of the organisation Ability to overcome client objections Closing skills (have to ask for the sale) Personal planning and time management skills Top 10 Success Factors in sales

4. Front line salespeople Major goal is to get customer to make a purchase Front line salespeople Requires many skills Identifying prospects Persuasion and negotiating Building new and profitable business Technical Support salespeople Provide support for frontline salespeople, part of the selling team Provide important decision making information Can be full time or as needed Merchandisers Retail and wholesale support Nationally negotiated deals Local advice on displays, stocking, sales promotions, etc. Order Getters

5. B2C – Business to Consumer Customer buying for their own use - personal Fast moving consumer goods (FMCG) – bought often, little thought into decisions – groceries, etc. Semi durable goods – clothing, shoes, jewelry (more time spent, purchase less often Durable consumer goods – cars, appliances, computers, considerable cost, more time spent researching, testing, deciding. B2B – Business to Business Larger, powerful buyers Buyers are skilled specialists who are charged with furthering corporate goals Long term negotiating - months or years in process B2C vs. B2B Sales

6. Determining salesforce objectives and goals Forecasting and budgeting Salesforce organisation, salesforce size, territory design and planning Salesforce selection, recruitment and training Motivating the salesforce Salesforce evaluation and control Role of Sales Management

7. Products have a limited life and product life cycles are being shortened due to technology Profits rise and fall at different stages. Products require different management strategies at each stage in the cycle Product growth stage may mean sales have to ration products In decline stage competitive or discount pricing may become more important Implications of the Product Life Cycle

8. Its relative advantage over other products or services in the marketplace The extent to which it is compatible with the existing values and potential needs of customers Its complexity in terms of how easily it can be used and understood by customers Its divisibility in terms of how it can be tried beforehand on some kind of test basis before a commitment is made to purchase Its communicability, which is the degree to which the innovation can be described or demonstrated prior to purchase (observation stimulates talk) Product Adoption Factors

9. The buying power of customers. Company must differentiate its products or services from competitors or offer a more competitive price Prices are constrained by what competitors charge To reduce price sensitivity, make the product more distinctive. Market-based pricing (as opposed to cost-based pricing) acknowledges that price represents value and not just costs. Inputs to Pricing Decisions

10. 1. The selection of distribution channels: Which distribution channels should goods and services be made available to the final consumer. (Long or short) Exclusive distribution vs. intensive distribution 2. Determining the level of customer service: Delivery periods and methods of transportation. Reduced delivery times can provide an advantage to a company, but may increase inventory levels and cost. 3. The terms and conditions of distribution: Conditions of sale on the part of distributors Minimum order/stocking quantities Credit, payment and discount terms for distributors. Distribution Decision Areas

11. Marketing and Sales Strategy • Salesforce strategy defines how marketing objectives will be achieved and the following may be considered: • Call rates • Percentage of calls on existing versus potential new accounts • Discount policy (the extent to which reductions from list prices is allowed) • Percentage of resources • Targeted at new versus existing products • Targeted at selling versus providing after-sales service • Targeted at field selling versus telemarketing • Targeted at different types of customer (e.g. high versus low potential) • Improving customer and market feedback from the salesforce • Improving customer relationships.

12. Sales Planning Process

13. PEST (EL) Analysis Political Factors Economic Factors Socio Cultural Factors Technological Factors Environmental Factors Legal Factors

14. Economic Interest rates Taxation changes Economic growth Inflation Disposable income Business cycles Bank Financing Exchange Rate Mechanism Incentives for Exports Restrictions for Imports For example: Higher interest rates may deter investment because it costs more to borrow A strong currency may make exporting more difficult because it may raise the price in terms of foreign currency

15. Legal Monopolies legislation Legislation Employment laws Environmental protectionlaws In recent years there havebeen many significant legal changes that have affected firms' behaviour. The introduction of age discrimination and disability discrimination legislation, an increase in the minimum wage and greater requirements for firms to recycle are examples of relatively recent laws that affect an organisation's actions. Legal changes can affect a firm's costs (e.g. if new systems and procedures have to be developed) and demand (e.g. if the law affects the likelihood of customers buying the good or using the service).

