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DEPARTMENT OF BUSINESS ADMINISTRATION & RESEARCH
Shri Sant Gajanan Maharaj College of Engg., Shegaon
Unit-1
Sales Related Marketing
Policies
Brief Marketing Policies
• Product Policies - What To Sell ?
• Distribution Policies – Who to Sell ?
• Pricing Policies – What price to Sell ?
Introduction
• Sales related marketing policies directly
influence the jobs of sales executives.
• These policies provide the direction to
organize ,manage and control the sales effort .
• These are generally company governed and
formulated policies which are administered by
sales executives.
Product Policies – What to Sell ?
• The products a company sells determines its
basic nature.
• These serve are guidelines for making product
decisions.
• They are derived from product objectives
Product Policies
• Product Line Policy
1. Short line(specialization) or full line (wide
selection) policies.
2. Governed by willingness to take risk.
Narrower the line greater the risk.
1. Changes in Product Offerings
-to determine the product tuning with market
-to determine products which needs to be dropped or added
Product Policies
2. Reappraising the product line and line simplification
-adding or removal of profitable and non profitable product lines
and customer accounts.
3. Reappraising the product line and line diversification
-relative to growth objectives
4. Ideas for new products
-Internal and external sources for new ideas.
5. Appraisal of proposed new products.
-criteria is profitability, nature and size of likely markets,
competition, price policy, sales programs and legal implications.
Product Policies
• Product Design Policy
1. Frequency of design change
2. Extent to which designs are to be protected from copying.
• Product Quality and Service Policy
1. High quality products require less service and low quality products
requires high service.
2. Guarantee policy – serves either protective or promotional
purposes.
Distribution Policies
– Who to Sell ?
• Policies on Marketing Channels
Channels should be chosen in order to obtain
the optimum combination of profit factors.
Time dimensions must be considered in
addition to :
1. Sales Volume Potential
2. Comparative distribution costs
3. Net Profit Possibilities
Distribution Policies
• Policies on Distribution Intensity
Following distribution strategies are
implemented by company :
1. Mass Distribution
2. Selective Distribution
3. Exclusive Agency Distribution
Pricing Policies
• Policy on Pricing Relative to Competition
1. Meeting the competition
2. Pricing above the competition
3. Pricing under the competition
• Policy on Pricing Relative to Costs
1. Full cost pricing
2. Promotion pricing
3. Contribution pricing
Pricing Policies
• Policy on Uniformity of Prices to Different
Buyers.
Company choose between:
1. One-price policy (same price)
2. Variable price policy ( price determined by individual
bargaining) “Here bargaining power of buyers varies with
the size of transaction.”
Pricing Policies
• Policy on List Pricing
 List pricing takes variety of forms most common being :
 Printing the price on package
 Sales personnel to suggest the resale price to buyers.
• Policy on Discounts
1. Trade Discounts
2. Quantity Discounts
Pricing Policies
• Geographical Pricing Policies
1. Free on Board (F.O.B) pricing – customer pays the freight
2. Delivered pricing – seller pays the freight
3. Freight absorption – compromise between delivered and F.O.B
pricing.
• Policy on Price Leadership
 Price changes by Market Leader and Followers
 Decision depends upon marketer’s relative market position and the
image of leadership that it desires to build and maintain
Pricing Policies
• Product Line Pricing Policy
 Different items in product lines compete with each other.
 Price space between the individual members of the line
 Bottom of line as ‘traffic builders’ and top of line as ‘prestige builders’
• Competitive Bidding Policy
 Industrial and government buyers solicit competitive bids from potential
suppliers and award the business to the bidder offering the best proposal
 Decision depending upon various factors such as price, delivery dates,
reputation for quality etc.
