Chapter 14

Sales Force Strategies in the

Global Marketplace
Sales Management:
A Global Perspective
Earl D. Honeycutt
John B. Ford
Antonis C. Simintiras
 Sales Force Strategies in the Global Marketplace

• The Strategic Planning Process and the Sales

Function
– Small Businesses normally move through a series of evolutionary
stages in terms of formalized planning. The normal process
involves the following stages:
• Planning as a Luxury
• Budgeting
• Annual Planning
• Long-Range Planning
• Strategic Planning
 Sales Force Strategies in the Global Marketplace

• The Strategic Planning Process and the Sales

Function
– Planning as a Luxury:

• Most entrepreneurial companies begin with the assumption

that day-to-day survival is all-important.

• As a result, there is no perceived need for formalized planning.

• Planning requires time, which is considered a luxury.

 Sales Force Strategies in the Global Marketplace
• The Strategic Planning Process and the Sales Function
– Budgeting:
• Eventually there will come a time when an entrepreneur
realizes that he or she does not have the financial resources
that are needed to do what they feel is necessary.
• The first need for formalization therefore focuses on the
budgeting process where time must be taken to anticipate
financial needs so that proper amounts can be set aside when
the need arises.
• Eventually this leads to problems since the focus is on internal
assessments of future finances, neglecting an external
assessment of competitors and consumer needs.
 Sales Force Strategies in the Global Marketplace
• The Strategic Planning Process and the Sales Function
– Annual Planning:
• The annual marketing plan is the first serious attempt at
formalized planning and requires both internal and external
assessments.
• By the time that the firm is in a position to develop marketing
plans, it has probably grown considerably in size, and the plan
will incorporate components from different functional areas
within marketing.
• One of these key component areas would be the sales area.
• It is important to remember that plans are normally developed in
a hierarchy which stretches from the company as a whole down
to each of the separate functional areas operating within the firm.
 Sales Force Strategies in the Global Marketplace
• The Strategic Planning Process and the Sales Function
– Annual Planning:

• The marketing plan (or the sales plan embedded within it) will
normally contain the following elements:
– Goals
– Objectives
– Strategies
– Tactics
– Budgeting
– Controls
 Sales Force Strategies in the Global Marketplace
• The Strategic Planning Process and the Sales Function
– Annual Planning:
• Goals:
– The overall statements of where you want to be at a particular point
in time in the future.
– They must be stated in a way which is specific and quantifiable.
– They serve as benchmarks for performance, and if they are not
quantifiable, they cannot be used as benchmarks for performance.
– Saying that the firm wants to be “number 1” is of little value since it is
not clear how this position would clearly be measured. Is it based on
sales or units sold?
– Goals are statements of what you hope will realistically happen at the
end of the one-year period, and they allow ongoing comparisons
between what you expected to accomplish (the goals) and your actual
performance.
 Sales Force Strategies in the Global Marketplace
• The Strategic Planning Process and the Sales Function
– Annual Planning:
• Objectives:
– Objectives are similar to goals in that they are statements of where and
when; however, they are stated in terms of a variety of expectations
which are under the umbrella of the goal.
– While there is an over-riding goal statement, there are usually a series of
objectives that are complementary in nature.
– Suppose that the overall goal for the sales force is to increase sales by
20% over the next year. Typical objectives that would support the
overall goal would be such expectations as:
» Increasing customer satisfaction ratings by 10%.
» Reducing response time from 36 hours to 30 hours.
» Increasing time spent with A-level customers by 5% while
reducing time spent with C-level customers by 5%.
 Sales Force Strategies in the Global Marketplace
• The Strategic Planning Process and the Sales Function
– Annual Planning:
• Strategies:
– Strategies are the action plans that allow us to reach the goals
and objectives which have been set.
– They are the statement of how we are going to get where we
plan to go by the expected time of arrival.
– The strategies would involve such things as:
» Providing the sales force with laptop computers.
» Adding three sales people in Europe.
» Bringing sales people in for retraining in customer
relationship management.
» Introducing more efficient call reporting mechanisms.
 Sales Force Strategies in the Global Marketplace
• The Strategic Planning Process and the Sales Function
– Annual Planning:
• Tactics:
– Tactics are the day-to-day details that are part of the overall
strategies.

– They are the individual pieces of the action plan.

