CRAVENS PIERCY PIERCY 8/e McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.

13-2 Chapter Thirteen Sales Force, Internet, and Direct Marketing Strategies McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.

13-3  Sales Force Strategy  Internet Strategy  Direct Marketing Strategies SALES FORCE, INTERNET, AND DIRECT MARKETING STRATEGIES

13-4 OFFICE DEPOT’S SUCCESSFUL INTERNET STRATEGY  Using a seamless network, Web operations are integrated into Office Depot’s existing businesses.  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 Depot’s online initiatives during the hiring process.  Office Depot’s Internet-sourced sales have increased at double digit rates from $1 billion in The online business was profitable in its first year. Source: Charles Haddad, “Office Depot’s E-Diva,” Business Week e.biz, August 6, 2001, EB22-EB24.

13-5 A company’s sales force 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. DESIGNING AND IMPLEMENTING SALES FORCE STRATEGY

13-6 Sales Force Strategy Determine the role of the sales force in promotion strategy 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

13-7 Challenges in Selling and Sales Management Two sets of ethical dilemmas are of particular concern to sales managers. The first set is embedded in the manager’s 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, 7 th ed., Burr Ridge, IL: McGraw-Hill/Irwin, 2003, 21.

13-8 Business and Marketing Strategy Influences on Sales Strategy SALES STRATEGY Business Strategy Market Target(s) Strategy Promotion Strategy Distribution Strategy Pricing Strategy Product Strategy

13-9 Blurring of industry boundaries Technology Advances Mergers and acquisitions Marketing productivity crisis Escalating customer expectations Intense global competition SALES FORCE CHALLENGES

13-10 Range of Personal Selling Roles Transactional Selling Feature/Benefit Selling Solution Selling Value-Added Selling

13-11 DEFINING THE SELLING PROCESS Finding Prospects Opening the Relationship Qualifying the Prospect Presenting the Sales Message Closing the Sale Servicing the Account Source: Mark W. Johnston and Greg W. Marshall, Sales Force Management, McGraw-Hill/Irwin, 2003,

13-12 As radical change sweeps through today’s 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.

13-13 The Selling Process Guides  Recruiting  Training  Effort Allocation  Organizational Design  Selling Support Activities

13-14 Selecting Sales Channels to Value Chain Members and End Users Major Account Management Field Sales Force Telemarketing Electronic/Mail Contact

13-15 DESIGNING THE SALES ORGANIZATION Organizational Structure Deployment of Selling Effort

13-16 Sales Force Deployment  Size 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

13-17 Customer needs different Product/ Market- Driven design Market-Driven design Simple product offering Complex range of products Product- Driven design Geography- Driven design Customer needs similar Alternative Designs

13-18 Selecting an Organizational Design  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 $ millions Number of salespeople Selling expense Gross profit contribution Current level Maximum profit contribution level Sales Force Size Example

13-20 MANAGING THE SALES FORCE  Finding and Selecting Salespeople  Training/Development  Management Control Monitoring Directing Evaluating Rewarding

13-21 The Swiss Drug Maker Novartis Strengthens Sales Force Capabilities 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  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: It’s Rivals in Funk, Novartis Finds a Way to Thrive,” The Wall Street Journal, August 23, 2002, A1 and A5.

13-22 SALES FORCE EVALUATION AND CONTROL Performance Measures Performance Standards Activities Focus of Management Control and/or Outcomes

13-23 REINVENTING THE SALES ORGANIZATION SALES MANAGER CHALLENGES Customer Relationships Applying Technology Performance Huddles Customer Channels Keeping Score Sales Structure Coaching Internal Relationships

13-24 INTERNET STRATEGY Strategy Development Internet Objectives E-Commerce Strategy Value Opportunities and Risks Measuring Effectiveness The Future of the Internet

13-25 Internet Strategy Alternatives Promotional Medium Communication Tool Value-Chain Channel Separate Business Model

13-26 Deciding Internet Objectives  Creating Awareness and Interest  Information Dissemination  Obtaining Research Information  Brand Building  Improving Customer Service

13-27 DESIGNING THE STRATEGY 1.Customer Groups Targeted 2.Value Proposition 3.Communications Strategy 4.Designing the Website 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.

13-28 Measuring Internet Effectiveness Challenging but capabilities are developing. 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

13-29 DIRECT MARKETING Kiosk Shopping Catalogs Direct Mail Electronic Shopping Radio/Magazine/ Newspaper Television Telemarketing DIRECT MARKETING METHODS

13-30 Advantages of Direct Marketing  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