Corporate
Strategy
Corporate Mission
SBU Definition
SBU Objectives
Corporate
Management
Sales
Strategy
Strategy Types
Strategy Execution
SBU
Management
Strategy
Level
Key
Decision Areas
Key
Decision Makers
Organizational Strategy Levels
Strategy
Level
Key
Decision Areas
Key
Decision Makers
Marketing
Strategy
Corporate
Management
Target Market Selection
Marketing Mix Dev.
Integrated Mkt Comm.
Business
Strategy
SBU
Management
Account Targeting Strategy
Sales Channel Strategy
Relationship Strategy
Organizational Strategy Levels
Corporate Strategy
Development Process
• Analyze corporate performance and identify
opportunities and threats
• Determine corporate mission and objectives
• Define strategic business units
• Set objectives for each strategic business unit
Definition of
Strategic Business Units (SBUs)
Cravens (1991)
An SBU is a single product or brand, a line of
products, or a mix of related products that
meets a common market need or a group of
related needs, and the unit's management is
responsible for all (or most) of the basic
business functions."
Salary plus
incentive
Prospective and
new accounts
Provide high
service levels
particularly pre-
sales service
Product/market
feedback
Build sales
volume; Secure
distribution
Build
SBU Objectives and
the Sales Organization
Compensation
System
Primary
Sales Tasks
Sales Organization
ObjectivesMarket Share
Objectives
Compensation
System
Primary
Sales Tasks
Sales Organization
ObjectivesMarket Share
Objectives
Salary plus
commission or
bonus
Call on targeted
current accounts
Incr. service levels
to current accounts
Call on new
accounts
Maintain
sales volume
Consolidate market
position through
concentration
on targeted
segments
Secure additional
outlets
Hold
SBU Objectives and
the Sales Organization
Compensation
System
Primary
Sales Tasks
Sales Organization
ObjectivesMarket Share
Objectives
Salary plus
bonus
Service most
profitable accounts
eliminate
unprofitable
accounts
Reduce service levels
and/or
inventories levels
Reduce selling costs
Target profitable
accounts
Harvest
SBU Objectives and
the Sales Organization
Compensation
System
Primary
Sales Tasks
Sales Organization
ObjectivesMarket Share
Objectives
SalaryDump inventory
Eliminate service
Minimize selling
costs and clear out
inventory
Divest or
Liquidate
SBU Objectives and
the Sales Organization
Business Strategy and
the Sales Function
• Low-cost supplier
• Differentiation
• Niche
Pursue large customers
Minimize cost
Compete on price
Seek customers who are low
price shoppers
Compete on non-price
benefits
Provide high quality
customer service
Seek customers who are not
low price shoppers
Serve a distinct target
market not served well by
others
Provide high quality
customer service
Seek customers who are not
low price shoppers
Personal Selling-Driven vs. Advertising-Driven
Marketing Communications Strategies
When Message Flexibility is Important
When Message Timing is Important
When Reaction Speed is Important
When Message Credibility is Important
When Trying to Close the Sale
When Low Cost per Contact is Important
When Repetitive Contact is Important
When Control of Message is Important
When Audience is Large
Personal Selling
Advertising
Target Market Situations and
Personal Selling
Target Market:
A definition of the specific market segment to be served
Personal Selling-Driven Promotional Strategies are
appropriate when:
– The market consists of only a few buyers that tend to be
concentrated in location
– The buyer needs a great deal of information
– The purchase is important
– The product is complex
– Service after the sale is important
Integrated Marketing Communications
The strategic integration of multiple
marketing communications tools
communicating a consistent message in
the most effective and efficient manner.