– The adding of three sales people in Europe from the previous

section would constitute a tactic.
 Sales Force Strategies in the Global Marketplace
• The Strategic Planning Process and the Sales Function
– Annual Planning:
• Budgeting:
– Budgeting involves the assessment of the financial/resource
needs of the firm for the coming period of time.
– Sales managers have to sit down and examine all possible
expenses for the sales function and present a budget to firm
management.
– There are four regularly used methods for setting budgets:
» All You Can Afford
» Percent of Past Sales
» Percent of Future Sales
» Objective and Task
 Sales Force Strategies in the Global Marketplace
• The Strategic Planning Process and the Sales Function
– Annual Planning:
• Budgeting:
– All You Can Afford:
» This method involves management telling the sales manager
just exactly how much money will be available for the sales
function.
» This is often seen in centralized, top-down structured
enterprises.
» Budgets are determined by top management and
apportioned as judged appropriate by senior management.
» A poor mechanism for setting sales budgets since it does
not consider the particular needs and expectations of the
sales function.
 Sales Force Strategies in the Global Marketplace
• The Strategic Planning Process and the Sales Function
– Annual Planning:
• Budgeting:
– Percent of Past Sales:
» This method is normally based upon historical evidence which
suggests that a particular percentage apportionment is
appropriate.
» Some firms simply allocate the same amount (as a % of past
sales) each year for the sales manager to use as needed.
» The rationale often used for this method is that the sales figures
were actual sales as opposed to projected sales, which may never
be reached.
» The flaw in the logic is that it should not be the sales themselves
which produce the sales budgets; it should be the sales budgets
which lead to the achievement of sales.
 Sales Force Strategies in the Global Marketplace
• The Strategic Planning Process and the Sales Function
– Annual Planning:
• Budgeting:
– Percent of Future Sales:
» This method is based on a sounder logic, and this is probably
the most-used mechanism for budget allocation is use today.
» The percentage which is utilized is usually based upon
industry standards.
» The main drawback to this type of budgeting is that industry
standards do not necessarily mean the best allocations. They
merely represent the collective wisdom of the industry and
can serve as an effective starting point for sales managers
when looking at expenses for the upcoming period.
 Sales Force Strategies in the Global Marketplace
• The Strategic Planning Process and the Sales Function
– Annual Planning:
• Controls:
– These involve mechanisms which would allow the sales manager to
monitor ongoing performance and take corrective action if necessary.
– Goals and objectives that are specific and quantifiable can serve as
effective benchmarks for performance.
– If there is a discrepancy between actual sales performance and
expected performance, then some kind of corrective action can be
taken to get things back on track.
– The type of control mechanism will depend upon the specific
goals/objectives that have been set. If we want to increase customer
satisfaction levels, we can use customer surveys for control. If we
want to increase the number of sales calls being made, we can use
salesperson call reports.
 Sales Force Strategies in the Global Marketplace
• The Strategic Planning Process and the Sales Function
– Long Range Planning:
• With this evolutionary step the time horizon is extended for
planning purposes.
• Annual planning is maintained while a longer-term perspective
is achieved through the long-range plan.
• Many firms begin by developing a 5-year plan, which is
written in more general terms than the annual plan.
• Looking at trends that are occurring outside of the firm is a
necessity here so that the firm will not be caught by surprise
by changes which can significantly affect performance.
 Sales Force Strategies in the Global Marketplace
• The Strategic Planning Process and the Sales Function
– Long Range Planning:
• An important component of long-range planning is the process
known as environmental scanning which involves careful
examinations of external trends.
• Environmental scanning should include the following types of
careful external assessments:
– Political changes
– Legal changes
– Economic changes
– Technological changes
– Societal changes
– Cultural changes
 Sales Force Strategies in the Global Marketplace
• The Strategic Planning Process and the Sales Function
– Strategic Planning:
• The most advanced stage is known as strategic planning.
• The previously mentioned components are all retained in the
strategic plan (budgeting, annual planning, and long-range
planning), but the strategic plan will add a significant amount
of information based upon an additional set of perspective
enhancing tools and techniques.
• Strategic planning enhances the chances of gaining competitive
advantage by systematically matching up the skills and abilities
of the firm with the opportunities in the marketplace.
 Sales Force Strategies in the Global Marketplace
• The Strategic Planning Process and the Sales Function
– Strategic Planning:
• The goal is to maximize the firm’s strengths while minimizing its
weaknesses.
• The only way for this to happen is through a thorough analysis of
not only the firm and its resources, but also the customers and
the competition.
• Strategies need focus and direction,, and when a firm gets to this
stage, it needs a better mechanism for developing its
marketing/sales plan.
• Strategic focus is aided greatly by the development of:
– Mission statement
– Vision statement
 Sales Force Strategies in the Global Marketplace
• The Strategic Planning Process and the Sales Function
– Strategic Planning:
• The mission statement is the statement of what the company is in
business for.
• It conveys valuable information not only about what the company
does, but it also tells what the company does not do.
• Annual and long-range plans are written under the umbrella of the
mission statement to maintain consistency and focus.
• The vision statement is a more recent addition to the strategic
planning literature.
• It is a statement of where management would like to see the firm
move in the future.
• It should be written under the limitations of scope established by the
mission statement.
 Sales Force Strategies in the Global Marketplace
• The Strategic Planning Process and the Sales Function
– Strategic Planning:

• An overview of the tools and techniques that help in the

development of effective strategic sales plans are found in
Figure 14-1.
 Sales Force Strategies in the Global Marketplace

• The Strategic Planning Process and the Sales Function

– Strategic Planning:
• Decision Support System:
– This refers to the intelligence gathering and storing mechanism for
use in the strategic planning process.
– For the sales function this would involve systematic input from field
sales people on what is happening in their territories, internally
generated reports (e.g., sales to quota reports, new account
generation forms, etc.), outside secondary studies (e.g., A.C. Nielsen
reports, Euromonitor reports, etc.), and relevant primary data studies
(e.g., customer satisfaction surveys, perceptual mapping studies,
etc.).
– There has to be an effective mechanism that will allow the collection
of this information, storage, and dissemination when it is needed.
 Sales Force Strategies in the Global Marketplace

• The Strategic Planning Process and the Sales Function

– Strategic Planning:
• Situational Assessment:

– This is a detailed report of what is actually happening in the

various markets served by the company and why.

– This report looks at the customers served, the competitors,

market dynamics, environmental factors which affect the market,
company sales, profits and costs.
 Sales Force Strategies in the Global Marketplace

• The Strategic Planning Process and the Sales Function

– Strategic Planning:
• Competitor Assessment:

– A detailed competitor assessment helps to strengthen the

situational assessment.

– The best model ever devised for this type of assessment is the
Five Forces Model that was developed by Michael Porter at
Harvard, which has been adapted for the sales function in Figure
14-2.
 Sales Force Strategies in the Global Marketplace

• The Strategic Planning Process and the Sales Function

– Strategic Planning:
• Core Competency Assessment:
– This involves an identification of what the company does that is not easily
duplicated by someone else.
– When examining the sales function in particular, the sales manager must
look at the entire functional area to see where distinctive competencies
may lie.
– One way that a competency might be achievable is in ensuring the highest
value for the customer.
– Distinctive competencies could lie in:
» A brand name which is highly valued by the customer.
» A delivery system that outperforms the competitors.
» Long-term relationships which provide exceptional value for the
customer.
 Sales Force Strategies in the Global Marketplace

• The Strategic Planning Process and the Sales Function

– Strategic Planning:
• Contingency Planning:
– This involves the development of a series of alternative responses to
particular occurrences in the market.
– What is deadly for a company is to have something happen which was
not anticipated.
– Should this happen, the company is often forced to stop, step back and
assess the situation, and then develop a strategic response to what has
happened.
– If history teaches companies anything, it is that a delay of this kind
could be disastrous.
– In order to avoid this possibility, the sales manager must look at a bare
minimum of three scenarios: 1) best case, 2) worst case, and 3) status
quo (if things continue as they have been).
 Sales Force Strategies in the Global Marketplace

• The Strategic Planning Process and the Sales Function

– Strategic Planning:
• SWOT Analysis:
– This is an attempt to assess the company’s strengths, weaknesses,
opportunities and threats.
– The previous tools and techniques discussed all add valuable
information that can be effectively used in this type of analysis.
– For the sales manager, strengths and weaknesses would be assessed by
examining the sales force and the various support mechanisms
available for them.
– When assessing opportunities and threats, the sales manager has to
consider the probability of certain things happening.
– Looking at the information generated by the situational analysis and
the assessment of the future in contingency planning provide an
excellent basis for estimating the probabilities of future occurrences.
 Sales Force Strategies in the Global Marketplace

• The Strategic Planning Process and the Sales Function

– Strategic Planning:
• SWOT Analysis:
– The sales manager must also be careful to consider both short-
term as well as long-term effects of possible changes in policies
and practices.
– Once this type of analysis is thoroughly done, then the sales
manager is in a much stronger position to develop meaningful
annual plans and long-range plans that are strategically focused.
– Strategic planning really is a perspective enhancing process.
– It provides the sales manager with all of the information to make
appropriate decisions and enhance the chances of gaining a
competitive advantage.