Sales Management

Slides: Sales Management Module 1 · Book: Jobber and Lancaster, Chapter 1

This chapter sets up the whole course. It asks what selling is, what a modern salesperson actually does all day, what makes someone good at it, and where selling sits inside marketing. Get these ideas straight and the later chapters (planning, buyers, settings, international) are applications of them.

What is selling

The slides define selling as responding to a consumer's needs and wants through planned, personalized communication in order to influence purchase decisions and ensure satisfaction. It is worth reading that slowly, because each word is doing work. Selling is not "talking people into things." It starts from a need the customer already has, and it ends with the customer being satisfied, not just having paid.

The book adds the history. Selling used to be seen as a low-status job for smooth talkers, and the "hard sell" gave it a bad name. That image is out of date. Modern selling is a professional activity: salespeople are trained, work with customer data, and are judged on the long-term value of the relationships they build rather than the number of orders they take this week.

Strengths and weaknesses of personal selling

Personal sellingOne person talking to one customer, face to face or by phone, to make a sale.Its strengths are interaction and adaptability; its weakness is cost. A sales visit costs far more than an email. means one person communicating directly with one customer, face to face or on the phone. Compared with advertising, it is both the mostMission, Objective, Strategy, Tactics: the planning process from the general to the specific.The book's acronym for the same idea as GOSPA. powerful and the most expensive way to communicate, and the two facts are connected: everything that makes it powerful is a person's time.

The practical consequence: personal selling is used where the sale is worth the cost of a person's time, which is why it dominates in business-to-business markets and for expensive or complex consumer products, and why cheaper media do the work for a bar of chocolate.

Characteristics of modern selling

Figure 1.1 in the book lists six things a modern salesperson does. Notice that "take the order" is not one of them. The order is the result; these six are the work.

Success factors for salespeople and sales managers

The book's Table 1.2 ranks ten factors that make a salesperson successful. The ranking matters: listening comes first, and closing, the skill people associate most with selling, comes ninth. Good selling is mostly finding out what the customer wants.

1. Listening skills. Hearing what the customer actually needs, not what you expected them to say.
2. Follow-up skills. Doing what you promised after the meeting: sending the quote, checking the delivery, calling back.
3. Ability to adapt sales style from situation to situation. A hospital buyer and a corner-shop owner need different approaches.
4. Tenacity: sticking to the task. Most sales take several contacts. Giving up after the first no loses the sale.
5. Organisational skills. Planning calls, territories and time so that effort goes where the business is.
6. Verbal communication skills. Explaining clearly, in the customer's language.
7. Proficiency in interacting with people at all levels of an organisation. From the receptionist who controls access to the director who signs.
8. Demonstrated ability to overcome objections. Treating "it is too expensive" as a request for information, not a refusal.
9. Closing skills. Knowing when and how to ask for the order.
10. Personal planning and time management skills. Time with customers is the scarce resource; everything else should protect it.

The slides add a memory aid from a Forbes article, S E A. Sincerity: listen without an agenda; the conversation is about the customer's needs, not yours. Ethics: do not try to talk someone into something; listen to what they actually want. Asking: serve the customer by asking questions that help them make a wise buying decision. Win-win relationships are built by remembering that it is about what the other person wants.

Table 1.3 lists what makes an effective sales manager. A sales manager runs the salesforce rather than selling directly, so most of the list is about managing people:

Types of selling

"Salesperson" covers very different jobs. The book sorts them by what the salesperson does about demand: do they take orders that would have come anyway, do they create demand without taking orders, or do they go out and win new business?

Why the classification matters: each type needs different people, different training and different pay. A delivery salesperson is paid for reliability; a new-business salesperson for persistence and persuasion. A company that manages them the same way gets neither.

Selling and the marketing concept

The marketing conceptThe idea that a business succeeds by finding out what customers need and satisfying it better than competitors, rather than by selling what it happens to make.Companies moved from production orientation, to sales orientation, to marketing orientation. Selling is one part of the marketing programme. is the idea that a company succeeds by finding out what customers need and satisfying those needs better than competitors, rather than by making something and then finding ways to sell it. The book describes it as the biggest change in business thinking: companies moved from a production orientation (make it well and it will sell), through a sales orientationRunning the company around what you have made: produce it, then push sales to move it.The order is production, sales, customers. Emphasis on the seller's needs. (make it, then pushAiming marketing effort at the channel: get wholesalers and retailers to stock the product, and they will sell it on.Relies on personal selling and trade promotion. hard), to a marketing orientationRunning the company around what customers need: find out first, then produce, then sell.The order is customers, production, sales. Emphasis on the customer's needs. This is the marketing concept in practice. (find out what they want, then make it). Figure 1.3 shows that the difference is simply the order of the boxes.

Under sales orientation, production comes first and the salesforce's job is to move whatever was made; the emphasis is on the seller's needs. Under marketing orientation, the customer comes first: research finds the need, production makes what meets it, and selling completes a match that already fits. The emphasis is on the customer's needs, and selling becomes easier because the product was designed to be wanted.

Adopting the marketing concept changes how a company is organised, and Figure 1.9 shows how. In a sales orientated company the sales director reports to the managing director and marketing services (advertising, research, public relationsPlanned communication from an organisation to its publics to build or protect its image.Not free advertising, not propaganda, not publicity. Its publics include the community, employees, government, the financial community, distributors, consumers, opinion leaders and the media.) sit underneath sales. In a marketing orientated company a marketing director takes that seat, the sales manager reports to marketing, and marketing services sit alongside sales as an equal. Selling is not demoted; it is placed inside a function that starts from the customer.