16. Objectives must be S.M.A.R.T. Specific Who or what is the focus of the effort and what needs to change Measurable Indicate a quantity such as a percentage change needed Achievable / Attainable / Appropriate Ensure the objectives are something the company is willing and able to accomplish Realistic / Relevant Given the company’s resources and the business environment is this realistic and relevant to your clients? Time-Related Should include a time limit: done by when? Statement of Objectives

17. Market potential is the maximum possible sales available for an entire industry during a stated period of time. Sales potential is the maximum possible portion of that market which a company could reasonably hope to achieve under the most favourable conditions. Finally, the sales forecast is the portion of the sales potential that the company estimates it will achieve. Sales forecast affects all operations (productions, etc.) Will be discussed in detail in Chapter 16. Determine Sales Forecasts

18. Objective: Maximise profits from established clients Strategy 1: Targeting / segmentation based on: Value (consumption levels, value of goods purchased) Customer preference (telephone/email ordering service, type of products/services purchased) Life stage (status of relationship between supplier and customer: active/lapsed/dormant customer/months since last purchase). At this point it is important that: Segments must be potentially profitable; Segments are not mutually exclusive; Segments are not stable. Hence, a consumer may fall into more than one segment or different segments at different times. If the segment requires a special effort to reach or appeal to it, then it must have sufficient potential purchasing power to justify the effort. Examples of Strategies

19. Proximity of the sales function to the marketplace places it in a unique position to contribute to the analysis of the current market situation facing the company. Sales is often well placed to contribute to the analysis of customer needs and trends in purchasing behaviour. Sales manager can also make a valuable contribution in terms of knowledge about competitors and their standing in the marketplace. This informational role of sales managers should not be ignored because, through the salesforce, they are ideally equipped to provide up-to-date, accurate information based on feedback from customers Market Situation Analysis

20. The promotional mix is made up of four major elements: Advertising Sales promotion Publicity/public relations Personal selling. To these traditional elements can now be added: Direct marketing Interactive/internet marketing. All six elements can contribute to company sales, but a decision has to be made on where to place the emphasis. This decision is made at the planning stage. The elements of the promotional mix work together to achieve company objectives. The Promotional Mix

21. Type of market: B2B vs. B2C marketing. Application of the marketing mix elements often differ (advertising and sales promotion more important in consumer marketing, personal selling more important to business buyers). Differences between B2B and B2C marketing stem from differences in buyer behaviour (FMCG/Capital). The ‘new’ promotional mix increasingly involves e-commerce (Internet) possibilities. In addition, the use of freephone facilities is also making communication easier and cost-free to the potential customer. Promotional Mix Decisions

22. Stage In The Buying Process: Advertising and publicity more cost effective in earlier stages Personal selling is more cost effective than other forms of promotional activity at the conviction and purchase stages. Promotional Mix Decisions

23. Push versus pull strategies – channel of distribution. A push strategy is one in which the focus of marketing effort is aimed at pushing the product through the channel of distribution. Ensure wholesalers and retailers stock the product. If they stock a product they will be active in ensuring that it is sold. Push strategy has a greater emphasis on personal selling and trade promotion. A pull strategy relies on advertising to promote the product to the final consumer. If sufficient consumer demand can be generated for a product they will ask retailers for the product. Retailers will then ask wholesalers for the product, who will contact the producer. The product is ‘pulled’ through the channel by creating consumer demand via assertive advertising. Promotional Mix Decisions

24. Promotional Mix Decisions

25. Fewer organisational buyers - 80% to 10-15 clients Close, long-term relationships between organisational buyers and sellers – large customers Organisational buyers are more rational Organisational buying may be to specific requirements Reciprocal buying may be important in organisational buying. May be more risky – not always known what will happen as products are usually more customised More complex – decisions need to be made across different levels of the organisation Negotiation is important – because of size, complexity and customisation of products. Professional buyers and sellers. Differences between consumerand organisation buying

26. Who buys? (Households/Orgs) 1. Initiator: the person who begins the process of considering a purchase. Information may be gathered by this person to help the decision. 2. Influencer: the person who attempts to persuade others in the group concerning the outcome of the decision. Influencers typically gather information and attempt to impose their choice criteria on the decision. 3. Decider: the individual with the power and/or financial authority to make the ultimate choice regarding which product to buy. 4. Buyer: the person who conducts the transaction: who calls the supplier, visits the store, makes the payment and effects delivery. 5. User: the actual consumer/user of the product.

