CRAVENS PIERCY

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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

OFFICE DEPOTS SUCCESSFUL INTERNET STRATEGY

Using a seamless network, Web operations are integrated into Office Depots existing businesses.

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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 Depots online initiatives during the hiring process. Office Depots Internet-sourced sales have increased at double digit rates from $1 billion in 2000. The online business was profitable in its first year.
Source: Charles Haddad, Office Depots E-Diva, Business Week e.biz, August 6, 2001, EB22-EB24.

DESIGNING AND IMPLEMENTING SALES FORCE STRATEGY

A companys sales force

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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.

Sales Force Strategy

Determine the role of the sales force in promotion strategy

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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

Challenges in Selling and Sales Management

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Two sets of ethical dilemmas are of particular concern to sales managers. The first set is embedded in the managers 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 their subordinates, communicate them clearly, and enforce them vigorously.
Source: Mark W. Johnston and Greg W. Marshall, Sales Force Management, 7th ed., Burr Ridge, IL: McGraw-Hill/Irwin, 2003, 21.

Business and Marketing Strategy Influences on Sales Strategy

Business Strategy Promotion Strategy

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SALES STRATEGY
Pricing Strategy

Market Target(s) Strategy

Product Strategy Distribution Strategy

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Marketing productivity crisis

Escalating customer expectations

Intense global competition

SALES FORCE CHALLENGES

Mergers and acquisitions Technology Advances

Blurring of industry boundaries

Range of Personal Selling Roles

Transactional Selling

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Feature/Benefit Selling

Solution Selling

Value-Added Selling

DEFINING THE SELLING PROCESS

Finding Prospects

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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 todays 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

Sales Force Deployment

Size

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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
Simple product offering

Product/ MarketDriven design

Complex range of products

GeographyDriven design

ProductDriven design

Customer needs similar

Selecting an Organizational Design

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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?

Sales Force Size Example

40 35
Current level

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Sales

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

MANAGING THE SALES FORCE

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Finding and Selecting Salespeople Training/Development Management Control

Monitoring Directing Evaluating Rewarding

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 the sales force.
Salespeople were provided 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 the sales force and improve selling and product training.
Source: New Prescription: Its Rivals in Funk, Novartis Finds a Way to Thrive, The Wall Street Journal, August 23, 2002, A1 and A5.

The Swiss Drug Maker Novartis Strengthens Sales Force Capabilities

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SALES FORCE EVALUATION AND CONTROL

Performance Measures

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Performance Standards
Activities Focus of Management Control and/or Outcomes

REINVENTING THE SALES ORGANIZATION

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Customer Relationships

Performance Huddles

SALES MANAGER CHALLENGES

Sales Structure

Keeping 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

Promotional Medium

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Communication Tool

Value-Chain Channel

Separate Business Model

Deciding Internet Objectives

Creating Awareness and Interest Information Dissemination

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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

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5. Structure of the Organization

6. Alliance Partners

7. Shareholder Value
8. Tracking Performance
Source: J. F. Rayport and B. J. Jaworski, e-Commerce, McGraw-Hill/Irwin, 2003, 12.

Measuring Internet Effectiveness

Challenging but capabilities are developing.

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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

Catalogs

Electronic Shopping

DIRECT MARKETING METHODS

Direct Mail

Radio/Magazine/ Newspaper

Telemarketing

Television

Advantages of Direct Marketing

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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