CHANNELS & SALES IN
NEW VENTURES
MKTG 241
Dr. Dawne Martin
March 29, 2012
Dates and Learning Objectives
• Paper 4 – Due Tuesday, April 3
• Quiz 4 – Thursday, April 5
• Paper 5 – Financials, Due April 10
• Learning Objectives:
• To review the contents of Paper 4 – Marketing Strategy and Tactics
• To investigate changes in the nature and purpose of channels of
distribution
• To analysis the decisions needed to create a ;channel that
implements strategy and accomplishes goals
Paper 4: Marketing Strategy Due
Tuesday, April 3
• Marketing Strategy
• Marketing objectives and relationship to overall corporate (or
enterprise) objectives
• Identify key strategies issues such as:
• Value proposition and competitive advantage
• Positioning relative to the competition
• Marketing Programs
• Product
• Features & Benefits
• Quality
• Packaging and labeling
• Related services
• Branding
• Product development & management
• Promotion
• Channel levels & types
• Channel functions
• Channel member selection criteria
• Managing channels and multiple channels
Paper 4 (cont.)
• Pricing Strategy
• Pricing objectives
• Cost & breakeven analysis
• Customer perceptions and demand
• Competitive situation – reference prices
• Promotion Strategy
• Personal Selling
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Role of sales person
Number of sales people
Qualifications for sales people
Sales Management – selection, training, compensation, evaluation
• Public relations & publicity
• Advertising
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Goals & objectives
Audience
Exposures
Costs
• Sales Promotions
• Web-site
• Support - Customer Service Strategy
Channels of Distribution
• Unique combination of distribution and sales
effort that creates a way to reach the target
customer with
• customer’s desired point of purchase
• service level sought
• producing effective sales opportunities for business in a
cost effective manner
• Strategic Benefits
• Sales growth
• Customer value
• Competitive advantage
• Video:
http://www.marsdd.com/videos/entries/distributionentrepreneurship-101-2011-12
Prentice Hall © 2009
Rethinking Marketing, 1st Edition
12-6
Channels Haven’t Changed Much
• Direct or indirect
• Mass production and consumption have lured
intermediaries into the junction between buyer
and sellers:
• These intermediaries have either
• Taken title to the goods or services during the flow from
producer to customer
• In some way facilitated this by specializing in one or more of
the functions that must be performed for such movement to
occur
• Distribution channels
• Flows of title and functions
• The intermediaries who have facilitated them
Prentice Hall © 2009
Rethinking Marketing, 1st Edition
12-7
• Dealing with the channel for a product or service
ranks as one of the key marketing quandaries
• Distribution channels generally involve relatively long-
term commitments
• If managed effectively over time, they create a key
external resource
• They exhibit powerful inertial tendencies
• Once in place and working well, managers are
reluctant to fix what is not broken
Prentice Hall © 2009
Rethinking Marketing, 1st Edition
12-8
So . . . Is anything happening?
• Recent years have in fact witnessed significant
changes
• Result of major shifts in the environment of
business
• Changes in legislation have
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Freed channels
Broken restrictive trading practices
Changes in economic circumstances
Changes in cultural and social values
Changes in technology
• Result has been disappearance of some
channels and development of new
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Book stores versus Amazon, Itunes
Prentice Hall © 2009
Rethinking Marketing, 1st Edition
12-9
Back to Basics: What is the purpose of a
distribution strategy?
• “Goal
of marketing is the matching of segments of
supply and demand”
—Wroe Alderson 1958
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• Purpose of a distribution channel
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Right quantities of the right product or service available
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Right place
Right time
• Distribution strategy unique—depends on physical
location
• Old saying among retailers three keys to success
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3 L’s, location, location, location
Prentice Hall © 2009
Rethinking Marketing, 1st Edition
12-10
Internet Technologies Have Three Major
Effects on Distribution
1.
The death of distance
• Distance will have substantially less effect
on distribution cost
The homogenization of time
2.