Buying
Situation
Buying
Center
Organizational
Buyer Behavior
Account
Buying
Process
Buying
Needs
Account
Targeting
Strategy
Relationship
Strategy
Salesperson
Sales
Strategy
Sales Channel
Strategy
Selling
Strategy
The Sales Strategy Framework
Business or
Industrial
Organizations
Major Category Types
Users: purchase products and
services to produce other
products and services
Organizational Buyer Behavior:
Types of Organizations
Original Equipment
Manufacturers (OEM): purchase
products to incorporate into
products
Resellers: purchase products to
sell
Major Category Types
Government
Organizations
Federal, State, and
Local Government
Agencies
Organizational Buyer Behavior:
Types of Organizations
Public and
Private Institutions
Institutions
Organizational Buyer Behavior:
Buying Situations
Straight Rebuy Buying Situation
– Routinized Response Behavior
Modified Rebuy Buying Situation
– Limited Problem Solving
New Task Buying Situation
– Extensive Problem Solving
Organizational Buyer Behavior:
Buying Center
• Initiators
• Users
• Gatekeepers
• Influencers
• Deciders
• Purchasers
Organizational Buyer Behavior:
Buying Process
Phase 1: Recognize Problem/Need
Phase 2: Determine Item Specs/Quantity Needed
Phase 3: Specify Item Specs/Quantity Needed
Phase 4: Identify and Qualify Potential Sources
Phase 5: Acquire and Analyze Proposals
Phase 6: Evaluate Proposals/Select Suppliers
Phase 7: Selection of Order Routine
Phase 8: Performance Feedback/Evaluation
Control Cost in Product Use
Situation
Few Breakdowns of Product
Dependable Delivery for
Repeat Purchases
Adequate Supply of
Products
Cost within Budget Limits
Want a Feeling of Power
Seek Personal Pleasure
Desire Job Security
Want to be Well Liked
Want Respect
Personal Goals Organizational Goals
Personal and Organizational Needs
Sales Strategy:
Account-Targeting Strategy
The classification of accounts within
a target market into categories for
the purpose of developing strategic
approaches for selling to each account or
account group.
Sales Strategy:
Relationship Strategy
A determination of the type of relationship to
be developed with different account groups.
Transaction Solutions Partnership Collaborative
Characteristics of
Relationship Strategies
Goal Sell Products Add Value
Time
Frame
Short Long
Offering Standardized Customized
Number of
Customers
Many Few
Sales Strategy:
Selling Strategy
A planned selling approach for each
relationship strategy. Developing efficient and
effective selling strategies is an important sales
management task.
Matching Selling and
Relationship Strategies
Transaction
Solutions
Partnership
Collaborative
Commitment
Cost to
Serve
High
High
Low
Sales Strategy:
Sales Channel Strategy
Ensuring that accounts receive selling effort
coverage in an effective and efficient manner.
Sales channel options include:
– The Internet
– Industrial Distributors
– Independent Representatives
– Team Selling
– Telemarketing
– Trade Shows
Sales Channel Strategy:
The Internet
Used strategically to:
• Increase Reach
• Gather Information about Customers
• Showcase New Products
• Conduct Surveys
• Enhance Corporate Image
• Obtain Feedback
• Service Existing Customers
Sales Channel Strategy:
Industrial Distributors
Essentially, channel intermediaries that:
• Have Their Own Sales Force
• May Represent One Manufacturer; Several
Non-competing Manufacturers; Several
Competing Manufacturers
• Take Title to the Goods and Normally Carry
Inventory
Sales Channel Strategy:
Independent or Manufacturers’
Reps
Outsourcing the selling effort to individuals or
organizations that:
• Sell complimentary products from non-competing
manufacturers.
• Do Not Take Title to the Goods or Carry Inventory
• Are Paid for Performance
• Have Control over the Selling Effort
• May Control Access to Customer Information
Sales Channel Strategy:
Team Selling
Multiple individuals from the selling organization
working together to develop and expand
relationships with one or more accounts. The
salesperson typically coordinates the team’s
selling efforts.
