B2B Advertising

The Role of Advertising

1. 2. 3. 4. Integrated Communication Programs. Enhancing Sales Effectiveness. Increased Sales Efficiency. Creating Awareness.

Advertising Cannot be a Substitute for effective personnel selling. Cannot, by itself, create product preference.

The Decision Stages for Developing the Business-toBusiness Advertising Program

Advertising is only one aspect of the entire marketing strategy. The advertising decision process begins with the formulation of advertising objectives. Equally important is the evaluation and selection of the media.

Setting Ad Budgets: Commonly Used Methods Percentage of Sales

Allocate some percent of sales to advertising. Makes advertising a consequence rather than a determinant of sales and profits. Useful only if possess VALID historical data Most commonly used method

Setting Ad Budgets: Commonly Used Methods

Affordability Method Firm spends on advertising what it has available to spend Good cash flow control Most common with small firms Sales drive the advertising

Setting Ad Budgets: Commonly Used Methods

Objective-Task Method
An attempt to relate advertising costs to the objective it is to accomplish. Focuses on the communications effects of advertising, not on the sales effects. Generally considered the best method.

Developing the B2B Advertising Message

Determine advertising objectives. Evaluate buying criteria of target audience. Analyze most appropriate language for presenting message.

Organizing the Sales Force

 Line Organizations (& Line/Staff) Functional Organizations Specialization Organization

Sales Activities Geographic Areas Products Customers

Typical Methods of Organizing the Sales Force

A Simple Line Organization

Sales Manager

Salesperson A

Salesperson B

Salesperson C

A Two-Level Line Organization

Sales Manager

Region A Sales Manager

Region B Sales Manager

Region C Sales Manager

Salesperson

Salesperson

Salesperson

Line Organizations
Characteristics
Authority/responsibility for planning/implementing sales activities lie in hands of sales manager. Each person has only one boss.

Line Organizations
Advantages
Very simple to understand and use. Easy to trace accountability. Relatively inexpensive (only a few highly-paid executives are necessary) Quick action possible since decision-making is in hands of relatively few people.

Line Organizations
Disadvantages
As organization size increases, problems become more complex. Specialized skills often needed. Many sales managers cannot keep on top of all functions that relate to sales. Lack of trained replacements.

Line Organizations
Implications
Best used by small organizations where operations can be clearly divided into basic functions of sales, finance, and production.

Line and Staff Organizations

Characteristics
Same as line organization except staff positions added Staff positions dont have authority over line positions

Advantages
Staff provide sales manager with specialized skills Allows sales manager to be more efficient/ effective. Doesnt dilute his/her authority/contact w/salespeople.

A Line & Staff Organization

Sales Manager

Market Forecaster

Region A Sales Manager

Region B Sales Manager

Region C Sales Manager

Training Director

Salespeople

Salespeople

Salespeople

Line and Staff Organizations

Disadvantages
Can be more expensive than a line organization. Conflicts may arise between line & staff executives. Staff executives may attempt to exert authority over line personnel. Line executives may ignore the counsel of the staff

Line and Staff Organizations

Implications
If sales managers find themselves spending less time working with subordinates and more time performing planning & evaluating functions, may want to consider this organization

Functional Organizations
Characteristics
Organization divided by function. Functional specialists have line authority. Salespeople report to multiple bosses.

Advantages
Specialist ensure their functions are carried out. Should improve performance in each functional area due to the specialization.

A Functional Organization
Sales Manager Region A Sales Manager Region B Sales Manager Training Director Region C Sales Manager Market Forecaster

Salespeople

Salespeople

Salespeople

Functional Organizations
Disadvantages
Breakdown in the unity of command due to conflicting orders Each salesperson is no longer accountable to only one boss

Implications
Typically used in large firms that feature numerous functions and that have the need for several specialists.

Centralized vs. Decentralized? Factors That Influence

Size of Sales Force
As sales force size increases, the need to decentralize increases. Span-of-control problems emerge More field managers will be necessary Decentralization more feasible

Organizing by Sales Activities

Characteristics
Usually employ simple line organizations Separate selling functions (present account maintenance and new account development)

Advantages
Allows salespeople to become proficient in their respective sales functions. Places special emphasis on searching out and selling new accounts.

Line Organization Structured by Sales Activities

Sales Manager
Account Development Manager Account Maintenance Manager

Salesperson A

Salesperson B

Salesperson C

Salesperson D

Salesperson E

Organizing by Sales Activities

Disadvantages
Customers may resent being turned over to a different salesperson. Salespeople may want to cultivate the accounts they have developed.

Organizing by Sales Activities

Implications
Use when there is a large turnover of customers Use when there is a significant difference in the skills needed in each separate area Use when fast growth through new account acquisition is deemed necessary

Organizing by Geographic Areas

Characteristics
Sales force is reorganized on a geographic basis Salespeople sell all the companys present products to all customers within their assigned territories

Line Organization Structured by Geographic Area

N a tio n a l S a le s M a n a g e r

W e s te rn R e g io n S a le s M a n a g e r

C e n tra l R e g io n S a le s M a n a g e r

E a s te rn R e g io n S a le s M a n a g e r

D a lla s D iv is io n S a le s M a n a g e r

C h ic a g o D iv is io n S a le s M a n a g e r

N e w Y o rk D iv is io n S a le s M a n a g e r

S a le s p e o p le

S a le s p e o p le

S a le s p e o p le

Organizing by Geographic Areas

Advantages
Salespeople and managers become more familiar with their territories Local problems may be solved more quickly Sales force can rapidly react to changes in the local competitive environment Can provide better service at lower cost Lower chance for customer confusion

Organizing by Geographic Areas

Disadvantages
Diversity/magnitude of product line may limit salespersons knowledge of any one product Duplication of overhead expense Greater level of salesperson control (which products to push, which customers to service)

Implications
Best used if product line is relatively homogeneous Best used if customers are widely dispersed

Organizing by Products
Characteristics
Sales force is reorganized on a product basis Salespeople specialize in particular products carried by the sales organization

Sales Force Organized by Products

Sales Manager Advertising Manager Product A Sales Manager Product B Sales Manager Marketing Services Manager

Product A Salespeople

Product B Salespeople

Organizing by Products
Advantages
Each product line receives a higher degree of specialized attention Allows for decentralization of both authority & responsibility for each product line Allows decisions to be made closer to the problems with any particular product line

 Disadvantages

Organizing by Products

If specialization occurs above salesperson level, additional overhead expense may be suffered. More than 1 salesperson may be calling on customers Difficult to maintain a consistent image

 Implications

Organizing by Products

Best used if product line is relatively heterogeneous Best used if have a wide variety of customers with quite different needs Best used if products are technically complex Broad, in-depth knowledge of product essential for the sales task

Organizing by Customers
Characteristics
Sales force is reorganized on a customer basis Salespeople specialize in selling to/ servicing particular customer types

Sales Force Organized by Customers

Industrial Sales Manager Retail Sales Manager

Industrial Manager Farms

Industrial Manager Construction

Industrial Manager Mining

Retail Manager JC Penney's

Retail Manager Sears

Organizing by Customers
Advantages
Most consumer oriented approach Organization of sales force is based on customer needs Control remains at the management level (which customers to call on, etc) Allows salespeople to specialize in customer needs

 Disadvantages

Organizing by Customers

Potential for overlapping territories is high Hence, overhead costs may rise Salespeople must become knowledgeable about companys entire line of products

 Implications

Organizing by Customers

Customers in a given market buy several different products/lines from single supplier Same buying factors apply across product lines Significant proportion of income is derived from a small number of accounts who require high service levels