Part I

THE BIG PICTURE

Chapter 2:

Strategy and Sales Program Planning

Learning Objectives

Describe the major elements of business strategy.

State the basic elements of strategic marketing.

Explain what is meant by strategic implementation process decisions.

Describe the purpose of a sales force program and lists its major elements.

Tell What is an account relationship strategy is and explain its purpose.

Chapter Outline

Business Strategy and Marketing Strategy. Factors Influencing Strategic Management. Business Strategies. Go to Market Strategy. Product Development Management (PDM). Supply Chain Management (SCM). Customer Relationship Management (CRM). Sales Force Program Decisions.

BusinessStrategy

BusinessStrategy

MarketingStrategy

MarketingStrategy

LEVEL 1Top ManagementDecisions

Figure 2-1 The Sales Force Decision Sequence

Structure

Competencies Leadership

LEVEL 3Sales ForceProgramDecisions

Sales Process

ActivitiesAccount Relationship

Strategy

Go-to-MarketStrategy

Supply Chain Management (SCM)

CustomerRelationship

Management (CRM)LEVEL 2StrategyImplementationDecisions

Product DevelopmentManagement

(PDM)

Efficiency & Effectiveness Efficiency - getting the most output

from the least amount of inputs “doing things right” concerned with means Effectiveness - completing activities so

that organizational goals are attained “doing the right things” concerned with ends Effectiveness and efficiency are

interrelated and sometimes overlapped.

Business Strategy:

Business Strategy involves defining and articulating an overall business mission, developing specific business goals, and designing a strategy for achieving these goals.

BUSINESS STRATEGY:

The factors influencing the strategic management planning process are depicted in Figure 2-2.

Figure 2-2: Factors Influencing Strategic Management

Distinct competencies Marketing Financial Technology Information

Distinct competencies Marketing Financial Technology Information

Environmental constraints Legal & regulatory Demographics Economic Conditions Technology Competitive conditions Sociocultural factors

Environmental constraints Legal & regulatory Demographics Economic Conditions Technology Competitive conditions Sociocultural factors

Strategic ManagementPlanning

Strategic ManagementPlanning

Resources Financial R&D Personnel Brand Equity Production

Resources Financial R&D Personnel Brand Equity Production

Firm’s historymanagement culture

Firm’s historymanagement culture

Business Mission:

A well-defined business mission provides a sense of direction to employees and helps guide them toward fulfillment of the firm’s potential. The basic character of an organization's business is defined by the three Cs—customers, competitors, and the company itself.

Top managers should ask, “What is our business?” and “What should it be?” A business mission statement should include information regarding (1) the types of customers it wishes to serve,(2) the specific needs to be fulfilled, and (3) the activities and technologies by which it will

fulfill these needs.

Establishing Goals:

the organization’s goals—specific objectives by which performance can be measured. These objectives are usually stated in terms of profits, sales revenue, unit sales, market share, survival, and social responsibility.

Measurable organizational goals must be communicated down the organizational structure.

0

10

70

60

50

40

30

20

29.8% 31.9%

66.1%

7.7%14.0%

7.8%

BuildingBrand of

Company/product

Enhancingcredibility

of companyproduct

Increasingsales/

revenue

Investorrelations

Savingcosts

Other

What Goals are Most Important to You?

Strategies:

A strategy is the means an organization uses to achieve its objectives.

all successful businesses focus on creating superior customer value by achieving one of the following market positions: low cost, differentiation, or a niche.

MARKETING STRATEGY:

Marketing strategy is the set of integrated decisions and actions a business undertakes to achieve its marketing objectives by addressing the value requirements of its customers.

Marketing strategy is concerned with decisions related to market segmentation and target marketing, as well as development and communication of a positioning strategy.

Segmentation and target marketing 1- targeting : Target marketing refers to

the selection and prioritizing of segments to which the company will market.

or to decide where or for whom to go to sell your product and its involve two steps :Selecting your markets , and set priorities .

2- segmentation: Market segmentation involves aggregating customers into groups that (1) have one or more common characteristics, (2) have similar needs, and (3) will respond similarly to a marketing program.

Positioning

3- Positioning: occur in the mind of the customer and refers to

how the customer perceive us versus our competitors .

