Chapter 13 Digital Sales, and Direct Marketing Strategy PDF

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Lesson 10: Integrated Marketing CommunicationsLearning ObjectivesAfter completing Lesson 10, you should be able to1 the role of six promotion components and identify their advantages and disadvantages. (textbook, pp. 350–353; Note 10)2 the process of the design of a promotion strategy. (textbook, pp...

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Lesson 10: Integrated Marketing Communications Learning Objectives

After completing Lesson 10, you should be able to 1. describe the role of six promotion components and identify their advantages and disadvantages. (textbook, pp. 350–353; Note 10.1)

2. describe the process of the design of a promotion strategy. (textbook, pp. 353–359)

3. discuss the major decision areas that comprise advertising strategy. (textbook, pp. 359–366)

4. discuss the major decision areas that comprise sales promotion strategy. (textbook, pp. 366–

371)

5. describe the components of a salesforce strategy. (textbook, pp. 374–389)

6. explain the role of digital marketing in marketing strategy. (textbook, pp. 389–396)

7. discuss key issues related to the development of a direct marketing strategy. (textbook, pp. 396–401) Chapter 13 Sales, Digital, and Direct Marketing Strategies Sales organizations in many companies around the world have experienced significant changes in how the selling function is being performed over the last decade. Many transactional selling activities are handled by the Internet, while salespeople are more focused on collaborative and consulting relationships with customers. Contrary to some forecasts the role of selling has not

deteriorated. More than a few companies and business units have shifted resources from marketing to sales because management considers the sales organization vital in attaining marketing and business strategy objectives.1 Personal selling, the Internet, and direct marketing initiatives are being impacted by many changes in the 21st century. The Internet has become an important and expanding avenue of direct contact between customers and companies selling goods and services, particularly through social media like Facebook and Twitter. Management may use a combination of salespeople, direct marketing, and the Internet to perform selling and sales support functions. Coordinating an organization's activities across multiple customer contact initiatives is essential to avoid conflicts and enhance overall results. Hewlett-Packard Co.'s (H-P) salesforce organizational changes are illustrative of the market-driven initiatives underway in many companies.2 In 2006 H-P's then-new CEO had received feedback from 400 customers and internal executives, which caused a major overhaul of H-P's salesforce strategy and structure. Before the changes H-P had eleven layers of managers

between the CEO and customers; sales team efforts were fragmented and duplicative. Seventy percent of H-P's revenues are from companies, yet salespeople were not actively seeking their business. New initiatives included product specialization by salespeople, salesperson customer responsibility assignment and reduction of the number of accounts, and standardization of account management software. H-P's salesforce now spends more time in front of customers, responds faster to their needs, and is winning more Page 374corporate sales deals. H-P's performance has improved and greater gains are expected from the sales strategy and structure changes. In this chapter we first discuss developing and implementing salesforce strategy. Next, we consider the issues and initiatives concerning Internet strategy. Finally, we describe and illustrate the various methods used in direct marketing to customers. Salesforce Strategy The strategic role of sales and selling resources is evolving rapidly in many companies. We consider this strategic sales

perspective. The management of sales efforts linked to strategic marketing goals is examined as salesforce strategy. Strategic Sales Perspective Sales organizations in many firms are undertaking a major transformation, as companies search for new organizational approaches that meet escalating customer and competitive pressures. The emergence of the strategic sales organization can be explained by several factors: changing customer relationship requirements; the changing sales task, which emphasizes customer relationship strength as well as sales transactions; and the importance of strategic sales capabilities to cope with technology complexity, growing customer sophistication, commoditization pressures, and the need for radically different selling approaches. The underlying need is to manage customers strategically includes the need to understand the opportunities and risks in the customer portfolio, and the need to implement appropriate strategies with strategic customers (see Chapter 7). The result is the emergence of new sales organization models reflecting both reshaping and restructuring of existing functions to better meet market requirements, but also the development of

new types of customer business development and process-based organizational forms (see Chapter 14). New types of more strategic sales organizations provides a means to achieve better alignment of sales and customer processes with business and marketing strategy.3 Escalating customer demands for enhanced service, new types of relationships with vendors, and greater added-value by business-to-business suppliers of all kinds are indicated in the H. R. Chally consultancy's World Class Sales Excellence Research Report,4 which investigates the views of corporate purchasers and their expectations for the relationship with the salesperson from a supplier. These findings are summarized in Exhibit 13.1. The Chally characterizes how the best salesforces are distinguished in the eyes of their customers. The research points to a customer environment that has radically different requirements from those of the transactional selling approaches of the past, and that poses substantially different management challenges in managing customer relationships. Sales and service organizations that meet these customer demands and expectations and develop sustainable and attractive customer

relationships are likely to be considerably different to those of the past, and to operate differently. For example, Procter & Gamble has been transformed from a slow-moving, inward-looking company into a nimble, innovative, and aggressive competitor. Part of that transformation has been the creation of customer business development (CBD) organizations at the front of the business. The goal of CBD is to transform the old, narrow idea of buyerseller relationships with customers into a multifunctional, collaborative approach designed to achieve mutual volume, profit, and market share objectives. CBD teams work with customers to develop the customer's plans and strategies to the advantage of both customer and P&G. CBD team members work collaboratively with experts from finance, management systems, customer service, and brand management to develop and implement business strategies that deliver sustainable competitive advantage for P&G brands.5 Page 375