Sales Channel Strategy:
Telemarketing
Using the telephone as a means of customer contact. This low-
cost method of customer relationship management may replace
field sales force for certain accounts. When integrated with field
sales force, activities include:
– Prospecting, Qualifying Leads, Conducting Surveys
– Taking Orders, Checking on Order Status, Handling Order
Problems
– Following Up for Repeat Business
Sales Channel Strategy:
Trade Shows
• Generate Leads
• Test Market New Products
• Introduce New Products
• Close Sales
• Gather Competitive Information
• Service Existing Customers
• Enhance Corporate Image
Events at which the company exhibits its wares.
Used by organizations to:

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Sdm 1.1

  • 1. DEPARTMENT OF BUSINESS ADMINISTRATION & RESEARCH Shri Sant Gajanan Maharaj College of Engg., Shegaon Unit-1 Sales Related Marketing Policies
  • 2. Brief Marketing Policies • Product Policies - What To Sell ? • Distribution Policies – Who to Sell ? • Pricing Policies – What price to Sell ?
  • 3. Introduction • Sales related marketing policies directly influence the jobs of sales executives. • These policies provide the direction to organize ,manage and control the sales effort . • These are generally company governed and formulated policies which are administered by sales executives.
  • 4. Product Policies – What to Sell ? • The products a company sells determines its basic nature. • These serve are guidelines for making product decisions. • They are derived from product objectives
  • 5. Product Policies • Product Line Policy 1. Short line(specialization) or full line (wide selection) policies. 2. Governed by willingness to take risk. Narrower the line greater the risk. 1. Changes in Product Offerings -to determine the product tuning with market -to determine products which needs to be dropped or added
  • 6. Product Policies 2. Reappraising the product line and line simplification -adding or removal of profitable and non profitable product lines and customer accounts. 3. Reappraising the product line and line diversification -relative to growth objectives 4. Ideas for new products -Internal and external sources for new ideas. 5. Appraisal of proposed new products. -criteria is profitability, nature and size of likely markets, competition, price policy, sales programs and legal implications.
  • 7. Product Policies • Product Design Policy 1. Frequency of design change 2. Extent to which designs are to be protected from copying. • Product Quality and Service Policy 1. High quality products require less service and low quality products requires high service. 2. Guarantee policy – serves either protective or promotional purposes.
  • 8. Distribution Policies – Who to Sell ? • Policies on Marketing Channels Channels should be chosen in order to obtain the optimum combination of profit factors. Time dimensions must be considered in addition to : 1. Sales Volume Potential 2. Comparative distribution costs 3. Net Profit Possibilities
  • 9. Distribution Policies • Policies on Distribution Intensity Following distribution strategies are implemented by company : 1. Mass Distribution 2. Selective Distribution 3. Exclusive Agency Distribution
  • 10. Pricing Policies • Policy on Pricing Relative to Competition 1. Meeting the competition 2. Pricing above the competition 3. Pricing under the competition • Policy on Pricing Relative to Costs 1. Full cost pricing 2. Promotion pricing 3. Contribution pricing
  • 11. Pricing Policies • Policy on Uniformity of Prices to Different Buyers. Company choose between: 1. One-price policy (same price) 2. Variable price policy ( price determined by individual bargaining) “Here bargaining power of buyers varies with the size of transaction.”
  • 12. Pricing Policies • Policy on List Pricing  List pricing takes variety of forms most common being :  Printing the price on package  Sales personnel to suggest the resale price to buyers. • Policy on Discounts 1. Trade Discounts 2. Quantity Discounts
  • 13. Pricing Policies • Geographical Pricing Policies 1. Free on Board (F.O.B) pricing – customer pays the freight 2. Delivered pricing – seller pays the freight 3. Freight absorption – compromise between delivered and F.O.B pricing. • Policy on Price Leadership  Price changes by Market Leader and Followers  Decision depends upon marketer’s relative market position and the image of leadership that it desires to build and maintain
  • 14. Pricing Policies • Product Line Pricing Policy  Different items in product lines compete with each other.  Price space between the individual members of the line  Bottom of line as ‘traffic builders’ and top of line as ‘prestige builders’ • Competitive Bidding Policy  Industrial and government buyers solicit competitive bids from potential suppliers and award the business to the bidder offering the best proposal  Decision depending upon various factors such as price, delivery dates, reputation for quality etc.
