Selling Chapter 03

PART II
PLANNING THE SALES
TEAM’S EFFORTS

CHAPTER 3
BUILDING RELATIONSHIPS
THROUGH STRATEGIC
PLANNING

LEARNING OBJECTIVES
Strategic planning helps an organization build long-term
relationships with its customers. This chapter will help you better
understand:
 The importance of corporate strategy.
 How strategic planning differs from tactical operational
planning.
 The relationship between marketing and sales force strategies.
 The role of personal selling in the firm’s marketing
relationship efforts.

IMPORTANCE OF CORPORATE
PLANNING
STRATEGIC PLANNING
• Strategic planning involves making
decisions about the organization’s long-term
goals and strategies.
• Strategic goals are major targets or end
results that relate to the long-term survival,
value, and growth of the organization.

STRATEGIC PLANNING Continued
• Strategy is a pattern of actions and resource
allocations designed to achieve the goals of
the organization.

TACTICAL AND OPERATIONAL PLANNING
• Tactical planning translates broad strategic
goals and plans into specific goals and plans
relevant to a definite portion of the
organization.
• Tactic is the operational means by which an
organization intends to reach its objective.
• Operational planning identifies the specific
procedures and processes required at lower
levels of the organization.

ESTABLISHING A MISSION AND VISION
• Mission is the basic purpose and values of
the organization, as well as its scope of
operations.
• Strategic vision provides a perspective on
where the company is headed and what the
organization can become.
• Strategic plan is the company’s mission,
values, objectives, strategies and tactics.

Four key questions:
1. Where are we?
2. Where do we want to be?
3. How should we get there?
4. Can we afford it?

FIGURE 3.1 KODAK’S VISION, MISSION, AND VALUES
VISION
“Our heritage has been and our future is to be
the World Leader in Imaging.”
MISSION
“Build a world-class, results-oriented culture…
by providing…solutions to capture, store, process, output,
and communicate…images to people and machines
anywhere, anytime...bringing differentiated, cost-effective
solutions…to the marketplace and with
flawless quality…through a diverse team of energetic
employees with the world-class talent and skills
necessary to sustain Kodak as the World Leader in Imaging.
In this way, we will achieve our
fundamental objective of Total Customer Satisfaction,
and our consequent goals of Increased Global
Market Share and Superior Financial Performance.”
VALUES
(1) Respect for the Dignity of the Individual
(2) Integrity (3) Trust (4) Credibility
(5) Continuous Improvement and Personal Renewal
Source: Kodak’s 1999 annual report.

FIGURE 3.2 RELATIONSHIP BETWEEN THE ORGANIZATION’S STRATEGIC
PLAN AND OPERATIONAL PLANS
O r g a n i z a t i o n ’s S t r a t e g i c P l a n
M i s s i o n
O b j e c t i v e s
S t r a t e g i e s
P o r t f o l i o p l a n
O p e r a t i o n a l P l a n s
P r o d u c t i o n P l a n M a r k e t i n g P l a n F i n a n c i a l P l a n
O b j e c t i v e s
F o r e c a s t
B u d g e t s
S t r a t e g i e s a n d
P o l i c i e s
O b j e c t i v e s
F o r e c a s t
B u d g e t s
P o l i c i e s
O b j e c t i v e s
F o r e c a s t
B u d g e t s
p r o g r a m s
P o l i c i e s
O b j e c t i v e s
F o r e c a s t
B u d g e t s
p r o g r a m s
P o l i c i e s
H u m a n R e s o u r c e s
P l a n

WHAT IS MARKETING?
Businesses have two major functions:
• Production of goods or creation of services.
• Marketing those goods and services.

Marketing is defined as the process of
planning and executing the conception,
pricing, promotion, and distribution of
goods, services, and ideas to create
exchanges that satisfy individual and
organizational objectives.

FIGURE 3.3 THE MARKETING GROUP – THE LINK BETWEEN
CUSTOMERS AND THE ORGANIZATION
M a r k e t i n g P r o d u c t i o n H u m a n
R e s o u r c e s
Top Management
Functional Departments
Salespeople
Customers Manufacturers – Service – Wholesalers – Retailers – Consumers

Marketing people typically have these four
basic objectives to accomplish:
1. Maximize sales of existing products in
existing markets.
2. Develop and sell new products.
3. Develop new markets for existing or new
products.
4. Provide the quality of service necessary for
customers to be satisfied with their
transactions and to continue doing business
with the organization.

