Selling and Sales Management: The Marketing Concept and Personal Selling

The Development of the Marketing Concept

  • The development of the marketing concept is viewed as the evolution of modern business practice through three successive and distinct stages:
    • Production Orientation.
    • Sales Orientation.
    • Marketing Orientation.

Production Orientation

  • This era was characterized by a primary company focus on the production of goods or services.
  • Primary Aim: To achieve high production efficiency by utilizing large-scale production techniques for standardized items.
  • Business Hierarchy: Within the organization, functions such as sales, finance, and personnel were considered secondary to the central business function of production.
  • Underlying Philosophy: The core belief was that customers would purchase products as long as they were of a reasonable quality and were made available in sufficiently large quantities at a suitably low price.

Sales Orientation

  • Historical Context: The large-scale introduction of mass production techniques during the 1920s forced many firms to shift toward a sales orientation.
  • Shift in Focus: Company efforts switched to the sales function to ensure that the production generated by the firm was actually sold.
  • Philosophical View of Customers: In a sales-oriented business, the underlying philosophy is that customers, if left to their own devices, will be slow or reluctant to buy.
  • Modern Application: Many companies today still adopt a sales-oriented approach to business, although modern customers are better protected against the worst excesses of this approach through regulations and consumer awareness.

Marketing Orientation

  • Core Principal: The marketing concept holds that the key to a successful and profitable business lies in identifying the needs and wants of customers and providing products and services that satisfy them.
  • Environmental Drivers: Companies have recognized a different approach is necessary due to today's environment, where consumers are better educated and more sophisticated.
  • Strategic Center: Customer needs must be placed at the very center of business planning.
  • Analytical Focus: There is a heavy emphasis on techniques aimed at understanding buyer behavior.

Comparison: Sales versus Market Orientation

  • Sales Orientation Analysis:
    • Process Flow: Production $\rightarrow$ Sales $\rightarrow$ Customers.
    • Focus: The emphasis is placed primarily on the seller's needs.
  • Marketing Orientation Analysis:
    • Process Flow: Customer Needs $\rightarrow$ Production $\rightarrow$ Sales.
    • Focus: The emphasis is placed primarily on the customer's needs.

Implementing the Marketing Concept

  • Implementing a marketing orientation requires significant organizational changes.
  • Management must develop a specific set of tools, including techniques and concepts, to put the marketing concept into practice.
  • Major Pillar Concepts: There are two major concepts that require deep understanding for implementation:
    • Market Segmentation and Targeting.
    • The Marketing Mix.

Market Segmentation and Targeting

  • Definition: Market segmentation is the process of identifying clusters of customers within a market who share similar needs and wants and who will respond in a unique way to a specific marketing effort.
  • Selection Process: once a company identifies various segments in a market, it must decide which segments are the most attractive and which ones it can market to most effectively.
  • Tailoring Efforts: Company marketing efforts can be tailored specifically to the needs of the segments the company has chosen to target.
  • Example: A manufacturer of toothpaste may decide to segment the market based on age group.

Benefits of Market Segmentation

  • Provides a clearer identification of market opportunities.
  • Allows for a clearer analysis of gaps in the market where no competitive products currently exist.
  • Results in product designs and market appeals that are more finely tuned to specific market needs.
  • Facilitates the focusing of marketing and sales efforts on segments that possess the greatest potential.
  • Seller Discovery: Through segmentation, a seller may discover that different age groups in the market have different wants and needs and require different features from the product.

Importance of Segmentation to Selling

  • Information Provision: Salespeople provide essential information to customers and the marketing department to ensure accurate segmentation.
  • Market Monitoring: Salespeople monitor market changes to indicate when a segment is no longer viable or distinctive.
  • Selling Efficiency: Effective segmentation makes the actual task of selling much easier.
  • Value Proposition: Salespeople use marketing analysis to formulate a value proposition for a particular segment, identifying key selling points and how the offer satisfies customer needs.

The Marketing Mix (The 4 Ps)

  • Definition: The marketing mix refers to the four key elements of a marketing strategy: Product, Price, Place, and Promotion.
  • This concept is central to modern marketing practice.
  • Management Task: Marketing management must blend these four ingredients together into a "successful recipe."
  • Extended versions of the 4Ps exist (Source: Gummesson, 1994:8).