Marketing becomes a senior function, and selling becomes one part of the marketing mixThe four things a company decides: product, price, place (distribution) and promotion.Personal selling sits inside promotion. Sales strategy must fit the other three., the four things a company decides: product, price, place (distribution) and promotion. Personal selling sits inside promotion, alongside advertising, sales promotionTemporary offers that increase interest or demand: price cuts, coupons, gifts, competitions, cash bonuses.Consumer promotions pull; trade promotions push; salesforce promotions motivate the sellers. and public relations. The company also starts to think in terms of market segmentationSplitting a market into groups of customers with similar needs, so each can be served differently.Targeting is choosing which segments to go after. and targeting, dividing the market into groups with similar needs and choosing which to serve, and of the product as a package of benefits rather than features. Theodore Levitt's line makes the point: "purchasing agentsA firm or person who obtains orders on behalf of an exporter for a commission; the exporter remains the principal.The most common form of overseas representation. Must be chosen, trained and treated as a partner. do not buy quarter-inch drills, they buy quarter-inch holes." A salesperson who sells the hole, the solution, sells better than one who describes the drill.

The product life-cycle

One marketing idea matters so much for selling that the slides carry the figure. Most products follow a pattern over time in sales and profit, the product life-cycleThe pattern most products follow: introduction, growth, maturity, decline.Profit turns positive after introduction, peaks in maturity before sales do, and shrinks under competition. Advertising matters most early; personal selling matters more as the market matures., and what the salesforce should do changes with the stage.

Two cautions from the book: not every product follows the curve (many fail at introduction), and the stages have no fixed length. The point for selling is that the promotional mixThe blend of advertising, personal selling, sales promotion and public relations a company uses.Its balance depends on the type of market, the step in the buying process, push versus pull, and the life-cycle stage. shifts: advertising and sales promotion do most of the work in introduction and growth, while personal selling has to work harder as the market matures and declines and each sale has to be fought for.

Relationship between sales and marketing

Selling does not set its own direction. Marketing strategy sets the objectives for personal selling; those objectives decide how the salesforce is organised; and that organisation decides how salespeople are recruited, trained, paid and evaluated. Figure 1.10 shows the chain.

Table 1.4 makes the link concrete. A company decides, for each product, whether it wants to build it, hold it, harvest it or divest it. Each of those strategic marketing objectives implies a sales objective and a sales strategy, right down to how often salespeople should call and on whom:

Read across a row and you see the logic: a product being built justifies expensive prospecting for new customers; a product being harvested does not, so the salesforce stops prospecting and drops small accounts to cheaper channels. The same salesperson, selling the same product, should behave differently depending on the strategy.

The slides end with Figure 1.11 on getting the salesforce to buy in to a marketing strategy. Four things help: objectivity and rational persuasion (explain the strategy with evidence, not orders), sensitivity and responsiveness to reality (listen to what the field says about customers), involvement in strategy creation (salespeople who helped write it will sell it), and positioning for success (set the salesforce up so the strategy can work). A strategy handed down from head office and ignored in the field is not a strategy.

Slides: Sales Management Module 2 · Book: Jobber and Lancaster, Chapter 2

Chapter 1 said that marketing strategy sets the direction for selling. This chapter is about how that strategy is made, what the sales function contributes to making it, and how a sentence in a boardroom plan becomes something a salesperson does on Monday morning. The book's opening point: sales activities only work inside an overall strategic marketing plan. Without one, sales effort competes with the rest of marketing instead of complementing it.

GOSPA

GOSPAGoals, Objectives, Strategies, Projects, Actions: a planning method that links what the organisation wants to what each person does today.Each level is the means to the one above it. The slides' version of the book's MOST. is a planning and performance-management method. Its purpose is alignment: making sure that what the organisation wants at the top is connected, step by step, to what each team does day to day. It stands for Goals, Objectives, Strategies, Projects, Actions, and it is read from the top down. Each level answers "how?" for the level above it.

The value of the framework is that any action can be traced upward. If a salesperson cannot say which project, strategy and objective a task serves, the task probably should not be done. The book's own version is MOST: mission, objective, strategy, tactics, again from the general to the specific.

The planning process book only

The book explains planning with a central heating system. You set the temperature you want (objectives). You decide what has to happen to reach it (operations). You install and arrange what is needed (organisation). You switch it on (implementation). You read the thermometer (measuring results against standards). And when the room is too hot or too cold, the thermostat corrects it (re-evaluation and control). Planning is a loop, not a line: the last step feeds the first.

Building a marketing plan follows a set of logical steps, even though every real situation is different.

The sales function in planning

Planning needs accurate, timely information, and no part of the company is closer to the market than the salesforce. Salespeople talk to customers every day and see competitors' moves first. So the sales function contributes at four points in the planning cycle, not just at the end when the plan has to be executed.

Inside-out versus outside-in planning

A plan is only worth anything if it changes what people do. Two models shape how organisations approach marketing planning, and they start from opposite ends.

For a sales manager the difference is practical. Inside-outPlanning that starts from the company's own objectives, capabilities and resources.The classical, financially driven approach. Structured but less customer-oriented than outside-in. gives the salesforce a number to hit. Outside-inPlanning that starts from the customer: cost per sale by segment (current, lapsed, prospect, new), then targets and tailored strategies for each.Customer-oriented and increasingly favoured. tells the salesforce which customers to spend time on, and why.

Advertising and selling are complementary

A common view among sales managers, especially in industrial markets, is that money spent on advertising is money that should have gone to the salesforce. The evidence contradicts it. Advertising and selling do different jobs, and the relationship should be coordinated, not competitive.

What advertising does for the salesperson in an industrial market: it builds the corporate reputation and the product's credibility, so the salesperson does not arrive as a stranger; it creates awareness among prospective clients, which makes the first call easier; it explains a new product's features before the sales contact, so the visit can go straight to the customer's questions; and it generates leads through return coupons and other response mechanisms, so the salesperson calls on people who have already shown interest.

The book's numbers make the case. Given adequate frequency, advertising can reduce the overall cost of selling to customers who have seen it by up to 30 percent. Conversely, a company that does not advertise, selling to customers who have seen its competitors' advertising, may find its selling costs raised by as much as 40 percent. The practical rule: salespeople should use the advertising themes in their own presentations, so the customer hears one consistent message, instead of treating advertising as a rival for budget.