-Some of the fundamental questions that customers ask about brands are:

(1) Who are you? (brand identity); (2) What are you? (brand meaning); (3) What do I think or feel about you? (brand

responses); (4) What kind of association and how much of a

connection would I like to have with you? (brand relationships).

STRATEGIC IMPLEMENTATION DECISIONS: (level 2)

Its require cross functional cooperation and coordination , and in its sales executives work with top executive from ( marketing , operation , engineering , customer service departments ) in making these decisions .

Strategic implementation decisions refer to a set of processes that organizations will develop to create customer value and achieve a competitive advantage.

STRATEGIC IMPLEMENTATION DECISIONS: (level 2) ==The fundamental decisions that most

companies will have to make with respect to these level 2 processes include: (1)How will customers be accessed? (Go-to-Market Strategy)

An essential set of activities must be performed in order to attract and retain customers. A go-to-market strategy defines who will perform these activities and for which customers.

The process for determining a go-to market strategy consists of answering the four major questions shown in Figure 2-5.12

1. What is the best way to segment the market?

2. What are the essential activities required by each segment?

3. What group of go-to-market participants should perform the essential activities?

4. Which face-to-face selling participants should be used?

Steps in Developing a Go-to-Market Strategy

Segmenting the Market:

Customer segments and go-to-market strategies will vary depending on the products old. Adult diapers and baby diapers are very similar in how they are manufactured, but they have very different go-to-market strategies. Most adult diapers are sold in bulk to nursing homes via distributors, and with very little advertising. Most baby diapers are sold at retail with massive advertising support.

Customer characteristics commonly used to segment a market for purposes of developing a go-to-market strategy include, but are not limited to, the following:

Segmenting the Market:

• Industry What business is the customer in? • Size What is the revenue size of the

customer? How many employees? What is the sales potential?

• Geography Where is the customer located? Does the customer have global operations?

• Behavior Who are the key decision markers? What are their adoption tendencies? Does the customer currently use our product? A competitor’s product? Does the customer buy centrally for all its plant locations?

Sales Process Activities

Sales Process Activities: The sales process activities consist

of all the activities needed to serve a customer properly.

Figure 2-6 Essential Activities

Interest Creation

Purchase

Pre-PurchasePost-Purchase

Interest Creation Activities

It include all the ways that the customers can learn about the benefit of the product and the company:

Prospecting. Generating leads. Creating awareness and interest. Providing information.

Pre-Purchase

In this phase customers are actively considering and evaluating competitive product and service offerings:

Explaining features and benefits. Qualifying prospects. Assessing customers needs. Cooperating in problem solving. Demonstrating company and product

capabilities.

Purchase

Negotiating. Bidding. Finalizing terms and conditions. Writing Proposals.

Post-Purchase

Delivery. Installation. Servicing of products. Addressing customers questions. Providing information about new

features. Collecting payments.

Go-to-Market Participants

Go-to-Market Participants: The combination of go-to-market

participants that is most appropriate for each customer segment and type of essential activity will depend on a number of factors, including cost, efficiency, and effectiveness. The efficiency of a marketing instrument refers to its ability to generate customer contacts for the money spent. On the other hand, the more results created from the number of customers contacted, the more effective the marketing instrument is.

Direct SalesForce

Direct SalesForce

AgentsDistributors

Retailers

AgentsDistributors

RetailersIntegratorsIntegrators AlliancesAlliances

AdvertisingPromotionDirect Mail

AdvertisingPromotionDirect Mail

Tele-marketing

Tele-marketing InternetInternet

Direct Indirect

Non-Sales Force OptionsSales Force Options

CompanyCompany

Customers and ProspectsCustomers and Prospects

Figure 2-7 Potential Go-to-Market Participants

Figure 2-8 Comparing Various Go-to-Market Alternatives

Advertising

Direct Mail

Internet

Telemarketing

Sales Force

Effectiveness

Efficiency

High Salesper Exposure

Low Costper Exposure

Various Go-to-Market alternatives Advertising and Promotion.

Advertising and promotion consists of instruments such as broadcast media, magazines, trade publications, newspapers, and direct mail. Telemarketing. Telemarketing refers to customer contacts utilizing telecommunications technology for personal selling without direct, face-to-face contact.