  • 15.
  • 16. Corporate Strategy Corporate Mission SBU Definition SBU Objectives Corporate Management Sales Strategy Strategy Types Strategy Execution SBU Management Strategy Level Key Decision Areas Key Decision Makers Organizational Strategy Levels
  • 17. Strategy Level Key Decision Areas Key Decision Makers Marketing Strategy Corporate Management Target Market Selection Marketing Mix Dev. Integrated Mkt Comm. Business Strategy SBU Management Account Targeting Strategy Sales Channel Strategy Relationship Strategy Organizational Strategy Levels
  • 18. Corporate Strategy Development Process • Analyze corporate performance and identify opportunities and threats • Determine corporate mission and objectives • Define strategic business units • Set objectives for each strategic business unit
  • 19. Definition of Strategic Business Units (SBUs) Cravens (1991) An SBU is a single product or brand, a line of products, or a mix of related products that meets a common market need or a group of related needs, and the unit's management is responsible for all (or most) of the basic business functions."
  • 20. Salary plus incentive Prospective and new accounts Provide high service levels particularly pre- sales service Product/market feedback Build sales volume; Secure distribution Build SBU Objectives and the Sales Organization Compensation System Primary Sales Tasks Sales Organization ObjectivesMarket Share Objectives
  • 21. Compensation System Primary Sales Tasks Sales Organization ObjectivesMarket Share Objectives Salary plus commission or bonus Call on targeted current accounts Incr. service levels to current accounts Call on new accounts Maintain sales volume Consolidate market position through concentration on targeted segments Secure additional outlets Hold SBU Objectives and the Sales Organization
  • 22. Compensation System Primary Sales Tasks Sales Organization ObjectivesMarket Share Objectives Salary plus bonus Service most profitable accounts eliminate unprofitable accounts Reduce service levels and/or inventories levels Reduce selling costs Target profitable accounts Harvest SBU Objectives and the Sales Organization
  • 23. Compensation System Primary Sales Tasks Sales Organization ObjectivesMarket Share Objectives SalaryDump inventory Eliminate service Minimize selling costs and clear out inventory Divest or Liquidate SBU Objectives and the Sales Organization
  • 24. Business Strategy and the Sales Function • Low-cost supplier • Differentiation • Niche Pursue large customers Minimize cost Compete on price Seek customers who are low price shoppers Compete on non-price benefits Provide high quality customer service Seek customers who are not low price shoppers Serve a distinct target market not served well by others Provide high quality customer service Seek customers who are not low price shoppers
  • 25. Personal Selling-Driven vs. Advertising-Driven Marketing Communications Strategies When Message Flexibility is Important When Message Timing is Important When Reaction Speed is Important When Message Credibility is Important When Trying to Close the Sale When Low Cost per Contact is Important When Repetitive Contact is Important When Control of Message is Important When Audience is Large Personal Selling Advertising
  • 26. Target Market Situations and Personal Selling Target Market: A definition of the specific market segment to be served Personal Selling-Driven Promotional Strategies are appropriate when: – The market consists of only a few buyers that tend to be concentrated in location – The buyer needs a great deal of information – The purchase is important – The product is complex – Service after the sale is important
  • 27. Integrated Marketing Communications The strategic integration of multiple marketing communications tools communicating a consistent message in the most effective and efficient manner.