27. The consumer decision-making process (buy phases)

28. Extensive problem solving: When a problem or need is new, there may be extensive problem solving required Salesperson builds good will by helping with the assessment of alternatives and providing information Limited problem solving: Usually repeat purchasing, experience with product Salesperson can expose clients to competitive products Automatic response: Companies try to move their clients to this type of buying Brand loyalty / advertising reinforcement Important factor is level of involvement with the purchase Important purchases, high risk, self image, social implications, provide pleasure In high involvement cases, salesperson must have the information client requires. How the Buying Situation affects decision making

29. Process - How: The organisational decision-making process

30. Influences On Organisational Purchasing behaviour

31. Influence on organisational buying behaviour - Buy Class New task - need for the product has not arisen previously so that there is little or no relevant experience in the company, and a great deal of information is required. Important for sales to be involved as early as possible to help build commitment and influence specifications Straight re-buy - previously purchased items from suppliers already judged acceptable. Routine purchasing procedures are set up to facilitate straight re-buys. Important to have no changes for client, any upset to routine may initiate analysis by the buyer Modified re-buy - regular requirement for product exists and the buying alternatives are known, but sufficient change has occurred to require some alteration of the normal supply procedure. Longer buying cycle and sales must make all resources available to assist client with analysis of the purchase

32. Purchase perceived as important when: Involves large sums of money Cost of making the wrong decision is high Considerable uncertainty about the outcome of alternative offerings. Many people at different organisational levels are likely to be involved in the decision and the process is likely to be long, with extensive search and analysis of information. Opportunities to convince buyers that your product offering has the best payoff Guarantees of delivery dates and after-sales service may be necessary when buyer uncertainty regarding these factors is high. Influence on organisational buying behaviour Importance of Purchase

33. A number of trends have taken place within the purchasing function that have marketing implications for supplier firms: Just-in-time purchasing (JIT) Centralised purchasing Systems purchasing Reverse marketing - buyer attempts to persuade the supplier to provide exactly what the organisation wants Leasing. Developments in purchasing practice

34. Developments in Purchasing Practice: Just-In-Time Purchasing Minimise stocks by organising a supply system which provides materials and components as they are required. Stockholding costs are significantly reduced or eliminated and thus profits are increased. Stock is seen as a cushion which acts as a disincentive to management to eliminate inefficiencies. Suppliers are evaluated on their ability to provide high-quality products. Buyers are encouraged to specify essential product characteristics, so suppliers have more discretion in product design and manufacturing. The supplier is expected to certify quality, so quality inspection at the buyer company is reduced and overall costs are minimised.

35. Purchaser takes the initiative in approaching new or existing suppliers and persuading them to meet their supply requirements. The implications of reverse marketing are that it may pose serious threats to uncooperative existing suppliers but major opportunities to responsive outside suppliers The growth of reverse marketing presents two key benefits to suppliers who are willing to listen to the buyer’s proposition and carefully consider its merits. First, it provides the opportunity to develop a stronger and longer-lasting relationship with the customer. Second, it could be a source of new product opportunities that may be developed to a broader customer base later on. Developments in Purchasing Practice: Reverse Marketing

36. Salesforce automation Laptops, smart phones, mobile telephones, fax, email Sales software (account planning), and recruitment, selection and evaluation of sales personnel Electronic data interchange (EDI) provides computer links between manufacturers and resellers Virtual sales offices Allows sales personnel to keep in contact with head office, customers and co-workers Cost and time savings Enhanced job satisfaction for salespeople Electronic sales channels Internet TV Shopping 3 Major Technological Forces affecting sales

37. The result of these forces is to change the role and operation of the traditional sales organisation from a focus on order-taking and order-making to strategic customer management which requires 3 activities: Intelligence gathering: enhancing knowledge of customers to add value to the relationship. Interfaces: refocusing salesforce efforts into the management and exploitation of critical interfaces (points of contact) that affect customer value (for example, with customer relationship management and key account management). Integration:bringing all the company’s activities and processes that affect customer value together into a single, integrated and sustained point of value delivery to customers through the sales person. Strategic Customer Management

38. Where sales take place. Involves two distinct activities: Logistics or physical distribution management (PDM): The effective and economic planning, implementation and control of the physical flow of materials in their unprocessed state through to finished goods from the point of origin to delivery to the end-consumer. Channels of distribution: the route that goods take through the selling process from supplier to customer. Sometimes the channel is direct, especially where goods sold are incorporated into a manufacturing process. Final goods might then be sold through a different channel. Distribution Channels

39. Characteristics of sales channels A manufacturer has the choice of one of four types of distribution: 1. Direct: the manufacturer does not use a middleman and sells and delivers direct to the end-customer. 2. Selective: the manufacturer sells through a limited number of middlemen who are chosen because of special abilities or facilities to enable the product to be better marketed. 3. Intensive: maximum exposure at the point of sale is needed and the manufacturer sells through as many outlets as possible. 4. Exclusive: the manufacturer sells to a restricted number of dealers.

