B2B Advertising

The Role of Advertising 1.Integrated Communication Programs. 2.Enhancing Sales Effectiveness. 3.Increased Sales Efficiency. 4.Creating Awareness. 5.Interactive Marketing Communications.

Advertising Cannot Substitute for effective personnel selling. Advertising alone cannot create product preference.

Advertising is only one aspect of the entire marketing strategy. The advertising decision process begins with the formulation of advertising objectives. Equally important is the evaluation and selection of the media. The Decision Stages for Developing the Business-to- Business Advertising Program

Setting Ad Budgets: Commonly Used Methods Percentage of Sales Allocate some percent of sales to advertising. Makes advertising a consequence rather than a determinant of sales and profits. Useful only if possess VALID historical data Most commonly used method

Setting Ad Budgets: Commonly Used Methods Affordability Method Firm spends on advertising what it has available to spend Good cash flow control Most common with small firms Sales drive the advertising

Objective-Task Method An attempt to relate advertising costs to the objective it is to accomplish. Focuses on the communications effects of advertising, not on the sales effects. Generally considered the “best” method. Setting Ad Budgets: Commonly Used Methods

Developing the B2B Advertising Message Determine advertising objectives. Evaluate the buying criteria of the target audience. Analyze the most appropriate language for presenting the message.

Developing the Message Perception Focus on Benefits Understanding Buyer Motivations

Organizing the Sales Force

Typical Methods of Organizing the Sales Force Line Organizations (& Line/Staff) Functional Organizations Centralized vs. Decentralized Organizations Specialization Organization –Sales Activities –Geographic Areas –Products –Customers

A Simple Line Organization

A Two-Level Line Organization

Line Organizations Characteristics –Authority/responsibility for planning/implementing sales activities lie in hands of sales manager. –Each person has only one boss.

Line Organizations Advantages –Very simple to understand and use. –Easy to trace accountability. –Relatively inexpensive (only a few highly-paid executives are necessary) –Quick action possible since decision-making is in hands of relatively few people.

Line Organizations Disadvantages –As organization size increases, problems become more complex. –Specialized skills often needed. –Many sales managers cannot keep on top of all functions that relate to sales. –Lack of trained replacements.

Line Organizations Implications –Best used by small organizations where operations can be clearly divided into basic functions of sales, finance, and production.

Line and Staff Organizations Characteristics –Same as line organization except staff positions added –Staff positions don’t have authority over line positions Advantages –Staff provide sales manager with specialized skills –Allows sales manager to be more efficient/ effective. –Doesn’t dilute his/her authority/contact w/salespeople.

A Line & Staff Organization

Line and Staff Organizations Disadvantages –Can be more expensive than a line organization. –Conflicts may arise between line & staff executives. –Staff executives may attempt to exert authority over line personnel. –Line executives may ignore the counsel of the staff

Line and Staff Organizations Implications –If sales managers find themselves spending less time working with subordinates and more time performing planning & evaluating functions, may want to consider this organization

Functional Organizations Characteristics –Organization divided by function. –Functional specialists have line authority. –Salespeople report to multiple bosses. Advantages –Specialist ensure their functions are carried out. –Should improve performance in each functional area due to the specialization.

A Functional Organization

Functional Organizations Disadvantages –Breakdown in the unity of command due to conflicting orders –Each salesperson is no longer accountable to only one boss Implications –Typically used in large firms that feature numerous functions and that have the need for several specialists.

Centralized vs. Decentralized? Factors That Influence Costs –Decentralized can be expensive due to duplication –Expenses increase as the numbers at each location increase in terms of specialists, inventory, and service facilities –Can offset with lower delivery costs, greater customer satisfaction or a higher sales volume.

Centralized vs. Decentralized? Factors That Influence Size of Sales Force –As sales force size increases, the need to decentralize increases. –Span-of-control problems emerge –More field managers will be necessary –Decentralization more feasible

Centralized vs. Decentralized? Factors That Influence Geographic Size of Market –As size of market grow geographically, need for decentralization increases –More difficult to efficiently/effectively supervise sales activities from central location –Sales expenses increase; such as transportation, lodging, and meals –Supervisors have less opportunities to work with individual salespeople

Organizing by Sales Activities Characteristics –Usually employ simple line organizations –Separate selling functions (present account maintenance and new account development) Advantages –Allows salespeople to become proficient in their respective sales functions. –Places special emphasis on searching out and selling new accounts.

Line Organization Structured by Sales Activities

Organizing by Sales Activities Disadvantages –Customers may resent being turned over to a different salesperson. –Salespeople may want to cultivate the accounts they have developed.

Organizing by Sales Activities Implications –Use when there is a large turnover of customers –Use when there is a significant difference in the skills needed in each separate area –Use when fast growth through new account acquisition is deemed necessary

Organizing by Geographic Areas Characteristics –Sales force is reorganized on a geographic basis –Salespeople sell all the company’s present products to all customers within their assigned territories

Line Organization Structured by Geographic Area

Organizing by Geographic Areas Advantages –Salespeople and managers become more familiar with their territories –Local problems may be solved more quickly –Sales force can rapidly react to changes in the local competitive environment –Can provide better service at lower cost –Lower chance for customer confusion

Organizing by Geographic Areas Disadvantages –Diversity/magnitude of product line may limit salesperson’s knowledge of any one product –Duplication of overhead expense –Greater level of salesperson control (which products to push, which customers to service) Implications –Best used if product line is relatively homogeneous –Best used if customers are widely dispersed

Organizing by Products Characteristics –Sales force is reorganized on a product basis –Salespeople specialize in particular products carried by the sales organization

Sales Force Organized by Products

Organizing by Products Advantages –Each product line receives a higher degree of specialized attention –Allows for decentralization of both authority & responsibility for each product line –Allows decisions to be made closer to the problems with any particular product line

Organizing by Products Disadvantages –If specialization occurs above salesperson level, additional overhead expense may be suffered. –More than 1 salesperson may be calling on customers –Difficult to maintain a consistent image

Organizing by Products Implications –Best used if product line is relatively heterogeneous –Best used if have a wide variety of customers with quite different needs –Best used if products are technically complex –Broad, in-depth knowledge of product essential for the sales task

Organizing by Customers Characteristics –Sales force is reorganized on a customer basis –Salespeople specialize in selling to/ servicing particular customer types

Sales Force Organized by Customers

Organizing by Customers Advantages –Most consumer oriented approach –Organization of sales force is based on customer needs –Control remains at the management level (which customers to call on, etc) –Allows salespeople to specialize in customer needs

Organizing by Customers Disadvantages –Potential for overlapping territories is high –Hence, overhead costs may rise –Salespeople must become knowledgeable about company’s entire line of products

Organizing by Customers Implications –Customers in a given market buy several different products/lines from single supplier –Same buying factors apply across product lines –Significant proportion of income is derived from a small number of accounts who require high service levels