Push and pull book only

The book's chapter also covers the promotional mix, the blend of advertising, personal selling, sales promotion and public relations a company uses, and what decides the balance: the type of product market, the step the buyer has reached in the buying process, the stage in the product life-cycle, and whether the company runs a push or a pull strategyAiming marketing effort at the final consumer so they ask for the product, and demand pulls it back through the channel.Relies on advertising. Consumers ask retailers, retailers ask wholesalers, wholesalers ask the producer.. Push and pull come back in Chapter 4 under sales promotions, so learn them here.

A push strategy aims the marketing effort at the channel of distribution. The idea is that if wholesalers and retailers can be persuaded to stock the product, they will in turn make sure it is brought to the final customer's attention. So a push strategy leans heavily on personal selling and trade promotion: salespeople calling on the trade, discounts and incentives for stocking.

A pull strategy aims at the final consumer instead, relying on advertising to create awareness and interest. If enough consumer demand is created, consumers ask retailers for the product, retailers ask wholesalers, and wholesalers ask the producer. The product is pulled through the channel by demand at the far end. Most companies use both, in different proportions; a new consumer brand launched with heavy television advertising is running pull, while the salesforce persuading supermarkets to give it shelf space is running push.

From strategies to tactics

Planning works when a broad goal is translated into a clear chain: objective → strategy → tactics. The objective says what outcome is wanted. The strategy says the approach. The tactics say who acts, when, and what they do in response to day-to-day market conditions. The slides give three worked examples:

Look at what the tactics have in common: each one is a concrete change to how salespeople spend their time or what they are paid for. Territory design, incentive systems and the amount of autonomy a salesperson has are all tactical levers, and they determine whether the strategy happens. A strategy without effective tactics fails, however good it looks on paper.

Slides: Chapter 3 · Book: Jobber and Lancaster, Chapter 3

You cannot sell well without knowing how the buyer decides. A salesperson who understands the steps a customer goes through, who else is involved, and what the customer is weighing can put the right information in front of the right person at the right moment. Consumers and organisations decide differently, so the chapter treats them separately, then looks at what has changed in how organisations buy, and finishes with relationship management.

How organisational buying differs from consumer buying

An organisational buyer is a person buying on behalf of a company, hospital, school or government department. The slides list eight differences from a consumer buying for themselves. Each one changes what the salesperson has to do.

Two organisational tools the slides define belong to this rational way of buying. Value analysisA systematic review of design, production and purchasing to cut a product's total cost without hurting its function.Cheaper components, standard parts, less cycle time, automation. is a systematic review of how a product is designed, made and bought in order to cut its total cost: designing to looser tolerances where they do not matter, switching to lower-cost components, standardising parts across product platforms, shortening production cycle time, and automating to strip labour cost out. Life-cycle costsEverything an asset will cost its owner over its life: purchase, later investment, yearly running costs, less what it sells for at the end.Buyers who think this way will pay more up front for lower running costs. are everything an asset will cost its owner over its life: the initial investment, future investments, and annual running costs, minus what it sells for at the end (the salvage value). A buyer who thinks in life-cycle costs will accept a higher price for a machine that is cheaper to run, and a salesperson who can show that arithmetic sells the dearer machine.

Consumer buyer behaviour

An understanding of customers can only be obtained by answering five questions: who is important in the buying decision, how do they buy, what are their choice criteriaThe factors a buyer uses to judge and compare alternatives.Economic (performance, reliability, price), social (status, belonging) and personal (how the product fits the buyer psychologically)., where do they buy, and when do they buy. The rest of the consumer half of the chapter answers the first three.

Who: the buying centre

Even a consumer purchase can involve several people. The book's example is a family buying a car: the child who wants one starts the process, a friend who knows about cars influences the choice, one parent decides, another may pay, and the whole family uses it. The people involved form a buying centreEveryone in an organisation who takes part in a buying decision. Also called the buying centre.Bonoma and Webster's six roles: initiators, users, deciders, influencers, buyers, gatekeepers., and each plays one or more roles.

The book's warning is that the salesperson must identify the roles and sell to each accordingly. A car salesperson who spends the whole visit talking to the teenager who wants the car, while the parent who will pay stands to one side unconvinced, has talked to the initiator and ignored the decider.

How: the decision process

Between evaluation and selection sits the evaluation system, Figure 3.2. It explains how a comparison turns into a decision.

Take a consumer choosing a car. Their evaluative criteria are the things they judge on: fuel economy, safety, price, looks. About each car they form beliefs: "this one is safe but thirsty." The beliefs, weighted by how much each criterion matters to them, add up to an attitude toward each car, an overall liking or disliking. The strongest attitude becomes an intention to buy. A salesperson can work on any link in the chain: change a belief (show the safety test results), change the weight of a criterion (stress that safety matters more than looks when children are in the car), or add a criterion the customer had not considered.

What criteria

Choice criteria are the various attributes and benefits a consumer uses when evaluating products and services. They can be economic, social or personal.

The salesperson needs to find out which criteria this customer is using and sell on those, not on the ones the salesperson happens to find interesting. Three groups of factors affect how the process runs and which criteria dominate: the buying situation, personal influences and social influences.

Factors affecting the consumer decision-making process

The buying situation

How much effort a consumer puts into a decision depends on how new, expensive and uncertain the purchase is. Howard and Sheth identified three levels, and Figure 3.3 links them to the level of purchase involvement.

Personal influences

A second group of factors concerns the psychology of the individual: their personality, motivation, perception and learning. For the salesperson the most practical of these is personality, because it affects how the buyer wants to be treated. Buzzotta, Lefton and Sherberg's dimensional model of buyer behaviour classifies buyers on two axes, dominance and warmth, giving four quadrants and a selling approach for each.

The idea behind the model is that the salesperson should adapt rather than use one style for everyone. A dominant buyer wants to feel in control and will not respect a salesperson who folds; a submissive buyer will be frightened off by pressure. A hostile buyer has to be won over before any product talk will land; a warm buyer will happily chat and needs steering toward a decision.

