CHAPTER 13

SALES FORCE, INTERNET, AND DIRECT

MARKETING STRATEGIES

 Sales Force Strategy

 Internet Strategy
 Direct Marketing Strategies

McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
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* SALES FORCE STRATEGY

A company’s sales force strategy determines

how the organization will use the personal
selling function to maintain contact with
customers and develop the relationships that
management wants in order to achieve
marketing and promotion objectives.

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* RELATIONSHIP
* FEATURE: The Vital Role of Selling at the Boeing Co.
During the 2000s Boeing experienced an intense competitive battle against
Airbus for control of the commercial jetliner market. Airbus was winning the
battle until 2005 when Boeing’s Asia-Pacific jet sales were $26 billion compared
to Airbus’ $9 billion.

Under a new CEO management gave salespeople much more control over selling
strategy compared to previous tight and rigid control by top management.
Boeing lost many sales to Airbus because of top management’s unwillingness to
give competent professionals flexibility in negotiating sales. Salespeople like
Larry Dickenson, Boeing’s top salesman who covers the Asia-Pacific market,
builds on over 18 years of relationships with airlines like Cathay Pacific, Quantas
Airways Ltd., and Singapore Airlines, Ltd., to negotiate winning contracts.

Importantly, Dickenson carefully plans and executes each sales campaign,

overseeing every detail in the process that may span several years. The
strategy is a combination of attractive pricing, financing, and leasing
arrangements in combinations with training and service packages.
Source: Stanley Holmes, “Boeing’s Jet Propellant,” BusinessWeek, December 26, 2005, 40.

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* Determine the role of the Sales Force Strategy
* sales force in promotion
strategy

Define the selling process (how

selling will be accomplished)

Decide if and how alternative sales

channels will be utilized

Design the sales organization

Recruit, train, and manage salespeople

Evaluate performance and make

adjustments where necessary
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* Challenges in Selling and Sales Management

Two sets of ethical dilemmas are of particular concern to sales managers. The
first set is embedded in the manager’s dealings with the salespeople. Ethical
issues involved in relationships between a sales manager and the sales force
include such things as fairness and equal treatment of all social groups in hiring
and promotion, respect for the individual in supervisory practices and training
programs, and fairness and integrity in the design of sales territories, assignment
of quotas, and determination of compensation and incentive rewards. Ethical
issues pervade nearly all aspects of sales force management.

The second set of ethical issues arises from the interactions between salespeople
and their customers. These issues only indirectly involve the sales manager
because the manager cannot always directly observe or control the actions of
every member of the sales force. But managers have a responsibility to establish
standards of ethical behavior for their subordinates, communicate them clearly,
and enforce them vigorously.

Source: Mark W. Johnston and Greg W. Marshall, Sales Force Management, 7th ed., Burr Ridge, IL: McGraw-Hill/Irwin, 2003, 21.
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* Business and Marketing Strategy Influences on Sales
Strategy

Business Strategy
Promotion
Strategy Market
Target(s)
SALES Strategy
STRATEGY
Pricing Product
Strategy Strategy

Distribution Strategy

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*
Escalating customer
Marketing expectations
productivity crisis Intense global
competition

SALES FORCE
CHALLENGES
Mergers and
acquisitions
Blurring of industry
boundaries
Technology
Advances
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* Range of Selling Roles
Transactional
Selling

Consulting-Type
Relationships

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* Defining the Selling Process
* Finding Prospects

Opening the Relationship

Qualifying the Prospect

Presenting the Sales Message

Closing the Sale

Source: Mark W. Johnston and Greg W. Marshall, Sales Force Management,

Servicing the
McGraw-Hill/Irwin, 2003, 51-56.
Account 1-9
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* The Selling Process Guides
 Recruiting
 Training
 Effort Allocation
 Organizational Design
 Selling Support Activities

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* Selecting Sales Channels to End Users

 Major Account Management

 Field Sales Force
 Telemarketing
 Electronic/Mail Contact

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* DESIGNING THE SALES ORGANIZATION

Organizational Structure

Deployment of Selling
Effort

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* Sales Force Deployment
* Size of the Sales Force
* Allocation of Selling Effort
Salesperson skills and effort
PLUS
Market potential
Number and location of customers
Intensity of competition
Market (brand) position of the company

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* Designing the Sales Organization
Customer needs
different

Market-Driven design Product/ Market-Driven

design
Simple Complex
product range of
offering products
Geography-Driven Product-
design Driven design
Customer needs
similar
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* Selecting an Organizational Design
* What is the selling job?
* How much customer/product specialization is
necessary?
* Role of value chain (channel) relationships?
* How many sales management levels (hierarchy versus
process)?
* Will sales teams be used?
* Sales channels in addition to the field sales force?
* Are there any sales structure danger signals (high costs,
turnover, large sales variations across territory?