MARKETING’S IMPORTANCE
TO THE FIRM
• Marketing generates sales.
• Marketing provides quality service.

ESSENTIALS OF A FIRM’S
MARKETING EFFORT
The essentials of a firm’s marketing effort
include its abilities (1) to determine the
needs of its customers and (2) to create
and maintain an effective marketing mix
that satisfies customer needs.

Marketing mix consists of four main
elements:
• Product
• Price
• Distribution or place
• Promotion.

PRODUCT: IT’S MORE THAN YOU MIGHT
THINK
• A good is a physical object that can be
purchased.
• Service is an action or activity done for
others for a fee.
• Product refers to both goods and services.

FIGURE 3.4 FOUR MARKETING-MIX ELEMENTS AND FOUR
PROMOTION ACTIVITIES
M a r k e t i n g M i x
Product Price Place Promotion
P e r s o n a l S e l l i n g A d v e r t i s i n g S a l e s P r o m o t i o n P u b l i c i t y

FIGURE 3.5 A GOOD/SERVICE CONTINUUM
R e l a t iv e ly
P u r e
G o o d s
S a lt
S o u p
R e l a t iv e ly
P u r e
S e r v i c e s
B a b y - s it t in g
I n s u r a n c e
T e a c h i n g
S e r v i c e -
I n t e n s iv e
G o o d s
A u t o m o b il e s
G o o d s -
I n t e n s iv e
S e r v i c e s
A i r t r a v e l
H y b r i d s
R e s t a u r a n t s

SERVICES ARE PRODUCTS
They present their own selling challenges
and opportunities:
• Intangibility – customers cannot sample.
• Inseparability – cannot be separated from the
seller.
• Heterogeneity – cannot standardize output.
• Perishability and fluctuating demand –
highly perishable, seasonal fluctuations.
• A tough sell – most challenging sales job.

PRICE: IT’S IMPORTANT TO SUCCESS
• Price refers to the value or worth of a product
that attracts the buyer to exchange money or
something of value for it.

DISTRIBUTION: IT HAS TO BE
AVAILABLE
• Distribution (or place) refers to the channel
structure used to transfer products from an
organization to its customers.

There are three groups of customers:
• Household – decision-making unit buying
for personal use.
• Firm – an organization that produces goods
and services.
• Government – an organization that has two
functions: the provision of goods and
services to households and firms and the
redistribution of income and wealth.

PROMOTION: PEOPLE HAVE TO BE TOLD
• Promotion, as part of the marketing mix,
increases company sales by communicating
product information to potential customers.

Four basic parts of a promotional
effort:
1. Personal Selling
2. Advertising
3. Publicity
4. Sales Promotion

TABLE 3.1 PROMOTIONAL ACTIVITIES
• Personal selling. Personal communication of information to persuade a
prospective customer to buy something – a good, service, idea, or whatever
– that satisfies an individual’s needs.
• Advertising. Nonpersonal communication of information paid for by an identi-fied
sponsor such as an individual or an organization. Modes of advertising in-clude
television, radio, direct mail, catalogs, newspapers, and outdoor advertis-ing
such as billboards.
• Publicity. Nonpersonal communication of information that is not paid for by an
individual or organization. Information appears in media such as television,
radio, and newspaper.
• Sales promotion. Involves activities or materials used to create sales for goods
or services. The two types of sales promotion are consumer and trade sales
promotion. Consumer sales promotion includes free samples, coupons, con-tests,
and demonstrations to consumers. Trade sales promotion encourages
wholesalers and retailers to purchase and to sell aggressively using devices
such as sales contests, displays, special purchase prices, and free merchandise.