Brand personalityThe human-like character a brand is given so that people feel something about it.Aimed at an emotional response in a chosen segment. belongs here too. It is a framework that helps a company shape the way people feel about its product, service or mission: the brand is given human characteristics (Coca-Cola as happy and sociable) so that a chosen consumer segment feels an emotional response to it and acts on it. The slides add a contextual note that applies to every buyer type: during an economic recession consumers become more price-sensitive and postpone discretionary purchases, so the same buyer will behave differently in a downturn.

Social influences

The third group of factors comes from the people around the consumer.

LifestyleThe pattern of living shown in a person's activities, interests and opinions.Used to segment consumers into groups such as young sophisticates or penny-pinchers. is the pattern of living as expressed in a person's activities, interests and opinions. Researchers use it to group consumers into segments with descriptive names. The slides' list: young sophisticates, home-centred, traditional working class, middle-aged sophisticates, Coronation Street housewives, self-confident, homely, and penny-pinchers. Each segment reads different media, shops in different places and responds to different appeals, so lifestyle groups are a practical way to target promotion.

Organisational buyer behaviour

To understand how an organisation buys, the book says you need to answer three questions, and it uses them to organise the whole topic.

Structure: who takes part

An essential point is that the buyer, or purchasing officer, is often not the only person who influences the decision, or who actually has the authority to make the ultimate decision. The people involved form the decision-making unit, or DMU. Bonoma and Webster identified six roles in it: initiators, users, deciders, influencers, buyers and gatekeepersPeople who control the flow of information to the decision-makers, such as a secretary or a purchasing officer who screens suppliers.A salesperson who cannot get past the gatekeeper never reaches the decider.. The first five match the consumer buying centre. The sixth, the gatekeeper, is new: someone who controls the flow of information, such as a secretary who decides which salespeople get an appointment, or a purchasing manager who decides which suppliers' brochures reach the engineers. A salesperson who cannot get past the gatekeeper never reaches the decider, and one who mistakes the buyer for the decider may win the buyer over and still lose the order.

The book's practical advice: for a new taskA purchase the customer has no previous experience of.Longest process, most people involved, most information needed. purchase the DMU is large and the salesperson must identify and reach every member; for a straight re-buyBuying the same goods on the same terms from the same supplier.Routine. The in-supplier's job is to make it easy; the out-supplier's job is to disturb it. it may shrink to the buyer alone. Selling to the DMU also means the sales message must be adjusted for each role. Engineers want technical performance, production managers want reliable delivery, the finance director wants the price and the payback.

Process: the buy phases

The pattern of information getting, analysis, evaluation and decision-making is the organisational decision-making process. Robinson, Faris and Wind described it as seven buy phases.

Two ideas ride on this process. The first is creeping commitmentThe way a buying organisation becomes gradually tied to one supplier through that supplier's early involvement and technical help.Get in at phase one and the later phases lean your way.: as the buying organisation moves through the phases it becomes increasingly committed to a particular supplier through that supplier's involvement in the process and the technical assistance it provides. A salesperson who helps write the specification in phase 2 is very hard to remove by phase 5. The lesson is to get in early, because a supplier who arrives at phase 4 is competing on price against a rival who has already shaped the decision. The second is the financial leaseA long-term lease that pays off the whole value of the asset over the contract; total payments usually exceed the purchase price.Contrast an operating lease, which is shorter and cancellable., one of the order routines a buyer may choose: a longer-term arrangement that is fully amortised over the term of the contract, with lease payments that in total usually exceed the purchase price of the item. It spreads the cost and can make an expensive purchase affordable, which is why salespeople offer it.

Content: the choice criteria

This aspect of organisational buyer behaviour refers to the choice criteria used by members of the DMU to evaluate supplier proposals. The slides list six.

The last two are why "organisations are rational" is only mostly true. The salesperson's task is to find out which criteria matter to which DMU member and to show how the proposal meets them, in the buyer's own terms.

Factors affecting organisational buying

Three factors shape how an organisation buys in a given case, and therefore how the salesperson should approach it. Figure 3.6 puts them together.

The buy class

Buy classes are buying situations distinguished by four characteristics: newness of the problem to the decision-makers, the number of alternatives to be considered, the uncertainty inherent in the buying situation, and the amount of information needed to make a buying decision. Robinson, Faris and Wind identified three.

The product type

Products can be classified according to four types. Materials to be used in the production process, such as steel, and components to be incorporated in the finished product, such as an alternator, are product constituents: they become part of what the organisation sells. Capital plant and equipment, and products and services for maintenance, repair and operation (MROsProducts and services for maintenance, repair and operation: spanners, welding equipment, lubricants.One of the four product types with materials, components and capital plant.: spanners, welding equipment, lubricants), are production facilities: they are used to make the product but do not become part of it. The type affects who is involved and how carefully they buy. Capital equipment involves senior management and engineers and is bought rarely and slowly; MROs are bought routinely by the purchasing department.

The importance of the purchase

A purchase is likely to be perceived as important to the buying organisation when it involves large sums of money, when the cost of making the wrong decision (for example lost production) is high, and when there is considerable uncertainty about the outcome of alternative offerings. The more important the purchase, the more people are involved, the longer it takes, and the more the salesperson must do to reduce the buyer's sense of risk.

Developments in purchasing practice

A number of trends have taken place within the purchasing function that have marketing implications for supplier firms. Each one changes what a supplier has to be good at.

The TQM figure on the slides shows three levels. Quality control checks products after they are made and rejects the bad ones. Quality assurance designs the processes so that bad products are not made in the first place. Total quality management extends that thinking to the whole company: every department, every employee, every supplier. A buyer that has reached the third level will only deal with suppliers who have too.