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* INTERNET
* FEATURE: Salesforce.com Makes People More Productive
Salesforce.com is an interesting example of a dot-com start-up which has
developed a successful business model supplying customer management software
over the Net for use by salespeople. A key feature of the software is that it is sold
as a service to customers at a monthly charge for each individual user.
Salesforce.com has nearly 450,000 subscribers @ 22,700 companies worldwide.
Salesforce.com illustrates how Internet information technology can enhance the
capabilities and efforts of salespeople. By replacing large up-front software
purchases with monthly service charges, Salesforce.com offers customers a
compelling value opportunity. Since this feature can be duplicated by software
competitors such as Siebel Systems, Oracle, and PeopleSoft, Salesforce.com may
have difficulty sustaining its competitive edge.

CEO Marc Benioff launched a new product initiative in 2005 intended to strengthen
Salesforce.com’s competitive edge. AppExchange is an online market place
enabling software firms and customers to trade and sell applications they develop.
There will be no charge for the eBay like service but Benioff expects to expand
demand for the firm’s software.
Source: Salesforce.com website and “An eBay for Business Software,” BusinessWeek, September 19, 2005, 78-79. 1-16
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* Sales Force Size Example
40 Sales

Current level
35
Maximum profit
contribution level
$ millions

30

25
Gross profit
contribution

20

Selling
15 expense

10 60 70 80 90 100 110
Number of salespeople 1-17
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* Managing the Salesforce

 Finding and Selecting Salespeople

 Training/Development
 Management Control
Monitoring
Directing
Evaluating
Rewarding
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STRATEGY
* FEATURE:
Wyeth Reorganizes the Sales Force to Improve Productivity

 Wyeth’s changes in the sales organization are

driven by concerns of physicians about duplicated
sales coverage and the need to improve salesforce
productivity.
 The prior approach of multiple salespeople calling on
doctors to market the same drugs is being changed.
 Out of Wyeth’s salesforce of 5000, about half call on
primary-care doctors. As many as 750 nay be cut or
reassigned.
 The selling strategy is to reduce the frequency of
sales calls, while making each more worthwhile.
 Initiatives include assigning each salesforce
responsibility for more drugs, reducing sales calls on
the doctors who write the fewest prescriptions, and
utilizing a part-time sales force for coverage of
selected accounts, and use of Internet-based
seminars.
Source: Scott Hensley, “Wyeth to Revamp, Cut Its Sales Force,” The Wall Street Journal, June 20, 2005, A3, A6.
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* Sales Force Evaluation and Control

Performance
Measures

Focus on Management Control

and/or Outcomes?

Performance
Standards

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* Reinventing the Sales Organization

Customer
A
Te pp Relationships g
ch lyi h i n
no ng ac
lo
gy Co
SALES MANAGER
Performance Huddles CHALLENGES Sales Structure
ls
e
n n
a Re I n
C h la ter
tio na
er ns l
tom Keeping Score hi
ps
us
C

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* INTERNET STRATEGY

 Strategy Development
 Deciding Internet Objectives
 E-Commerce Strategy
 Value Opportunities and Risks
 Measuring Internet Effectiveness
 The Future of the Internet

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* Internet Strategy Alternatives

Promotional Medium

Communication Tool

Value-Chain Channel

Separate Business Model

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* Deciding Internet Objectives

 Creating Awareness and Interest

 Information Dissemination
 Obtaining Research Information
 Brand Building
 Improving Customer Service

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* Designing Internet Strategy
1. Customer Groups Targeted
2. Value Proposition
3. Communications Strategy
4. Designing the Website
5. Structure of the Organization
6. Alliance Partners
7. Shareholder Value
8. Tracking Performance
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* Measuring Internet Effectiveness
Challenging but capabilities are developing.
What should be measured and how?
Major changes are likely through trial and
error.
Alternative measures:
Ad impressions, clicks, unique
visitors, total visits, page impressions

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* E-Tailing Finally Hits Its Stride
The E-tail Effect
How e-commerce is shaking up the retail landscape:
THE BIG GUNS ARRIVE
After early struggles, online sales at brick-and-mortar giants such as Wal-Mart,
Sears, and Gap are soaring. These chains are also using the Web to test new
products and move into new markets.
NICHES GO NATIONAL
More and more niche players are succeeding by offering variety rivals can’t match.
Luggage seller eBags, for example, is able to stock 12,000 styles, compared with
250 in a typical store.
SEARCH LENDS A HAND
Using Google and similar Websites, consumers can search far and wide for
specialized products – say, stainless-steel farm sinks. That’s creating markets for
lesser known brands and new merchants.
MORE PRICING PRESSURES
Shoppers are increasingly using price-comparison sites such as Shopping.com and
Shopzilla. The result: Ever more cutthroat competition for brick-and-mortar and
online stores alike.
Source: “E-Tailing Finaly Hits Its Stride,“ BusinessWeek, December 20, 2004, 36-37.
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* The Future of the Internet

Revolutionary for certain

industries and incremental for
others.

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* DIRECT MARKETING

Kiosk
Catalogs
Shopping

Electronic DIRECT
Direct Mail
Shopping MARKETING

Radio/Magazine/ Telemarketing
Newspaper
Television

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* Advantages of Direct Marketing
 Socio-economic Trends
Time constraints/
convenience
 Low Access Costs
Much lower than face-to-face
contact
 Data Base Management
Facilitates direct marketing
initiatives
 Value
An attractive bundle of value
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