BASIC SALES CONCEPTS

The need for sales

Where does the sales function fit in an organization

Salespeople – Why they are important?Salespeople are “active representatives of the company who canInfluence people's perception of it through their ability to interact,to customize, and to build relationships with customers”

The Strategy Hierarchy

CORPORATE STRATEGY

SALES STRATEGY

MARKETING STRATEGY

Corporate Strategy – Encompasses plans and goals of the entire organization.

Communicated to various business units

Marketing Strategy – What markets to serve with what products - What types of relationships to form and with whom - Level and allocation of resources - Detailed objectives and plans

Most Challenging Aspect – Finding the sustainable competitive advantage thatWill give the company an edge in the market over time.

Growth Strategies

PRODUCTS

NEW MARKETS

Market Penetration(finding more customersIn existing markets)

Market Development(To develop potential new markets)

Product Development(creating new products to get more business out of company's existing customers)

Diversification(combining new Products and new markets)

DETAILED OBJECTIVES AND ACTION PLANS – SMART Format

SpecificMeasurableAchievable, yet challengingRealisticTime-Based

SELLING APPROACHESTransactionalAffiliativeConsultativeEnterprise Selling

TYPES OF SELLING

Order Takers – Respond to already committed customers

Order Creators – Do not directly receive orders since they talk to specifiers rather than buyers.

Order Getters – Attempt to persuade customers directly to place Orders.

Types of order takersInside order takers – sales assistant's task is purely transactional - receiving payment and passing over the goods.Delivery sales people – Winning and losing orders will be dependent on reliability of delivery and personality of salesperson.

Outside Order Takers –Primary function is to respond to customer requests rather than to actively seek to persuade

ORDER CREATORSMissionary salespeople – Sales task is not to close the sale but to persuade the customer to specify the seller's products. MR, Beauty salons, architects.

ORDER GETTERSNew business salespeople – win new business by identifying and selling to prospects.

Organizational salespeople – To maintain close, long-term relationships with organizational customers

Consumer salespeople – sell products and services to individuals. Much selling is one-off and salespeople are generally rewarded through commission.

Technical Support Salespeople – Provide sales support to front-line salespeople where product is highly technical and negotiations are complex.

Merchandisers – Provide sales support in retail and wholesale selling situations. Sales to individual outlets is supported by merchandisers who give advise on display, implement sales promotions, check stock levels and maintain contact with store managers.

NATURE AND ROLE OF SALES MANAGEMENT

What is Management??

Need for Sales Management- sales is a strategic function in the organization- Emphasis has changed from pure selling to Planning, organizing and controlling- Advances in technology- Increased competition

DUTIES AND RESPONSIBILITIES OF A SALES MANAGER- Setting up of sales force objectives and goals- Forecasting and budgeting- Sales force organization, sales force size, territory design and planning- Sales force selection, recruitment and training- Motivating the sales force- Salesforce evaluation and control

Figure 1.1 Characteristics of modern sellingSource: Adapted from Moncrief, W.C. and Marshall, G.W. (2005) ‘The evolution of the seven steps of selling’, Industrial Marketing Management, 34, pp. 13–22

Production OrientationEfforts to achieve high production efficiency,low production cost and mass distribution. Underlying philosophy – Consumers prefer products that are widely available and inexpensive.Suited to an economic climate where demand outstripped supply.

Sales Orientation Focus shifts from production to sales function Underlying philosophy – Left to their own devices,customers will be slow or reluctant to buy Demand is depressed compared to supply capacity or goods are unsought like insurance policy, encyclopedia. Customers have a lot of potential suppliers to choose from

MARKETING CONCEPT

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Focus shifted from “make-and-sell” philosophy to a customer centered “sense-and-respond”Rather than finding right customers for products, find the right product for the customer

The Marketing concept holds that the key to achieving organizational goals is being more effective than competitors in creating, delivering and communicating superior customer value to your chosen market.

Focuses on the need of the buyer Focuses on the need of the buyer

Satisfying needs of the customersPreoccupied with the sellers need to convert his product into cash

SELLING MARKETING

Figure 1.4 The product life-cycle curve

A sales organization defines the duties, roles, rights and A sales organization defines the duties, roles, rights and responsibilities of salespeople engaged in selling activities responsibilities of salespeople engaged in selling activities meant for the effective execution of the sales effort.meant for the effective execution of the sales effort.

Managerial functions undertaken by a sales organization:Managerial functions undertaken by a sales organization:Selection and recruitment of quality manpowerSelection and recruitment of quality manpowerTheir induction and training for better performanceTheir induction and training for better performanceEffective supervision of subordinates in the sales forceEffective supervision of subordinates in the sales forceMotivate the salesforce to remain loyal and committed to Motivate the salesforce to remain loyal and committed to achieve achieve organizational goalorganizational goalAdequate compensation to the team according to efforts.Adequate compensation to the team according to efforts.