Relationship management

Relationship management is a strategy in which an organisation maintains an ongoing level of engagement with its audience, business to business (B2B) or business to consumer (B2C). It aims to create a partnership between the organisation and its patrons instead of viewing the relationship as merely transactional. The slides' CRM diagram puts the customer at the centre with sales, marketing, service, orders, analysis, strategy and support all organised around them.

Buyers increasingly treat trusted suppliers as strategic partnersTwo businesses that team up so both reach their goals, each keeping its independence.Uber and Spotify; Grameenphone and Upay. Buyers increasingly treat trusted suppliers as strategic partners.. Simply put, a partnership you create with another business with the goal of helping you both achieve your goals, while each remains independent. The slides' examples: Uber and Spotify (passengers with premium Spotify accounts play their own music in Uber cars), and Grameenphone and Upay. The book's example is the car industry: Honda, Toyota and Daimler Chrysler tell existing suppliers about a better outside offer and give them 18 to 24 months to match it before switching. Such partnerships are a strong barrier against competitors, which is why suppliers work so hard to become one.

For the salesforce this has two consequences. Some companies appoint customer relationship managers whose whole job is one relationship. More reorganise the salesforce around key accounts, so that the biggest customers are served by a team rather than by whichever representative covers their territory. The book's caution: relationship management is expensive, and small firms may not have the resources to make it work, so it is not the right strategy for every customer or every supplier.

Slides: Chapter 4 · Book: Jobber and Lancaster, Chapter 4

A sales setting is the situation you sell in: who the customer is, what is being sold, and through what route. The same salesperson would work very differently selling steel to a factory, biscuits to a supermarket chain, or insurance to a family. The chapter starts with the forces changing every setting, then walks through the settings themselves (channels, industrial, resale, services), then the activities that support selling: sales promotions, exhibitions and public relations.

Environmental and managerial forces that impact on sales

The book groups the forces changing selling into three: behavioural (what customers do), technological (what tools exist) and managerial (how companies respond). Together they explain why the salesperson's job has moved from taking orders to managing customers.

Behavioural forces

Technological forces

Managerial forces

Strategic customer management

These forces have changed the role of an organisation, and of its salesperson, from order taker to order getter. In the contemporary view selling is a core function when it is integrated with marketing in designing and implementing CRM strategies. Strategic customer managementTreating selling as a core, cross-functional process built on three things: intelligence, interface and integration.The shift from order taker to order getter, with sales integrated into CRM strategy. rests on three things.

Sales channels

A sales channelThe route goods take from supplier to customer.Direct when sold straight into the customer's process; indirect when sold to a wholesaler or agent. is the route that goods take through the selling process from supplier to customer. Marketing channels are determined by company policy, and this determines how the salesforce should be organised, so channel management is a key role of the sales manager. A direct sales channel is where goods are sold direct to the customer to be incorporated into a manufacturing process, or used or consumed. An indirect sales channel is where a manufacturer sells to a wholesaler or agent, who then breaks the bulkAn intermediary buying in large quantities and selling on in small ones.The basic job of a wholesaler.: buys in large quantities and sells on in smaller ones to retailers or users.

Why would a manufacturer give away margin to a middleman? Because the middleman does things the manufacturer cannot do cheaply: hold stock close to customers, sell small quantities to many small buyers, offer a range from several manufacturers in one place, and give credit. The longer channel costs margin but saves selling and distribution cost.

LogisticsGetting the right amount of the right product to where demand is: order processing, materials handling, warehousing, inventory control, transportation, packaging.Also called logistics. It starts from the customer and works back to the source of supply., or physical distribution management (PDM), is the science of business logistics whereby the proper amount of the right kind of product is made available at the place where demand for it exists. Logistics means the effective and economic planning, implementation and control of the physical flow of materials from source to end consumer. It conventionally starts with customers and works back to the original source of supply: decide what service the customer needs, then design the chain that delivers it.

Appraising sales channels

When selecting or reappraising channels, the company must take into account seven factors.

Whatever channel is chosen, a manufacturer also chooses how widely to distribute. There are four types.

Industrial, commercial and public authority selling

A number of characteristics in these types of markets distinguish them from consumer markets: fewer customers, concentrated markets (often geographically, around an industry), complex purchasing decisions and reciprocal trading. Chapter 3 covered the buying side. What the seller must also understand is the customer's type of production, because it decides what is bought, in what quantities and how often.

Selling for resale

Selling to retailers is a setting of its own, because the retailer is not the final user and judges the product by whether it will sell and what margin it leaves. The seller needs to know the seven different types of retail outlet.

FranchisingThe franchisor licenses a franchisee to run a business under its name and system, for a fee and royalties.A vertical marketing system. Manufacturer to retailer (car dealers), manufacturer to wholesaler (soft-drink concentrate), wholesaler to retailer (SPAR), service firm to retailer (fast food). is an arrangement where the franchisor (one party) grants or licenses some rights and authorities to the franchisee (another party). It is a well-known marketing strategy for business expansion: the franchisor grows without funding every outlet, and the franchisee gets a proven business. McDonald's, Domino's, KFC, Pizza Hut and Subway are the examples. There are four common forms.

Franchising arrangements have a common set of processes. The franchisor offers expert advice on such matters as location, finance, operational matters and marketing. The franchisor promotes the image through national or international advertising, so the franchisee starts with a known brand. Many franchisors run a purchasing system where franchisees buy at favourable rates through the franchisor's buying power. The franchisor provides initial and continuing training. And the franchisee pays for all this with a franchise fee and a royalty, usually a percentage of sales.

Selling services

In Britain the service sector has grown tremendously over recent years, so much so that it is now primarily a service rather than a manufacturing economy. Public services have become more marketing orientated and accountable. Due to the abstract nature of services they are hard to sell, so service providers must be highly trained in sales techniques and negotiations, the image of the service organisation is also important, and trust is essential in services marketing. You cannot inspect a haircut or a holiday before you buy it, so you buy the provider's reputation.

The book gives five special characteristics of services, each of which makes selling harder.

Because of these characteristics, services marketing adds three Ps to the usual four (product, price, place, promotion).

Sales promotions

A sales promotion is a marketing strategy in which a business uses a temporary campaign or offer to increase interest or demand in its product or service: price reductions, vouchers or coupons, gifts, competitions, lotteries, cash bonuses. Its objectives are the encouragement of repeat purchases, building long-term customer loyalty, encouraging consumers to visit a particular sales outlet, building up retail stock levels, and widening or increasing the distribution of a product or brand. Promotions are aimed at three audiences.

Exhibitions

Exhibitions are related to sale settings, and their objective is to build up goodwill and preparation for future sales rather than to take orders on the spot. At a simple level event management concerns activities that promote the organisation, and is often an excuse to provide hospitality to customers. Corporate hospitalityEntertaining clients at sporting or public events to promote business.Seats or a box at a Test Match. A form of exhibition and event activity. is the entertaining of clients by companies in order to promote business, especially at sporting or other public events, such as a box at a test match. Conferences can be sponsored to reflect the interests of the sponsoring company and provide a more serious forum for participants.

A trade exhibition stand works when it displays a full range of products, particularly large items that cannot be demonstrated by a travelling representative; when it is always staffed by personnel who do not spend time conversing with colleagues; when the staff are well informed and approachable; when there is seating and an office on the stand; when there are refreshments for visitors; when staff do not use mobile telephones in public while on duty; and when they spend time with potential and known customers, making future appointments and filtering away time-wasters and freeloaders.

The book's model of the exhibition communication process starts from the product. Every product has a unique sales propositionThe one feature or benefit that makes a product different from every competing brand.Death Wish Coffee sells the world's strongest coffee while others claim the smoothest. (USP): the one feature or perceived benefit that makes it unique from the rest of the competing brands, the reason for buying this one rather than that one. Different types of product need different strengths of communication to get the USP across, and the book calls these strengths communication strataThe different strengths of communication needed to convey a USP, from the written word up to seeing the product under extreme test.Exhibitions sit near the strong end, which is why they suit products that must be seen working., from the weakest (the written word) up to the strongest (seeing the product under extreme test). Exhibitions can deliver the strong end, because the visitor can see the product working and try it, which is why they suit large, technical or novel products whose USP cannot be conveyed in a brochure.

Exhibitions must be conducted according to specific objectives, and the book lists four in descending order of ambition: sell the product from the stand, arrange to quote, get permission to phone for a follow-up interview, get permission to send further information. Visitors are attracted before the event by direct mail, telephone, a personal sales call, or an advertisement in the technical or trade press, and at the event by a buffet, give-aways, advertising material, films and seminars.

Public relations

PR is short for public relations and refers to the strategic communication from an organisation to the public to maintain or cultivate public image and respond to public discourse. The publics are every group whose opinion matters to the organisation: the community, employees, government, the financial community, distributors, consumers, opinion leaders and the media. PR is also defined by what it is not: it is not free advertising (it is not bought space and cannot be controlled), it is not propaganda (it must be truthful) and it is not publicity (publicity is one tool it uses).

The objectives of public relations show how wide its reach is: attract sales inquiries, reinforce customer loyalty, attract investors, attract merger partners or smooth the way for acquisition, attract better employees, minimise competitor advantage while you catch up, open a new market, launch a new product, reward key people with recognition, bring about favourable legislation, change perceptions about the company, and alter the image that the company projects about itself.

Effective PR depends on three things: setting specific objectives that are capable of evaluation, fully integrating the PR function into the organisation, and selecting the right personnel to carry it out. A PR manager needs personal integrity, communication skills, organisational ability, a strong personality, team play and sound judgement. External PR can be bought from freelance writers and consultants, the PR department of an advertising agency, a PR subsidiary of an advertising agency, or independent PR consultants who usually specialise in a class of business.

Slides: Chapter 5 · Book: Jobber and Lancaster, Chapter 5

This chapter widens the lens from one market to the world. It asks why countries trade at all, why an individual firm goes abroad, how culture changes the sale, how to organise for it, and how price, tariffsA tax a government charges on goods coming in from abroad.Ad valorem (percentage of value), specific (per unit) or compound (both). Raises the price of imports and protects home producers. and partnerships work across borders. The lecturer's deck goes further into economics and trade policy than the book does, so those parts get full treatment here.

Balance of payments and balance of trade

The balance of paymentsA country's record of all economic transactions with the rest of the world over a period, usually a year.Three accounts: current, capital and financial. They always sum to zero. (BOP) is a systematic record of the economic transactions between the residents of one country and the rest of the world during a specific period, usually one year. It tells us how money is coming into and going out of a country through international economic transactions. It is built from three accounts.

The three accounts always sum to zero, because every transaction has two sides. If a country buys more from abroad than it sells, the difference has to be paid for somehow, and the payment shows up as foreigners acquiring the country's assets. In the slides' example a current account deficit of $40 billion is balanced by a financial account surplus of $40 billion: the country is using capital inflows to finance its imports and investments.

The balance of tradeExports of goods minus imports of goods.A deficit is not automatically bad if the imports are machinery and technology that raise future capacity. A surplus is not automatically good if it reflects weak demand at home. is narrower: only the goods line, exports of goods minus imports of goods. A deficit means imports exceed exports; a surplus means the reverse.

Is a trade deficit always bad? No. A trade deficit may occur because the country is importing machinery, technology, raw materials and capital equipment, and these imports may increase future productive capacity: the country is buying the means to produce and export more later. Similarly, a trade surplus is not automatically good if it reflects weak domestic demand or insufficient investment, a country that exports because its own people cannot afford to buy.

The book adds the British context. Britain has imported more physical goods than it exported for over a century; the gap was covered by invisible exports, the earnings of the City of London, shipping and tourism. When invisibles stopped keeping pace with the visible deficit, the overall balance went into deficit. That is why the book treats selling overseas as a national as well as a company concern: every export sale helps the balance.