Various Go-to-Market alternatives Internet. “Today we notice that trying to

get our customers to purchase through the Web has not worked. But we do know that buyers will make their purchasing decisions because of the Internet.

Face-to-Face Selling Alternatives.. Should the selling be performed by a direct company sales force, a selling partner, or some combination? The main outsourcing options available to most companies are agents, resellers, integrators, and alliances.

Various Go-to-Market alternatives Independent Sales Agents. Independent sales agents are not employees, but rather

independent businesses given exclusive contracts to perform the selling function within specified geographic areas. Unlike distributors, they take neither ownership nor physical possession of the products they sell and are always compensated by commission.

Resellers. Resellers are channel members, retailers, and distributors, who take title to the offerings they sell to end-users.

(they market their supplies offering to their own customers ) Integrators. Set solutions for complicated problems that

end customer face (powerful buying influence with complex choice )

Alliances. An increasingly popular alternative for accessing markets is to establish an alliance with another organization in a joint venture to sell products to specific markets.

Product Development Management (PDM)

Product Development Management is the process of developing, producing, and marketing new product offerings.

Supply Chain Management (SCM)

Supply Chain Management is the integration and organization of information and logistics activities across firms in a supply chain for the purpose of creating and delivering goods and services that provide value to customers.

Customer Relationship Management (CRM) It is a comprehensive set of

processes and technologies for managing relationships with potential and current customers and business partners.

Successful CRM efforts depends on a combination of people, processes, technology, knowledge, and information.

SALES FORCE PROGRAM DECISIONS: A sales force program is a tool for

planning how the sales force will perform its role in achieving the firm’s objectives.

Figure 2-12 Sales Force Program

Marketing Objectives, Strategy, andStrategy Implementation Program

Marketing Objectives, Strategy, andStrategy Implementation Program

Account Relationship StrategyAccount Relationship Strategy

Desired Selling Actionsand Behaviors

Desired Selling Actionsand Behaviors

Organizational StructureOrganizational Structure

Competency Development ProgramCompetency Development Program

Leadership SystemLeadership System

Estimates of salespotential and sales forecast

Estimates of salespotential and sales forecast

Estimates of sales forcesize and budget

Estimates of sales forcesize and budget

Feedback

Account Relationship Strategy:

A firm’s account relationship strategy refers to the type of relationship it intends to develop with its customers.

this decision determines which customers can be profitably served because it calls for very different levels of investment into customer relationships.

Account relationships may take a variety of forms, each having major implications for the sales force with respect to recruiting and selection, compensation, necessary competencies, and behaviors.

Types of Account Relationship: 1-A transactional relationship

is one in which the relationship is based on the need for a product of acceptable quality, competitively priced, and a process and relationship convenient for the buyer.

it is usually based on a personal relationship between individual buyers and sellers.

Types of Account Relationship: 2- Consultative Relationship. A

consultative relationship, a quite common relationship in industrial markets, is based on the customer’s demand and willingness to pay for a sales effort that creates new value and provides additional benefits outside of the product itself.

-get very close to the customer and to intimately grasp the customer’s business issues.

2- Consultative Relationship the sales force attempts to create value

for the customer in three ways: • Helping customers understand their

problems and opportunities in a new or different way

• Helping customers develop better solutions to their problems than they would have discovered on their own

• Acting as the customer’s advocate inside the supplier’s organization, ensuring the timely allocation of resources to deliver customized or unique solutions to meet the customer's special needs.

3-Enterprise Relationship. An enterprise relationship is one in

which the primary function is to leverage any and all corporate assets of the supplier in order to contribute to the customer’s strategic success.

-To achieve successful enterprise relationships, the supplier must deliver exceptional customer value while also extracting sufficient value from the relationship.

Just to remember ??!

A critical mistake is to assume that more investment in the customer relationship will automatically create a better relationship with improved results. It turned out, however, that most customers simply didn’t want advice or help. They needed packaging material, pure and simple, and that’s all they were prepared to pay for.

Investmentby

Supplier

Investment by Customer

Transac

tional

Relatio

nship

Consulta

tive

Relatio

nship

Enterpris

e

Relatio

nship

Figure 2-13: Alternative Types of Account Relationships