40. Services vs. Products • Intangibility; • The difficulty of separating production from consumption as many services are consumed as they are produced • Services are not as ‘standard’ as products and are more difficult to assess (in terms of value) • It is not possible to ‘stock’ services (e.g. unsold hotel rooms) unlike products.

41. Sales Promotions • Sales promotions include techniques used as part of org’s marketing effort which can: • Encourage repeat purchases • Build of long-term customer loyalty • Encourage consumers to visit a particular sales outlet • Widening or increasing the distribution of a product or brand. • Sales promotions include: • Price reductions • Vouchers or coupons; • Gifts • Competitions • Lotteries • Cash bonuses

42. Trade Promotions • The aim is to push products through the channel towards the customer. Incentives are offered through extra rewards such as discounts, increased margins on sales, dealer competitions, exhibitions, provision of demonstrators and free holidays etc. • The objectives of retailer–distributor promotions are to: • achieve widespread distribution of a new brand; • move excess stocks onto retailers’ shelves • achieve required display levels of a product • encourage greater overall stockholding of a product • encourage salespeople at distributor levels to recommend the brand – particularly in the case of non-consumer products • encourage support for overall promotional strategy.

43. Exhibition Stands • The exhibition stand itself should have a number of elements: • 1. Products on show will depend upon the target market.. • 2. Literature should not be on a self-service display. • 3. Graphics should include at least a display board featuring the product literature. • 4. An office or interview room can take up a lot of expensive display space. • 5. Refreshment facilities on the stand are good attractors • 6. An area should be designated for storage of coats, briefcases, literature, materials, etc., to avoid clutter. • 7. An expensive, eye-catching stand can be a problem as it might attract visitors, but can be perceived affecting the price of products.

44. The public relations practitioner has to conduct activities that concern every public with which the organisation has contact. The specific nature of such groups will vary according to circumstances. Jefkins identifies seven basic publics: The community Employees Government The financial community Distributors Consumers Opinion leaders Public relations (PR)

45. Public relations (PR) PR is used in order to create a better environment for the organisation and its activities. Objectives may include: • Attract sales inquiries • Reinforce customer loyalty • Attract investors • Attract merger partners or smooth the way for acquisition • Attract better employees • Dissolve or block union problems • Minimise competitor advantage while you catch up • Open a new market • Launch a new product • Reward key people with recognition • Bring about favourable legislation

46. Sales responsibilities

47. Prospecting is the searching for and calling upon customers who, until now, have not purchased from the company. Sources of prospects: Existing customers (ask for referrals) Trade directories Enquiries (word-of-mouth, advertising, etc.) Press and Internet (advertisements and articles) Cold Calling (unannounced, without an appointment) 1. Prospecting

48. A salesperson may have to organise their own call plan, which involves dividing territory into sections to be covered day by day and deciding the best route to follow between calls. Often it makes sense to divide a territory into segments radiating outwards, which the salesperson’s home at the centre. Each segment is designed to be small enough to be covered by the salesperson during one day’s work. On average, only 20–30 per cent of a salesperson’s normal working day is spent face-to-face with customers. Another factor, which may be the responsibility of the salesperson, is deciding on call frequency. It is sensible to grade customers according to potential. For example, consumer durable salespeople may categorise the retail outlets they are selling to into A, B and C grades. 3. Self Management

49. Primarily this involves the relationships between salespeople and customers (discussed in Chapter 3). Another set of relationships that a salesperson must master in today’s complex selling environment are those between the salesperson and other people in their company who are vital to ensure a smooth sales process and efficient delivery and service of the product. Particularly with key accounts, selling is performed by a team of players (e.g. from engineering, production, marketing, finance and senior management). Key account managers must be able to manage these relationships both within their firms and between those players and members of the customer’s DMU. 6. Relationship Management

50. Misunderstandings regarding strategy can have grave implications. For example, the credibility of a premium price and high-quality position can be undermined by a salesforce eager to give large price discounts. The solution might be to decide discount structure at managerial level based on the price sensitivity of various market segments. Product’s positioning strategy would remain intact while allowing the salesforce some discretion. Successful implementation of strategy can mean the difference between winning or losing new accounts. An effective method of gaining an account in the face of entrenched competition is the diversion. The aim is to distract a rival into concentrating its efforts on defending one account (and therefore neglecting another). 7. Implementing Strategies