Absolute and comparative advantage

Why do countries trade at all, rather than each making everything it needs? Two ideas answer that. A country has an absolute advantageBeing able to produce something with fewer resources than another country.Bangladesh making 100 shirts per worker against Austria's 70. when it can produce a product using fewer resources, or at a lower cost or more efficiently, than another country. Comparative advantageBeing relatively better at something, measured by opportunity cost, even if another country is better at everything.Each country should specialise where its opportunity cost is lower; then both gain from trade. Ricardo's theory of comparative costs. is based on opportunity costWhat you give up to produce something: the other thing you could have made instead.Comparative advantage is about opportunity cost, not raw productivity., not simply productivity: a country should specialise in the products for which it has the lower opportunity cost, the products it gives up least to make.

In the slides' example Bangladesh has an absolute advantage in shirts, because one worker makes 100 shirts against India's 70. India has the absolute advantage in computers. But look at opportunity cost. For Bangladesh, one computer costs 10 shirts of lost production; for India it costs only 3.5 shirts. So India is relatively better at computers and Bangladesh relatively better at shirts. If Bangladesh specialises in shirts, India specialises in computers, and they trade, both end up with more of both than if each tried to make both. That is Ricardo's theory of comparative costs, and it holds even when one country is better at everything, because "better at everything" still leaves it relatively best at one thing.

Why firms go international

Countries trade because of comparative advantage; firms go abroad for more concrete reasons. The slides give ten.

The book's own list overlaps and adds a few. A product may simply be unavailable at home: Britain cannot grow rubber, so it imports it. Product differentiation means Britain both imports and exports cars, because buyers want different cars. Firms export to counter recession at home, to use spare production capacity, to sell products that are obsolete in the home market but wanted elsewhere (the book's example is flypaper), and to gain economies of scale that also let them cut prices at home. Underneath all of it, the strongest incentive is simply demand backed by purchasing power: somebody abroad wants the product and can pay for it.

Culture: Hofstede's six dimensions

A product can be successful in one country but fail in another because consumers do not just buy products; they buy products within a cultural context. The book defines culture as the distinctive way of life of a group of people, learned and passed on, made of abstract elements (values, attitudes, ideas, religion) and material elements (technology, consumption patterns, artefacts). Geert Hofstede measured how national cultures differ on six dimensions, and each one has a business implication for how you sell.

The book adds the communication traps that culture sets. Language first: Pepsi's "Come Alive with Pepsi" was read in parts of Asia as bringing ancestors back from the dead; Ford's Fiera means ugly old woman in Spanish; McDonald's avoids the number 4 in Chinese prices because it sounds like death. Then humour (which rarely travels), prestige (what confers status differs), colours and imagery (white is mourning in parts of Asia), levels of education and literacy, economic development, the media infrastructure available for advertising, and government regulation of what may be said and sold.

Standardisation, adaptation, glocalization

Once a firm sells in several countries it faces a basic choice: sell the same thing the same way everywhere, or change it for each market. The slides give three global strategies.

The slides' example of glocalizationThink globally, act locally: keep the global brand but adapt selected elements for each market.McDonald's India's vegetarian burgers, prepared away from the meat. is McDonald's in India. The brand, the golden arches and the restaurant experience are the same everywhere, but the menu offers a wide variety of vegetarian burgers tailored to the local palate, prepared completely separately from meat products to respect religious sensitivities. The book frames the same choice with Prahalad and Doz's integration-responsiveness grid: integration (ethnocentric, standardised, Coca-Cola selling one drink to the world) against responsiveness (polycentric, adapted, Levi's changing fit and marketing by country), with "think global, act local" as the balance that sustains competitiveness.

Organisation for international selling book only

The book distinguishes three depths of international involvement. Exporting is a peripheral activity, typically under 20 percent of turnover, handled by an export department while the company stays domestic in outlook. International marketing is a strategic decision: the company changes its organisation and marketing mix for foreign markets and treats them as central. Multinational marketing means manufacturing plants and offices around the world, operating in each country as a national company: Shell, Ford, Coca-Cola, Microsoft, McDonald's. Whatever the depth, the book insists a senior manager should own exporting, or it stays a sideline.

Indirect methods put someone else between the company and the foreign customer.

Direct methods put the company's own people in the market.

Choosing an agent means checking when it was founded and its history, what other products it represents (competing? complementary?), the territory it covers, its standing in the trade, whether its way of working fits yours, its financial and staff resources, and its ability to provide technical and after-sales support. Once chosen the agent must be trained, visited regularly, and helped to negotiate. The book's warning is that an agent's success can be its downfall: if it builds the market well, the principal may be tempted to drop it and go direct. Fairness, and the principal's reputation with other agents, call for a long-term agreement or a run-down clause that compensates the agent. Direct selling abroad demands language and cultural understanding and patience, since in many cultures the first "no" is rarely final.

International pricing, freight and tariffs

International pricing is more complicated than domestic pricing because the final price may include production cost + shipping/freight + insurance + tariffs + taxes + distributor margins + exchange-rate effects + other costs. The slides' example: a company sells a product for $100, international shipping adds $10, insurance $2, tariff $8 and other costs $5, so the landed costWhat an imported product really costs once shipping, insurance, tariffs, taxes, distributor margins and exchange effects are added to its price.The book's example: $100 becomes $125. is $125. Although the product's original price is $100, the importer effectively faces a cost of $125 before considering any margins.

A tariff is a tax imposed by one country's government on goods and services imported from a foreign country. It increases the price of the good and encourages homegrown brands to thrive. Tariffs are calculated in three ways.

Who actually pays a tariff? Follow the slides' example.

An Indian exporter sells a pair of trousers to a US importer for $10. The US government imposes a 10 percent tariff on Indian products, so the importer has to pay $10 plus $1, making the effective price $11. After adding expenses and profit the trousers are sold for $20, and a US consumer will most likely pay more for them: someone who paid $19 before now pays $20. There are two exceptional cases where the consumer does not pay. The exporter may absorb the tariff by lowering its price to keep the business, or the importer may reduce its profit margin to keep retail prices stable. In both cases the tariff is paid, just by a different link in the chain.