Benefits of a sales organization:Benefits of a sales organization:Help in the flow of both the upward and downward communication for Help in the flow of both the upward and downward communication for taking sales-related decisions.taking sales-related decisions. Helps in proper forecasting of market demandHelps in proper forecasting of market demandExecution of contingency sales plans in response to competition and Execution of contingency sales plans in response to competition and market changes.market changes.Remove duplication of efforts and enhance productivity levels of Remove duplication of efforts and enhance productivity levels of salespeople by keeping costs and expenses under control.salespeople by keeping costs and expenses under control.Generate financial resources, which are circulated within the organization Generate financial resources, which are circulated within the organization to finance its other functions.to finance its other functions.Serves as a unified contact or relationship point with customers. Allows Serves as a unified contact or relationship point with customers. Allows for continuous customer interaction to obtain information about their for continuous customer interaction to obtain information about their problems, suggestions and future demands,problems, suggestions and future demands,Pay adequate attention to customer problems, their redressal and Pay adequate attention to customer problems, their redressal and suggestions for an effective and long-term relationship.suggestions for an effective and long-term relationship.

ORGANIZATIONAL DESIGNORGANIZATIONAL DESIGN

““Refers to the formal and coordinated task of assigning territories Refers to the formal and coordinated task of assigning territories and establishing flows of communication and responsibilities of sales and establishing flows of communication and responsibilities of sales groups and individuals to serve customers effectively. groups and individuals to serve customers effectively. The developed structure helps in:The developed structure helps in:Identification of roles, responsibilities and command in the Identification of roles, responsibilities and command in the organization.organization.Enhancing productivityEnhancing productivityConflict reductionConflict reductionImproves individual's quality of work by identifying contents of the Improves individual's quality of work by identifying contents of the job, qualifications and experience required to undertake the job and job, qualifications and experience required to undertake the job and rewards associated with the performance of the job.rewards associated with the performance of the job.

Line Organization – Chief executive does the decision making and decisions flow down the line for execution. Decisions are made faster, overhead costs are lower and salespeople need to followthe command.

President/Owner

Salespeople

Sales Head

Design by Territory – Designing done on basis of a geographic territory

President/Owner

Salespeople

Sales Head

President/Owner

Salespeople

Sales Head

Salespeople

Sales Head Sales Head

Salespeople

Sales Head

SalespeopleSalespeople

Salespeople

Design by Management Function – Also called Line and Staff function design

VP, Marketing

Advertising/SalesPromotion mgr.

Manager, Market Research

Salespeople

Sales Manager

Staff Function Line function

Design by Product –Used in organizations with diversified productportfolio

President(Marketing

Product Mgr A

Product Mgr B

Mgr Training Mgr promotionsMgr Sales

Mgr Training Mgr promotionsMgr Sales

Design by Customer – Used in Organizations with several and distinct Markets. Each salesperson sells the entire product line to the same customer.

PresidentMarketing

Sales Manager,Industrial Customers

Vice President Sales

Sales Mgr,Retail sales

Salesman Salesman

Sales Manager,Wholesalers

Salesman

SELLING AND BUYING STYLES

Buying style varies depending on:Capability to payQuantity of purchaseBuyer's ability to take riskBargaining power of the buyerCompetitive landscape in the industryNature of product

Product Adoption and diffusion – Describes innovative behavior and holds that the characteristics of a new product can affect its rate of adoption. These adopter categories contain percentages of first-time buyers that fall into each category.What will attract first-time buyers to a product or service and the length of time it will take for the diffusion process to be completed will depend upon the nature of the product or the service.

% f

irst-

time

adop

ters

Innovators(2.5%)

Earlyadopters(13.5%)

EarlyMajority(34%)

LateMajority(34%)

Laggards(16%)

Time of Adoption(Approval , acceptance) of Innovations

9

8

7

6

5

4

3

2

1 2 3 4 5 6 7 8 9

(1,9) People-orientedI am the customers friend.I want to understand him and respond to his feelings and interests so that he will like me. It is the personal bond that leads him to purchase from me.

(5,5)Sales Technique Oriented – I have tried an effective route for getting a customer to buy. It motivates through a blended personality and product emphasis

(1,1) Take it or leave it -I place the product before the customer and it sells itself as and when it can

(9,9) Problem solving orientedI consult with the customers so as to inform myself of all the needs in his situation that my products can satisfy. We work towards a sound purchase decision on his part,which yields him the benefits he expects from it

(9,1) Push the product oriented – I take charge of the customer and hard sell him, pilling on all the pressure it takes to make him buy

SELLING STYLES

Concern for Sale

Concern

For

Customer

SELLING SKILLS

SELLING SKILLS

Problem solving skills

Listening skills

Conflict managementAnd resolution skills

Negotiationskills

Communication skills

Implementation/Follow-Up

Pre-Approach

Approach

Needs Identification

Presentation

Handling Objections

Closing the sale

Prospecting

SALES PROCESS

Prospecting -Involves identifying potential customers for a particular product or serviceMAD Buyer – Money to spend, Authority to buy, Desire to buy it

Pre-Approach – Salesperson tries to learn everything he can about the account

Approach – Ask the buyer to commit to a meeting

Needs Identification – Involves three stepsa) Questioning techniques like SPIN in order to figure out customers needb) Identification of the decision process elements facing the customerc) Gaining pre-commitment

Presentation – Describe the product/service to the customer and how it meets the customer requirements.FEBA (approach towards presentations) – Statement of Feature, Evidence, Benefit and Agreement