Chapter 1

Introduction to Sales Management

in the Twenty-First Century
 Change Central to Sales
Management Today
• Changing customer needs drive changes
in salespeople
• Changing sales management agendas
• Change creates opportunities
 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
 Video

• https://www.youtube.com/watch?
v=zie_xSa2oRc
• https://www.youtube.com/watch?
v=5EYlJPHlrcs
• https://www.youtube.com/watch?
v=6tDfPoEOOoE
• https://www.youtube.com/watch?
v=QQQe1aDy4fE
Sales Management in the 21st Century (1)

• 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
Sales Management in the 21st Century (2)

• Building long-term relationships with customers

» Assessing customer value and focusing
on the high-priority customers.
• Creating more nimble and adaptable sales
organizational structures
» Adaptability and flexibility
• Removing functional barriers within the
organization to create greater job ownership and
commitment from salespeople
» Removing functional barriers and
leveraging the team experience
Sales Management in the 21st Century (1)

• Shifting sales management style from commanding

to coaching
» To allow salespeople to use their talents
and abilities in their sales performance.
• Leveraging available technology for sales success
» Competitive edge over others
• Integrating salesperson performance evaluation to
incorporate all activities and outcomes
» Performance evaluation and reward
process
 Key Themes in Sales Management

• Innovation – thinking outside the box, do

things differently, and embrace change
• Technology – broad spectrum of tools
available to salespersons
• Leadership – capability to make things
happen
 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.
 Technology

• Sales effectiveness is enhanced through

technology
• Constant accessibility to people/data via
computers and mobile phones
• Interactive web presences
• Just-in-Time (JIT) delivery
• Customer Relationship Management
Software (CRM)
• Intranets for internal communication
• Extranets to serve all stakeholders
 Leadership versus Managing

Leading (Mentoring) Managing

• Communicate • Control
• Cheerleader/coach • Supervisor/boss
• Empower to make • Direct
decisions
 Globalization

• Products are designed in one country,

manufactured in another, and marketed
global stage.
• Customers are global
• Diversity in the sales force has created
new challenges for sales managers.
 Ethics

• Customer loyalty is impossible to maintain

without trust as the long term
relationships require higher ethical
standards
• Federal Sentencing Guidelines (the U.S.
government) designed to punish unethical
firms
• A formal code of ethical conduct-
organizational culture
 What is Sales Management?

• All activities, processes, and decisions

involved in managing the sales function in
an organisation.
 Sales Management Process

• The formulation of a sales program

• The implementation of the sales program
• The evaluation and control of the sales
program
The Formulation of a Sales Program

• Creation of a sales management process

taking into consideration environmental
and other factors.
 The Implementation of the Sales
Program
• Involves the selection of appropriate sales
personnel, and creation of policies and
procedures that will direct efforts toward
the desired objectives.
 The Evaluation and Control of the
Sales Program
• Development of methods for monitoring
and evaluating sales force performance.
 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
Exhibit 1.2 Components of the external environment
 Economic Environment

• Buyer-seller interactions take place within the

context of current economic conditions
»The amount of growth
»The unemployment rate
»The level of inflation
• The economy impacts real potential demand
• Global economic conditions are important
• Distribution and competitive structures affect
selling success
 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
 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
 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
• Ethical standards reflect integrity of the firm
 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
Exhibit 1.4 Components of the Internal Environment
 Goals, Objectives and Culture

• Mission and objectives drive customer

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

• 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
 Financial Resources

• Lack of financial resources can:

– constrain ability to develop new
products
– limit promotional budget
– limit size of sales force

Mergers are sometimes sought to obtain

financial resources
 Production and Supply Chain
Capabilities
• Production capacity
• Location of production facilities
• Transportation costs
• Ability to ensure seamless distribution and
service after the sale
 Service Capabilities

• Opportunity for strong competitive advantage

• Difficult for other firms to compete for same
customers
• Customers reluctant to switch regardless of
price
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
 Tutorial

Q1. A number of organizations that did not consider

marketing part of their business activities in the past have
found the need to begin to market their services. Nowhere
is this more prevalent than in the nonprofit community.
While not “selling” a product or service, public service
organizations such as the Red Cross have developmental
officers who market the organization in the community. How
might you “sell” a public service organization in the
community? What is different about this versus selling for a
for-profit enterprise? What would be your goals and how
would you accomplish them?
 Tutorial

Q2. What do you think the differences would be in the

selling process for the following products and services?
How would managing the sales process differ for each?
• Selling Planter’s Peanuts to your grocer.
• Selling Planter’s Peanuts to Southwest Airlines to be
given to its customers.
• Selling telecommunications equipment costing $1 to $2
million to the U.S. government.
• Selling telecommunications equipment costing $1 to $2
million to General Electric.
• Selling five-year leases on prime retail space in Beverly
Hills.
 LEADERSHIP CHALLENGE: THE
NEW KID ON THE BLOCK
Questions
1.You are Grace Hart. What are the first three things you
would want to learn about the sales environment at MIT?
2.Consider the elements of sales force management talked
about in this chapter. What area of sales management do
you think would be most difficult for Grace to learn about as
“the new kid on the block”?
3.What advice would you give to Grace on her first day at
MIT?
 MINICASE: iTEAM, INC
Questions

1. What aspects of the external environment are most likely to affect

iTeam, Inc.’s future planning, and what impact might each factor have?

2. What aspects of the internal (organizational) environment at iTeam

are most likely to affect its future planning, and what impact might each
factor have?

3. What advice can you give to Andrew Taylor with respect to iTeam’s
future sales program? In your opinion, what steps should he take,
given the external environment and the company’s current
circumstances?