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In a physical market, time and season predominate
trading and, by definition, distribution
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Activities that occur by time of day and in social and climatic
seasonality
Virtual marketplace is atemporal; a website is always
open
Seller need not be awake to serve the buyer
Buyer need not be awake, or even physically present, to
be served by the seller
Web is independent of season
Prentice Hall © 2009
Rethinking Marketing, 1st Edition
12-11
The irrelevance of location
3.
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Any screen-based activity can be operated
anyplace on earth
No longer is location key to most business
decisions
One can dispute whether the term even has
meaning in the case of Internet pureplays
Defining location itself becomes onerous
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Is it the address where the firm is officially registered?
Is it where most of the people employed by the firm work?
Is it where the server is physically situated?
Is this true for all channels?
In what businesses would location and time continue to be
major marketing considerations?
Prentice Hall © 2009
Rethinking Marketing, 1st Edition
12-12
Compare Marketspace to Conventional
Bookstore – 5 Criteria
1.
2.
3.
4.
5.
Content: Conventional bookstore sells books;
Amazon.com sells information
Context (Interface with Customer): Conventional
bookstore is in a shop with books; Amazon.com
through a screen
Infrastructure: Building, people, lots of books, good
location; Amazon.com requires fast, efficient server
and a big database
Content: Conventional bookstore can never stock all
books in print; Amazon.com stocks only those books
that sell in great numbers, yet paradoxically stocks all
books
Infrastructure: Conventional bookstore location is
important; Amazon.com location does not matter
Prentice Hall © 2009
Rethinking Marketing, 1st Edition
12-13
Implications
1.
Distribution media rather than distribution
channels for most services and many
products—they can create
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Primary relationship
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Virtual markets (www.betfair.com)
Virtual communities (NuNomad.com and LaptopHobo.com)
Virtual worlds (www.secondlife.com)
Not between customers
With mediated environment with which they mutually interact
“The medium is the message” complemented
with the medium in the product
Prentice Hall © 2009
Rethinking Marketing, 1st Edition
12-14
Implications
2. Diminished effect on marketers’ ability to
differentiate the product or service
• Commoditization: Process by which the complex
and the difficult become so simple and easy that
anyone can do them
• Solution
• Niche market too small to be attractive to others
• Rapid innovation to stay ahead of the pack
• Monopoly
• Mass Customization
3. Dis-intermediation and Re-intermediation –
networks and universal service
Channel Design
• Design
• Where are how are customers used to buying?
• Identify needs of customers and product
• Convenience, need to touch and feel, time pressure
• Need for information, education (sales effort) and consulting services,
on-site service
• Need for smaller quantities, more product assortment
• Stocking and availability
• Financing
• Available channels and relative ability to deliver needs services
Example
You are a forest products producer who has developed a
“fire proof” pine roof shingle – what are the customers and
product needs?
• What kind of information do construction contractors
need?
• Are there any issues with building codes?
• Where is the product needed?
• On what time schedule?
• What are the relative costs of shipping versus stocking?
• What are the existing channel options?
Channel Management
• What tasks does the channel need to provide?
• How will you compensate the channel for the services
provided?
• How will you ensure that the services are delivered at
the level you need to maintain product and service
quality?
• What support do you need to provide to the channel
members?
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Marketing materials?
Financing or floor planning inventory?
Training and sale support?
Entrepreneurial Selling
• You are it!