The graph shows the same thing for a whole market. Without a tariff the domestic price equals the world price, domestic firms supply Qs, consumers demand Qd, and the gap is filled by imports. A tariff lifts the price consumers face to the world price plus the tariff. At the higher price domestic firms supply more (Qs') and consumers buy less (Qd'), so imports shrink to the narrower gap. The shaded rectangle over the imports is the government's tariff revenue. Domestic producers gain, the government gains, and consumers lose more than the other two gain together, which is the economist's case against tariffs.

Why do governments impose them anyway? The slides draw the chain. The tariff raises the cost of imports. Consumers are put off by rising costs and import less. Domestic industries see an influx of internal producers and jobs are created, and government revenue increases. So the pros are that a tariff protects local industries in the short term, generates government revenue and gives trade leverage in negotiations. The cons are higher consumer prices, the risk of retaliatory measures from other countries, and strained trade relations. The book adds two other import controls: quotas, a numerical limit on how much may be imported, sometimes auctioned to importers, and import licences. It also notes that freight, packaging for long sea journeys and containerisation all enter the export quotation, which can be quoted anywhere from an ex-works price (at the factory gate) to delivered to the customer's door.

Transfer pricingThe price one part of a company charges another part, in another country, for goods or services.Set to move profit toward low-tax countries and minimise import duty, which is why tax authorities watch it closely. is an accounting practice that represents the price that one division in a company charges another division for goods and services provided. In the slides' example the UK parent, Software UK, provides sales, marketing, services and brand to its US subsidiary, Software US, at an agreed transfer price of total cost plus 15 percent: $1 million becomes $1,150,000. Why does it matter internationally? Because tax rates and import duties differ by country. A company can move components at low transfer prices into a country with high import duties, and book high transfer prices in a country with high corporation tax, so that profit appears where it is taxed least. Customs and tax authorities watch transfer prices closely for exactly that reason.

Strategic alliances, joint ventures, licensing, franchising

A strategic allianceAn arrangement between two companies to undertake a mutually beneficial project while each stays independent.Five tests: tied to a core goal, protects a core competency, blocks a competitive threat, creates strategic options, mitigates a major risk. is an arrangement between two companies to undertake a mutually beneficial project while each retains its independence. Neither buys the other; they agree to work together on something specific. The slides give five key components of a successful strategic business alliance.

Alliances come in two families. Equity alliances involve ownership: joint ventures and equity participation (buying a stake in the partner). Non-equity alliances are contracts without ownership: licensingLetting a foreign company use your trademarks, know-how, processes or patents in exchange for royalties.Royalties are typically 1 to 15 percent. The licensee keeps more freedom than a franchisee., franchising, joint marketing, R&D agreements and network organisations.

A joint ventureTwo companies combining resources in a shared undertaking, either as a new jointly owned entity or as separate entities operating together.A common way into China, with the risks of bureaucracy and weak rule of law. combines the resources and expertise of two firms, short-term or long-term, and can be informal (a handshake) or formal. It either creates a separate entity (a corporation, limited liability company or partnership) or operates the two firms jointly as separate entities. Joint ventures save money on advertising and share risk, and the book notes they are a common route into China, where guanxiPersonal connections in China that a person draws on for resources or advantage in business.Literally pass the gate and get connected. Built through introductions, favours and gifts; favours are banked and must be returned. (networks of personal relationships), bureaucracy and a weak rule of law make a local partner valuable.

Licensing is a contractual transaction whereby the firm, the licensor, offers some proprietary assets to a foreign company, the licensee, in exchange for royalty fees. The assets can be trademarks, technology know-how, production processes and patents. Royalties are typically between 1 and 15 percent of sales.

Franchising is a form of licensing with much more control. The franchisor gives the franchisee the rights to use its brand, recipes and support, and the franchisee pays fees and royalties. The slides' comparison shows how the two differ.

GATT and the WTO

Trade between countries runs under rules, and two names carry them. GATTThe General Agreement on Tariffs and Trade, 1947: a provisional set of rules to cut tariffs and quotas, with no institution behind it.Replaced by the WTO in 1995., the General Agreement on Tariffs and Trade, was an international agreement signed in 1947 that minimised barriers to international trade by eliminating or reducing quotas, tariffs and subsidies. It was provisional, a set of rules rather than an organisation, and it covered only goods. The WTOThe World Trade Organization, 1995: a permanent body of 164 members that sets trade rules, covers goods, services and intellectual property, and settles disputes with binding decisions.Faster and enforceable where GATT was slow and non-binding., the World Trade Organization, superseded it in 1995 as a permanent government regulatory body that promotes fair and non-discriminatory trade practices among its member countries, provides a platform for resolving trade disputes between member countries, and contributes to economic growth and development worldwide.

The book's European context belongs alongside. The Common Market of 1957 became the EEC, then the EC and now the EU of 28 states. The Single European Act of 1987 set out to remove the remaining barriers by 1992, so that a product approved in one EU country can be sold throughout the Union, public contracts are open to all EU firms, and professional qualifications carry across borders. For a British exporter, selling into the EU became closer to selling at home than to selling abroad.

Selling in Japan book only

The book ends with eight rules for selling to Japanese organisations, and they double as a case study in how culture changes the sale. Describe your organisation in detail, ideally in Japanese, because the buyer wants to know who they are dealing with before what they are buying. Manage meetings Japanese style: be introduced by a mutual acquaintance, never be late, bring a small gift from your country. Recognise that decisions are made by middle management by consensus, not by the president you meet first. Do not push for a close; they will take time, and they will not say no to your face, so a vague answer usually means no. Use Japanese wherever possible. Keep presentations low key; the hard sell reads as disrespect. Build the relationship through courtesy visits and social events, because the relationship comes before the order. Dress conservatively.

The lists you must be able to write out from memory

Cover the answer, say the list out loud, then open it to check. Everything expands when printed.