  • 29. Business or Industrial Organizations Major Category Types Users: purchase products and services to produce other products and services Organizational Buyer Behavior: Types of Organizations Original Equipment Manufacturers (OEM): purchase products to incorporate into products Resellers: purchase products to sell
  • 30. Major Category Types Government Organizations Federal, State, and Local Government Agencies Organizational Buyer Behavior: Types of Organizations Public and Private Institutions Institutions
  • 31. Organizational Buyer Behavior: Buying Situations Straight Rebuy Buying Situation – Routinized Response Behavior Modified Rebuy Buying Situation – Limited Problem Solving New Task Buying Situation – Extensive Problem Solving
  • 32. Organizational Buyer Behavior: Buying Center • Initiators • Users • Gatekeepers • Influencers • Deciders • Purchasers
  • 33. Organizational Buyer Behavior: Buying Process Phase 1: Recognize Problem/Need Phase 2: Determine Item Specs/Quantity Needed Phase 3: Specify Item Specs/Quantity Needed Phase 4: Identify and Qualify Potential Sources Phase 5: Acquire and Analyze Proposals Phase 6: Evaluate Proposals/Select Suppliers Phase 7: Selection of Order Routine Phase 8: Performance Feedback/Evaluation
  • 34. Control Cost in Product Use Situation Few Breakdowns of Product Dependable Delivery for Repeat Purchases Adequate Supply of Products Cost within Budget Limits Want a Feeling of Power Seek Personal Pleasure Desire Job Security Want to be Well Liked Want Respect Personal Goals Organizational Goals Personal and Organizational Needs
  • 35. Sales Strategy: Account-Targeting Strategy The classification of accounts within a target market into categories for the purpose of developing strategic approaches for selling to each account or account group.
  • 36. Sales Strategy: Relationship Strategy A determination of the type of relationship to be developed with different account groups.
  • 37. Transaction Solutions Partnership Collaborative Characteristics of Relationship Strategies Goal Sell Products Add Value Time Frame Short Long Offering Standardized Customized Number of Customers Many Few
  • 38. Sales Strategy: Selling Strategy A planned selling approach for each relationship strategy. Developing efficient and effective selling strategies is an important sales management task.
  • 39. Matching Selling and Relationship Strategies Transaction Solutions Partnership Collaborative Commitment Cost to Serve High High Low
  • 40. Sales Strategy: Sales Channel Strategy Ensuring that accounts receive selling effort coverage in an effective and efficient manner. Sales channel options include: – The Internet – Industrial Distributors – Independent Representatives – Team Selling – Telemarketing – Trade Shows
  • 41. Sales Channel Strategy: The Internet Used strategically to: • Increase Reach • Gather Information about Customers • Showcase New Products • Conduct Surveys • Enhance Corporate Image • Obtain Feedback • Service Existing Customers
  • 42. Sales Channel Strategy: Industrial Distributors Essentially, channel intermediaries that: • Have Their Own Sales Force • May Represent One Manufacturer; Several Non-competing Manufacturers; Several Competing Manufacturers • Take Title to the Goods and Normally Carry Inventory
  • 43. Sales Channel Strategy: Independent or Manufacturers’ Reps Outsourcing the selling effort to individuals or organizations that: • Sell complimentary products from non-competing manufacturers. • Do Not Take Title to the Goods or Carry Inventory • Are Paid for Performance • Have Control over the Selling Effort • May Control Access to Customer Information
  • 44. Sales Channel Strategy: Team Selling Multiple individuals from the selling organization working together to develop and expand relationships with one or more accounts. The salesperson typically coordinates the team’s selling efforts.
  • 45. Sales Channel Strategy: Telemarketing Using the telephone as a means of customer contact. This low- cost method of customer relationship management may replace field sales force for certain accounts. When integrated with field sales force, activities include: – Prospecting, Qualifying Leads, Conducting Surveys – Taking Orders, Checking on Order Status, Handling Order Problems – Following Up for Repeat Business
  • 46. Sales Channel Strategy: Trade Shows • Generate Leads • Test Market New Products • Introduce New Products • Close Sales • Gather Competitive Information • Service Existing Customers • Enhance Corporate Image Events at which the company exhibits its wares. Used by organizations to: