Corporate goals

Maximize shareholder wealth

Business unit objectives

12% revenue growth Increase product As market share by 2 points

Marketing objectives

Sales department objectives Achieve sales revenue of $210 million in product A

Sales district objective

Achieve sales revenue of $10.5 million in product A

Salesperson objective

Achieve sales revenues of $1.2 million in product A

Major account objective

Achieve sales revenues of $95,000 in product A

Figure 2-2: Hierarchy of Sales Objectives

Major Accounts

Size of Account

Middle Accounts

Minor Accounts
Number of Accounts

Figure 2-6: Customer Base Traingle

Chapter 2
Strategic management planning -Mission -Goals -Strategies

Strategic marketing planning

-Situation analysis -Segmentation & target marketing -Marketing mix program

Sales force strategy

-Market access strategy -Account relationship strategy

Operating budgets

-Promotion -Selling expense

Michael E. Porters Three Generic Strategies

Broad Target

1 Cost leadership

2 Differentiation

Narrow target

3a. Cost focus

Lower cost

3b. Differentiation focus

Differentiation

Competitive Advantage
Source: From Michael E. Porter, Competitive Advantage, New York; Free Press, 1985, p.12.

Table 2-1 Sales Managers and Marketing Executives Product Classifications by Strategy Sales manager Classification
Build
Strategy Marketing executive classification Build strategy Hold strategy 71 29 10 21 129

Hold
Strategy 22 57

Harvest
Strategy 2 3

Divest
Strategy 0 1 Total 95 88

Harvest strategy
Divest strategy Total

49
21 149

23
27 55

6
25 32

88
94 365

A total of 71 sales managers classified their products as build strategies out of 95 so classified by marketing executives. Source: William Strahle. An Exploratory Study of the Relationship Between Marketing and Slaes Strategy (Bloomington: School of Business, Indiana University, unpublished doctoral dissertation, 1989), p. 153.

Traditional View The ultimate purpose of marketing is to make a sale The objective is to make the sale and find the next customer

vs.

Relationship View The ultimate purpose of marketing is to create a customer The objective is to satisfy the customer you have by delivering superior value

Growth comes primarily from finding customers Supplier is valued for its products and services

Growth comes primarily from enhanced product offerings for existing customers Supplier is valued for its present and future problem solving capabilities

Source: Presentation by Frederick Webster, Relationships in Marketing at Summer Marketing Educators Conference, August 8, 1993. Figure 2-7: Traditional versus Relationship Marketing

Alternative Types of Account Relationships

Programmatic

Purchasing Approach

Strategic Partners 3% Major Accounts 7%

Contractual Relationships 20%

Repeat Transactions 70% Transactional

Reactive: respond to demand

Selling approach

Partnering: create demand

Design marketing program Set advertising and promotion expenditure levels

Forecast sales Revise expenditure categories

Estimate personal selling costs needed to reach sales goals

Request additional funds as needed

Compare actual expenditures with plans

Figure 2-8: The Sales Budgeting Process

Selling Expenses as a Percent of Sales

COMPANY SIZE: Under $5 Million (MM) $5 - $25 MM $25 - $100 MM $100 - 250 MM Over $250 MM
PRODUCT OR SERVICE: Industrial Products Industrial Services Office Products Office Services Consumer Products Consumer Services

14.7% 10.5% 7.9% 3.5% 6.8%

4.1% 6.4% 9.4% 8.1% 5.4% 7.9%

Selling Expenses as a Percent of Sales Selling Expenses as a Percent of Sales

INDUSTRY: Business services Communications Educational services Electronics Fabricated metals Health services Hotels Machinery Manufacturing Office equipment Paper and allied products Wholesale (Consumer goods) Wholesale (Industrial goods) Average

1.7% 9.8% 47.9% 4.2% 10.8% 19.9% 21.4% 10.1% 13.6% 9.0% 6.8% 3.7% 9.5% 6.9%

Translating Corporate Objectives into Sales Strategies

Corporate Objectives Marketing Strategies

Become a major Supplier of Consumer Leisure Products and Services

Build
Secure Added Distribution Outlets Sell New Products to Existing Account

Hold
Service Current Target Accounts

Harvest
Trim Product Line and Push Volume Items

Divest

Help Dealers Clear Out Inventory

Help Dealers Find Substitutes or New Suppliers

Maintain List Prices and Reduce Costs Promote Product Variations and Improvements

Reduce Selling Costs

Sales Strategies

Offer Low Prices to Attract Business Emphasize Advertising Support Demonstrate Superior New Product Benefits Offer Easy Credit Terms Offer Trade Deals to Gain Acceptance

Call on Large Accounts

Offer Promotional Allowances and Help with Displays

Emphasize Advertising Support Show Superior New Product Benefits Offer Easy Credit Terms

Sell Excess Inventory to Export Markets or Jobbers

Identify and Promote Alternative Uses

Offer Key Account or National Account Services