Figure 2-2: Hierarchy of Sales Objectives
Corporate goals Maximize shareholder wealth
Corporate goals Maximize shareholder wealth
Business unit objectives 12% revenue growth
Business unit objectives 12% revenue growth
Marketing objectives Increase product A’s market share by 2 points
Marketing objectives Increase product A’s market share by 2 points
Sales department objectives Achieve sales revenue of $210 million in product A
Sales department objectives Achieve sales revenue of $210 million in product A
Sales district objective Achieve sales revenue of $10.5 million in product A
Sales district objective Achieve sales revenue of $10.5 million in product A
Salesperson objective Achieve sales revenues of $1.2 million in product A
Salesperson objective Achieve sales revenues of $1.2 million in product A
Major account objective Achieve sales revenues of $95,000 in product A
Minor Accounts
Middle Accounts
Major
Accounts
Size of Account
Number of Accounts
Strategic -Mission management -Goals planning -Strategies
Strategic -Situation analysis
marketing -Segmentation & target marketing planning -Marketing mix program
Sales force -Market access strategy
strategy -Account relationship strategy
Operating -Promotion
budgets -Selling expense
Michael E. Porter’s Three Generic Strategies
1
Cost leadership
2
Differentiation
3a.
Cost focus
3b.
Differentiation
focus
Broad Target
Narrow target
Lower cost Differentiation
Competitive Advantage
Source: From Michael E. Porter, Competitive Advantage, New York; Free Press, 1985, p.12.
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Table 2-1 Sales Manager’s and Marketing Executive’s Product Classifications by Strategy
Sales manager Classification
Build
ªA total of 71 sales managers classified their products as build strategies out of 95 so classified by marketing executives.
Source: William Strahle. An Exploratory Study of the Relationship Between Marketing and Slaes Strategy
Traditional View
The ultimate purpose of marketing is to make a sale
The objective is to make the sale and find the next customer
Growth comes primarily from finding customers
Supplier is valued for its products and services
Relationship View
The ultimate purpose of marketing is to create a customer
The objective is to satisfy the customer you have by delivering superior value
Growth comes primarily from enhanced product offerings for existing customers
Supplier is valued for its present and future problem solving capabilities
Source: Presentation by Frederick Webster, “Relationships in Marketing” at Summer Marketing Educator’s Conference, August 8, 1993.
vs.
Strategic Partners
3%
Major Accounts 7%
Contractual Relationships 20%
Repeat Transactions 70%
Alternative Types of Account Relationships
Purchasing
Approach
Transactional
Reactive: respond to
demand
Selling
approach
Partnering: create demand
Design marketing program
Set advertising and promotion expenditure levels
Design marketing program
Set advertising and promotion expenditure levels
Forecast sales
Forecast sales
Estimate personal selling costs needed to reach sales goals
Estimate personal selling costs needed to reach sales goals
Compare actual expenditures with plans
Compare actual expenditures with plans
Revise expenditure categories Request additional funds
as needed
Revise expenditure categories
Request additional funds as needed
Selling Expenses as a Percent of Sales
COMPANY SIZE:
Under $5 Million (MM) 14.7%
$5 - $25 MM 10.5%
$25 - $100 MM 7.9%
$100 - 250 MM 3.5%
Over $250 MM 6.8%
PRODUCT OR SERVICE:
Industrial Products 4.1%
Industrial Services 6.4%
Office Products 9.4%
Office Services 8.1%
Consumer Products 5.4%
Selling Expenses as a Percent of Sales
Selling Expenses as a Percent of Sales
INDUSTRY:
Business services 1.7%
Communications 9.8%
Educational services 47.9%
Electronics 4.2%
Fabricated metals 10.8%
Health services 19.9%
Hotels 21.4%
Machinery 10.1%
Manufacturing 13.6%
Office equipment 9.0%
Paper and allied products 6.8% Wholesale (Consumer goods) 3.7% Wholesale (Industrial goods) 9.5%
Translating Corporate Objectives into Sales Strategies
Corporate
Objectives Become a major Supplier of Consumer Leisure Products and Services
Build Hold Harvest Divest
Offer Promotional Allowances and
Help with Products to Existing Account
Offer Low Prices to Attract Superior New Product Benefits
Offer Easy Credit Terms
Offer Trade Deals to Gain
Acceptance
Service Current Target Accounts
Maintain List Prices and Reduce Costs
Promote Product Variations
and Improvements
Identify and Promote Alternative Uses
Offer Key Account or National Account
Services
Trim Product Line and Push Volume Items
Reduce Selling Costs
Help Dealers Clear Out
Inventory
Help Dealers Find Substitutes or New Suppliers
Sell Excess Inventory to Export Markets
or Jobbers
Marketing Strategies