EXHIBIT 13.1 Customer Demands for New Sales Relationships Source: Adapted from H. R. Chally, World Class Sales Excellence Research Report (Dayton, OH: The H. R. Chally Group, 2006). The Chally Report investigates the views of major corporate purchasers and their expectations for the relationship with the vendor salesperson from a supplier, and their requirements the salesperson should Be personally accountable for our desired results—the sales contact with the supplier is expected to be committed to the customer and accountable for achievement. Understand our business—to be able to add value, the supplier must understand the customer's competencies, strategies, challenges, and organizational culture. Be on our side—the salesperson must be the customer's advocate in his or her own organization, and operate through the policies and politics to focus on the customer's needs.

Design the right applications—the salesperson is expected to think beyond technical features and functions to the implementation of the product or service in the customer's environment, thinking beyond the transaction to the customer's end state. Be easily accessible—customers expect salespeople to be constantly connected and within reach. Solve our problems—customers no longer buy products or services, they buy solutions to their business problems, and expect salespeople to diagnose, prescribe, and resolve their issues, not just sell them products. Be creative in responding to our needs—buyers expect salespeople to be innovators, who bring them new ideas to solve problems, so creativity is a major source of added value. Similarly, when Sam Palmisano took over as CEO at IBM, one of his early moves was to implement a thorough overhaul of the 38,000-person salesforce. In the 1990s salespeople representing the various IBM business units essentially worked on their own, looking for opportunities to sell individual products or services.

Palmisano “reintegrated” IBM in front of customers by bringing together specialists from computers, software, consulting, and research into teams that meet with customers to help solve their business problems and develop new business strategies. Collaborating with customers, suppliers, and even rivals is part of his plan to invent new technologies to create new markets.6 The role of the sales organization in many companies is shifting from order-taking and managing transactions to business development and effective customer relationship management. Sales organizations are playing an active role in creating and shaping marketing strategy, rather than implementation. There is an emerging opportunity and challenge for executives: Today's competitive environment demands a radically different approach. Specifically, the ability of firms to exploit the true potential of the sales organization requires that company executives adopt a new mindset about the role of the selling function within the firm, how the sales force is managed, and what salespeople are expected to produce. The sales function must serve as a dynamic source of value creation and innovation within the firm.7

Furthermore, when examining salesforce strategy and its impact on strategic marketing it is increasingly important to recognize that salespeople's interactions with many customers and the geographical dispersion of salespeople are likely to create more ethical issues than are experienced in other types of jobs (see Chapter 4). The level of scrutiny of the ethical and social responsibility standards of companies has never been so searching. Sales managers may encounter a wide range of ethical situations as discussed in the ETHICS APPLICATION. Issues of integrity and social responsibility in seller behavior are a high priority for many business leaders. Indeed, research suggests that when major customers are asked what they want from sellers, honesty and integrity are ranked highest.8 Salesforce Strategy As well as concerns for strategic sales organization transformation, salesforce strategy requires clear decisions about how to use personal selling to contact sales prospects, generate sales, and develop the types of customer relationships that management considers necessary to accomplish the organization's salesforce objectives. Personal selling activities

vary considerably across companies based on how personal selling contributes to marketing positioning strategy and promotion strategy. For example, a pharmaceutical salesperson maintains regular contact with doctors and other professionals, but actual purchases are made at retail outlets where the prescriptions are filled. Nonetheless, salespeople play a vital role in the pharmaceutical company's marketing strategy. The drug salesperson provides information on new products, distributes samples, and works toward building long-term relationships. Page 377 EXHIBIT 13.2 Salesforce Strategy

Salesforce strategy includes six major initiatives, as shown in Exhibit 13.2. First, the role of the salesforce in the promotion strategy is determined. This requires deciding how personal selling is expected to contribute to the marketing program. Second, the selling process must be determined, indicating how selling will be accomplished with targeted customers. Third, in selecting sales channels, management decides how the sales organization, major account management, telemarketing, and the Internet will contribute to the selling process. Fourth, the design

of the sales organization must be determined and assessed over time to determine its effectiveness. Recall H-P's redesign initiatives discussed in the lead-in illustration. Fifth, salespeople are recruited, trained, and managed. Finally, the results of the selling strategy are evaluated and adjustments are made to narrow the gap between actual and desired results. The Role of Selling in Promotion Strategy Salespeople's responsibilities may range from taking orders from customers to extensive collaboration as consultants to customers. While management has some flexibility in choosing the role and objectives of the salesforce in the marketing program, several factors often guide the role of selling in a firm's integrated marketing communications strategy, as shown in Exhibit 13.3. Recall our discussion of integrated marketing communications (IMC) in Chapter 12. Considerable direction as to how personal selling will be used is provided by the target market, product characteristics, distribution policies, and pricing policies. The selling effort needs to be positioned into the integrated communications program. It is also useful to indicate how the other promotion-mix components, such as advertising,

