Determination of product potential on an account by account basis.
Estimates of Market Share and Probability are based upon the judgement of the salesperson and
Amount of past sales
Degree and kind of competition
Product,Price, and Service commitments
Existing account relationships
Expected Value of an Account
EV= PPV x (SES x PES)
PPV= Potential Product Volume
SES= Salesperson Estimated Share
PES= Probability of getting expected share
EV=PPV X Expected Share
$60,000 X .43 = $25,800
Sales Force Quality Impacts Financial Performance
Value of Quality Sales Force Increases as:
Customer pressure intensify
Sources of Product differentiation dry up
Supply Chain Functions become more integrated
Sales Strategy is most important when
Product is differentiated
Product is New
Product is late in life cycle
Product is undifferentiated
Amount of Product Differentiation Product Life Cycle High Low High Low
From Product Power to Customer Power
Over time sources of of MFG. Profitability change
Early one profits are proportional to account size
Consolidation in most customer industries has led to much more concentration at the top of the account triangle
Shift in customer buying power requires shift in Sales Strategy Number of Accounts Cost Pressure Price Pressure Major Accounts Middle Accounts Mini-Accounts Account Size
Key Determinants of Account Profitability
Selling and Service Cost
Something Old…Something New
Get New Accounts
Get the Order
Pressure Firm to cut Price
Give Service to Get Sales
Manage all accounts the same way
Sell to Anyone
Retain Existing Accounts
Become the Preferred Supplier
Price for Profit
Manage for Profitability
Manage each account for maximum long term profitability
Concentrate on High Profit Potential accounts
Role of the Salesperson
Which Products and Services?
What Specific Activities are to be accomplished?
What are the key interactions with other parts of the company?
Make the Sales Task Clear
Sales Force Architecture
How many different sales forces should we have?
How should the sales force be structured?
What degree of specialization is needed?
What are the sales force resource requirements?
Sales Management must function as a system
Skill Creation Systems
Rethinking The Role of the Sales Force
Return on Investment
Sales Process Control
Integrated Customer Management
Technology Assisted Selling
Direct versus Indirect Salesforce
* Understanding Customer Need Requirements * Establishing Channel Objectives * Direct versus Indirect Channel Alternatives * Economic Consequences * Evaluating Channel Performance KEY CHANNEL MANAGERIAL ISSUES
Multiple Customer Bases Create Complex Interactions WHO IS THE CUSTOMER? SUPPLIER DISTRIBUTION CHANNEL A DISTRIBUTION CHANNEL B INDIVIDUAL CUSTOMER INDUSTRIAL CUSTOMER
Growth in Multi-channel Systems
Just in Time Inventory Management
Supply Chain Systems
Channels Members add Value to the Exchange Process Suppliers Local market Knowledge Local inventory and distribution outlets Exchange efficiencies Financial Services Customers Expert advice Credit Accessibility Warranty/ Guarantees
Control vs. Financial Resources in Channel Design Financial Suppliers Resources Control More Financial Resources Required and more control Less Financial Resources Required and more control Few Many High LOW
Distributors Economic Role Manufacturer Distributor Customer Transferred Business Costs Transferred Business Costs $ Inventory $ Order Handling $ Selling $Credit $ Inventory $Freight $Storage $Order Handling
Distribution Strategies Intensive Distribution Newspapers,Books, magazines Packaged goods Auto parts Selective Distribution Consumer Durables Sevices Exclusive Distribution Rolls royce Dealers
Manufacturers Representatives Independent firm Bears all selling expenses Sells on commission basis Does not carry competing lines Replaces or supplements the direct sales force Does not take title to the goods
Distributors Beliefs about Factors High cost of carrying inventory Inefficient marketing Costs Increasing distribution costs Pressure to increase volume and market share Increased distributor services. Lower operating costs of purchasing.