FIGURE 3.6 TYPICAL DISTRIBUTION CHANNELS FOR CONSUMER
AND INDUSTRIAL PRODUCTS
C o n s u m e r P r o d u c t s
M a n u f a c t u r e r
H o u s e h o l d C o n s u m e r
R e t a i l e r
W h o l e s a l e r
H o u s e h o l d C o n s u m e r
R e t a i l e r H o u s e h o l d C o n s u m e r
I n d u s t r i a l P r o d u c t s
M a n u f a c t u r e r
I n d u s t r i a l U s e r
W h o l e s a l e r I n d u s t r i a l U s e r

TABLE 3.2 EXAMPLES OF EACH MARKETING-MIX
ELEMENT
PRODUCT PRICE PLACE PROMOTION
Brand name Credit term Channels Advertising
Features Discounts Inventory Coupons
Image List price Locations Free samples
Packaging Promotional allowances Retailers Personal selling
Quality level Transportation Product displays
Returns Wholesalers Publicity
Services Sales management
Sizes Trade shows
Warranties

THE GOAL OF A MARKETING MIX
The organization’s marketing group strives to
create a marketing mix for the right product, at
the right price, at the right time, and with the
right promotional effort.

RELATIONSHIP MARKETING
Relationship marketing is the creation of
customer loyalty.

LEVELS OF RELATIONSHIP MARKETING
• Transaction selling: Customers are sold to and not
contacted again.
• Relationship selling: The seller contacts
customers after the purchase to determine if they
are satisfied and have future needs.
• Partnering: The seller works continually to
improve its customers’ operations, sales, and
profits.

TECHNOLOGY BUILDS
RELATIONSHIPS AND PARTNERS
• Most dramatic force shaping an
organization’s marketing efforts today.
• Helps salespeople increase the speed with
which they can find leads, gather
information, reduce paperwork, and
provide service.
• Technology is expensive.

RELATIONSHIP MARKETING
AND THE SALES FORCE
These four basic questions are guidelines that define the role of
the sales force:
1. How much selling effort is necessary to gain and hold
customers?
2. Is the sales force the best marketing tool, compared to
advertising and other sales promotion methods, in terms
of cost and results?
3. What type of sales activities – for example, technical
assistance and frequent or infrequent sales calls – will
be necessary?
4. Can the firm gain strength relative to its competition
with its sales force?

PERSONAL SELLING BUILDS RELATIONSHIPS
• Salespeople generate revenue.
• Salespeople provide service.
Service quality is a subjective assessment that
customers arrive at by evaluating the service level
that they perceive being delivered.
• Salespeople implement relationship marketing.

STRATEGIC PLANNING AND THE
SALES MANAGEMENT PROCESS
PLANNING A SALES STRATEGY
THE DEVELOPMENT OF SALES STRATEGIES
1. A clear picture of the present situation.
2. Well-defined strategies covering every major
aspect of the selling units or departments.
3. Income and expense budgets and profit plan.

A sales strategic plan includes the following four
major questions:
1. What is the sales department’s present condition?
2. What trends are apparent?
3. What are the most important objectives?
4. What are the strategies for getting these
objectives accomplished?

SETTING NEXT YEAR’S SALES PLAN
The sales force may have objectives measured on
the basis of the following:
• Contribution to profits.
• Return on assets (ROA) managed by the sales
force.
• Sales/cost ratio.
• Market share.

SALES OBJECTIVES DIRECT OTHER
ACTIVITIES

FIGURE 3.8 THE STRATEGIC SALES FORCE PLANNING PROCESS
S a l e s F o r c e O b j e c t i v e s
D e f i n e R o l e s , A c t i v i t i e s ,
a n d M a r k e t s o f S a l e s F o r c e
E s t a b l i s h O r g a n i z a t i o n a l
D e s i g n a n d S t r u c t u r e
S t a f f i n g T r a i n i n g D i r e c t i n g
S a l e s A n a l y s i s a n d
E v a l u a t i o n o f S a l e s P e r s o n n e l

THE BOTTOM LINE
Strategic planning involves making decisions about an
organization’s long-term goals and strategies.
Most people today associate marketing with selling.
This marketing concept evolved over the years, developing as
American businesses matured.
The marketing mix consists of four variables: product, price,
distribution, and promotion.
Firms must carefully consider the role of the sales force in their
promotional program or promotional aspect of the marketing
mix.

Selling Chapter 03

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