support and relate to the salesforce. Sales management needs to be aware of the plans and activities of other promotion components. The objectives assigned to salespeople frequently involve management's expected sales results. Sales quotas are used to state these expectations. Companies may give incentives to salespeople who achieve their quotas. Team selling incentives may also be used. Objectives other than sales are important in many organizations. These include increasing the number of new accounts, providing services to customers and channel organizations, retaining customers, selecting and evaluating value chain intermediaries, and obtaining market information. The objectives selected need to be consistent with marketing strategy and promotion objectives and measurable so that salesperson performance can be evaluated. Page 378 EXHIBIT 13.3 Factors Influencing the Role of Personal Selling in a Firm's IMC Strategy

Source: Mark W. Johnston and Greg W. Marshall, Sales Force Management, 9th ed. Burr Ridge, IL: McGraw-Hill/Irwin, 2009, 94.

Selling roles range from transactional selling to consulting-type relationships. The Internet is replacing salespeople in transactional selling, whereas it may be used to provide support

for relationship-type selling roles. Transactional selling is not restricted to small, low-volume buyers. The important issue is how much direct contact with the salesperson is needed by the buyer. For example, physicians may need detailed assistance on new drugs from salespeople, whereas transactional selling via the Internet is preferred for older and less complex products prescribed by doctors. Importantly, companies may need to utilize different types of selling for the same customer. Types of Sales Jobs The salespeople who sell to ultimate consumers (door-to-door sales, insurance sales, real estate brokers, retail store sales, etc.) comprise a major portion of the number of salespeople, but a much greater volume of sales is accounted for by business-tobusiness salespeople.9 B2B sales may be to resellers (e.g., retail chains), business users, and institutions. Page 379Consumer and organizational sales are similar in several respects, but B2B sales may involve more complex products, more extensive purchasing processes, different selling skills, and more collaborative management processes (e.g., training, coaching, directing, and evaluating).

Illustrative sales positions for salespeople include new business selling, trade selling, missionary selling, and consultative/technical selling.10 New Business Selling This selling job involves obtaining sales from new buyers. The buyers may be one-time purchasers or repeat buyers. For example, recruiting a new online business customer by an Office Depot salesperson is an illustration of a one-time selling situation. Alternatively, the selling strategy may be concerned with obtaining new buyers on a continuing basis. Commercial insurance and real estate sales firms frequently use this strategy. Trade Selling This form of selling provides assistance and support to value chain members rather than obtaining sales. A producer marketing through wholesalers, retailers, or other intermediaries may provide merchandising, logistical, promotional, and product information assistance. For example, PepsiCo's field sales organization assists retailers in merchandising and support

activities and builds relationships with fast food and other retailers selling drinks on premises. Missionary Selling A strategy similar to trade selling is missionary selling. In these selling situations, a producer's salespeople work with the customers of a channel member to encourage them to purchase the producer's product from the channel member. For example, commercial airline sales representatives contact travel agencies, providing them with schedule information on new routes and encouraging agencies to book flights on their airline. Consultative/Technical Selling Firms that use this strategy sell to an existing customer base and provide technical and application assistance. These positions may involve the sales of complex equipment or services such as management consulting. Importantly, consultative selling requires giving sales professionals authority in negotiating sales as illustrated by sales of Boeing's large commercial aircraft.11 These sales relationships involve high-level consultative selling strategies as described in the RELATIONSHIP APPLICATION.

An organization may use more than one of the selling strategies. For example, a transportation services company might use a new business strategy for expanding its customer base and a missionary selling strategy for servicing existing customers. The skills needed by the salesperson vary according to the selling strategy used. Important changes are underway in many sales organizations. These initiatives require redesigning the traditional sales organization, leveraging information technology to lower costs and provide quick response, designing the sales strategy to meet different customer needs, building long-term relationships with customers and business partners, and responding proactively to global competitive opportunities and challenges. The salesforce continues to be essential in many organizations, although salespeople are being asked to assume new responsibilities and the methods for keeping score are changing. Defining the Selling Process Several selling and sales support activities are involved in moving from identifying a buyer's needs to completing the sale

and managing the postsale relationships between buyer and seller. This selling process includes (1) prospecting for customers, (2) opening the relationship, (3) qualifying the prospect, (4) presenting the sales message, (5) closing the sale, and (6) servicing the account.12 The process may be very simple, consisting of a routine set of actions designed to close the sale, such as supermarket purchases. Alternatively, the process may extend over a long time period, with many contacts and interactions between the buyers, other people influencing the purchase, the salesperson assigned to the account, and technical specialists in the seller's organization. The selling process for Boeing aircraft is illustrative (RELATIONSHIP APPLICATION). Sales management guides the selling process by indicating the customers and prospects the firm is targeting and providing guidelines for developing customer relationships and obtaining sales results. This process is management's strategy for achieving the salesforce objectives in the selling environment of interest....