• Sales is about identifying, building and developing value
for customers
• You can’t makes sales calls to everyone – choose your
target customers carefully
• You can develop sales skills – listen, ask questions, let
the customer define the problems and benefits of
solutions (SPIN Selling – Situation, Problem, Implications,
Needs/Payoffs)
• Video
http://www.marsdd.com/videos/entries/sales-entrepreneurship-1012010-11
Traditional role of sales
• Management is preoccupied with
making sure the salespeople are
• Making right number of calls
• Calling on the right accounts
• Pushing the right products
• Selling at the right price
• Closing the right number of deals
Prentice Hall © 2009
Rethinking Marketing, 1st Edition
13-20
Principles Behind a New Mindset in Sales
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The sales function must become a source of competitive advantage
in companies
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Great sales organizations are run strategically and with
strategic intent
Sales managers and salespeople must see themselves as
entrepreneurs, and the sales department should be the most
entrepreneurial area within companies
Sales must be an opportunity-driven, rather than a resourceconstrained, activity
Innovation is a major responsibility of those in sales
The ability to create, develop, and manage relationships with
customers is the single biggest way in which salespeople
create value in the marketplace
The sales function is not separate from the marketing function
Peak performance in sales is most likely when organizations
have dynamic management systems to support the sales
force
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Prentice Hall © 2009
Rethinking Marketing, 1st Edition
13-21
Changes in markets affect sales
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Today’s market highly fragmented
Terms such as relationship marketing and one-toone marketing are being introduced to describe
• Market segmented into dozens and even
hundreds of narrowly defined segments
• Individual customers must be approached
as unique market segments
Individual customers must be approached as
unique market segments
Customer expectations continue to ratchet upward
More emphasis on customized solutions for
customers
Prentice Hall © 2009
Rethinking Marketing, 1st Edition
13-22
Result of Market Changes
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Those in sales must have more knowledge at
their fingertips
Customers expect salespeople to know about
them and to make specific recommendations
Speed has become a key source of
competitive advantage
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Customer expectations are on the rise regarding
response time to questions and demands
Customer demands can overload salespeople who
experience
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Information overload
Role overload (burnout)
Prentice Hall © 2009
Rethinking Marketing, 1st Edition
13-23
Salespeople “leverage” organizational resources
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Adept at tapping into a variety of resources within their own firms
on behalf of customers
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Production
Customer service
Product development
Credit and finance
Senior management
Build relationships with customers and key members of own firm
Salespeople deal with a large number & variety of
individuals within client organizations
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Understand the dynamics of how people influence decisionmaking process, more challenging
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Teams and networks make buying decisions
No longer one or two individuals
Growing reliance on strategic alliances
Package “total solutions” for their customers
Need to analyze lines of power and influence
Prentice Hall © 2009
Rethinking Marketing, 1st Edition
13-24
Death of the Sales Force?
The creative sales force
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Creativity is soul of sales organization
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Vital in every facet of sales management and personal selling
Creativity is about destruction and construction
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Abandonment of certain assumptions
Rejection of accepted precepts
Willingness to challenge established methods
“Creative abrasion”
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Facilitate divergence
Leadership that produces convergence
Prentice Hall © 2009
1.
Rethinking Marketing, 1st Edition
13-25
The creative sales force—cont.
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Results in concepts or solutions that can
disrupt the work lives of people in
companies
Making them break out of patterns and
comfort zones
A fresh start, new way
A path toward what can be
To create is to
matter, count, make a difference
have an impact, be a source of value
Prentice Hall © 2009
Rethinking Marketing, 1st Edition
The expeditionary (or innovating) sales force
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Creativity results in innovation
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Novel methods
Unusual solution
Core competency
Innovation is dynamic
Must know the customer intimately
Learn from competitors’ success and failures
Salespeople are front line of the organization
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Monitoring external environment
Deciphering patterns and trends
Predicting change
Developing strategy
Expeditionary sales force is one that
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Leads customers
Leads competitors
Leads its own firm
13-26
Prentice Hall © 2009
Rethinking Marketing, 1st Edition
13-27
The strategic sales force
4.
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Two dimensions
1. Connection between company as a whole
and sales force
2. Connection between overall direction and
priorities of the sales organization and the
day-to-day operational decisions made by
sales managers and salespeople
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Need for technology to assist in the process
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Document customer contacts
Automate and customize communications
Track customer purchase behavior and
future needs