chap001 (1)

McGraw-Hill/Irwin Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved.

Chapter 1

Overview of Sales Management and the Selling Environment


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Learning Objectives

• Identify and discuss key trends affecting sales organizations and sales managers today

• Present a general overview of the sales management process

• Identify and illustrate the key external and internal environmental factors that influence the development of marketing strategies and sales programs


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Sales Management in the 21st Century

• Building long-term relationships with customers• Creating more nimble and adaptable sales organizational

structures • Removing functional barriers within the organization to

create greater job ownership and commitment from salespeople

• Shifting sales management style from commanding to coaching

• Leveraging available technology for sales success• Integrating salesperson performance evaluation to

incorporate all activities and outcomes


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Key Themes

• Innovation – thinking outside the box

• Technology – broad spectrum of tools available to salespersons

• Leadership – capability to make things happen

• Globalization

• Ethics


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Innovation

Classical selling involved . . .• Transaction Selling – a series of transactions,

each one involving separate organizations entering into an independent transaction.

The contemporary shift . . .• Relationship Selling – narrowing the vendor

pool, improving efficiencies, working directly with customers to solve problems. In general, salespeople are asked build relationships.


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Technology

• Constant accessibility to people/data via computers and mobile phones

• Interactive web presences• Just-in-Time (JIT) delivery

– Electronic Data Interchange (EDI) in manufacturing– Efficient Customer Response (ECR) in retailing

• Customer Relationship Management Software (CRM)

• Intranets for internal communication• Extranets to serve all stakeholders


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Leadership versus Managing

Leading (Mentoring)• Communicate• Cheerleader/coach• Empower to make

decisions

Managing• Control• Supervisor/boss• Direct


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Globalization – bridging the culture gap

1. View customers in terms of ethnic core values

2. Get in sync with customer business practices

3. Follow customers’ lead

4. See others honestly

5. Adopt the perspective of other cultures


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Ethics

• Customer loyalty is impossible to maintain without trust

• Long term relationships require higher ethical standards

• Federal Sentencing Guidelines designed to punish unethical firms


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Sales Management Process

• The formulation of a sales program

• The implementation of the sales program

• The evaluation and control of the sales program


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Environmental Impact on Selling

• Environmental forces constrain the ability to pursue certain marketing strategies or activities

• Environmental variables determine the ultimate success or failure of marketing strategies

• Changes in the environment create new marketing opportunities

• Environmental variables are affected by marketing activities


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Economic Environment

• Buyer-seller interactions take place within the context of current economic conditions

• The economy impacts real potential demand

• Global economic conditions are important

• Competitive structure affects selling success


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Legal-Political Environment

Many of the changes in society’s values reflect new laws and new government regulations.

Three broad categories of laws are relevant:

• Antitrust

• Consumer Protection

• Equal Employment Opportunity


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Technological Environment

• Changing the way salespeople and sales managers do their jobs

• Influences sales strategies• Provides increased opportunities for

product development• Transportation, communications, and data

processing technologies change sales territories, sales rep deployment and sales performance evaluation


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Social and Cultural Environment

• Ethics - concerned with development of moral standards by which actions and situations can be judged.

• Of concern to sales managers:– Their relationships with salespeople– Interactions between salespeople and their customers

• Managers must influence ethical performance by example

• Ethical standards reflect integrity of the firm


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Natural Environment

• Nature influences demand for products– Weather– Natural disasters– Availability of raw materials– Energy resources

• Demarketing may result from shortages caused by nature

• Growing social concern about the possible negative impact of product and production have important implications for marketing and sales programs


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Goals/Objectives/Culture

• Mission and objectives drive customer management approaches

• A well-defined mission + successful corporate history + top management values = strong corporate culture


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Personnel

• Modern sales organizations are highly complex and dynamic

• Often difficult to expand to take advantage of growing markets

• Utilizing outside specialists can help firms meet need to expand


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Financial Resources

• Lack of financial resources can: – constrain ability to develop new products – limit promotional budget– limit size of sales force


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Production and Supply Chain Capabilities

• Production capacity

• Location of production facilities

• Transportation costs

• Ability to ensure seamless distribution and service after the sale


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Service Capabilities

• Opportunity for strong competitive advantage

• Difficult for other firms to compete for same customers

• Customers reluctant to switch regardless of price


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R&D and Technological Capabilities

• Excellence in design and engineering provide major promotional appeal

• Ability to communicate technological sophistication as value-add helps prevent over-reliance on price to get sales


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Key Terms• transactional selling• relationship selling• leading versus• managing• sales management• sales management process

• formulation• Implementation• evaluation and control

• internal (organizational) environment

• corporate culture• discontinuous change

•external environment• economic environment• legal and political• environment• technological environment• social and cultural• environment• natural environment

•ethics•demarketing


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Mark W. JohnstonRollins College

Greg W. MarshallRollins College

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