Product Element

  • Definition: Product covers anything a company offers to customers to satisfy their needs.
  • Associations: Features, packaging, quality, and range.
  • Significance: Decisions regarding the product determine the upper limit of a company's sales potential.
  • Customer Perspective: Product relates to what the customer is actually purchasing in terms of needs and wants.
  • Example: When people purchase cosmetics, the underlying need/want they are purchasing is "attractiveness."

Product Life Cycle (PLC)

  • The product life cycle is analogous to the human life cycle and consists of four distinct stages:
  • Introduction (Birth):
    • Characterized by slow sales growth.
    • High launch costs result in few profits and often a financial deficit.
    • Dealers must be persuaded to stock and promote the product.
    • Consumers must be made aware of the product, persuaded to purchase, and educated on how to use it.
  • Growth:
    • Sales begin to escalate at a rapid pace.
    • Profits begin to be realized.
    • A snowball effect occurs via word-of-mouth communication and advertising.
    • Dealers may begin to request to stock the product.
  • Maturity:
    • Sales growth begins to slow as the market becomes saturated.
    • There are few new buyers and a high proportion of repeat sales.
    • Competitors enter the market due to previously high profit margins.
    • Profits peak and then begin to decline.
  • Decline:
    • Sales fall and profits disappear (00 profit).
    • Customers become bored with the product or are attracted to new, improved products.
    • Dealers begin to destock the product in anticipation of further reduced sales.

New Product Adoption and Innovation

  • The nature of a new product can affect its rate of adoption in the market.
  • Sales Role: Salespeople must be aware of how their major customers respond to innovations to tailor selling activities to customer preferences.
  • Multiple factors determine the rate at which an innovation is taken up by the market.

Price Element

  • Associations: Price levels, credit terms, price changes, and discounts.
  • Strategy: Pricing can be used to win a competitive advantage and differentiate a company from its competitors.
  • Perceived Value: The capacity to set prices must consider the perceived value among customers.
  • Salesperson's Task: Convince clients that the product offered is worth the price.
  • Market Dynamics: Prices can be lowered if demand is small or raised if demand is large.
  • Pricing Approaches:
    • Cost-based: Ignores customers and competition.
    • Market-based: Considers the worth or value seen by customers.
  • Five Factors in Determining Price Level:
    1. Company objectives.
    2. Marketing objectives.
    3. Demand considerations.
    4. Cost considerations.
    5. Competitor considerations.

Mathematical Models in Pricing and Output

  • The Demand Curve:
    • A graph showing the relationship between Price (PP) and Quantity (QQ).
    • Example values on the curve: At a price of £30\pounds 30, quantity is low; at £10\pounds 10, quantity increases to 44 (thousands).
  • Simple Break-even Chart:
    • Fixed Costs (aa): Constant regardless of output.
    • Variable Costs (bb): Increase with output.
    • Total Costs: Represented as a+ba + b.
    • Sales Revenue: The total income from sales.
    • Break-even Point: The intersection where Sales Revenue equals Total Costs.
    • Profit and Loss: Loss occurs when Total Costs exceed Sales Revenue; Profit occurs when Sales Revenue exceeds Total Costs.

Place (Distribution) Element

  • Definition: refers to where consumers buy or discover the product.
  • Components: Inventory, channels of distribution, and the number of intermediaries.
  • Logistics: Distribution involves all activities required to move goods and materials into the factory, through the factory, and to the final consumer.
  • Strategic Value: Distribution is recognized as a key part of strategic management that can improve company performance and lead to cost savings.
  • Three Factors for Distribution Consideration:
    1. Selection of distribution channels.
    2. Determining the level of customer service.
    3. The terms and conditions of distribution.
  • Impact on Sales: Distribution decisions influence territory design and route planning for the sales force.

Promotion (Communication) Element

  • Associations: Advertising, publicity, sales promotion, personal selling, and sponsorship.
  • Sales Influence: Personal selling is considered an element of the total promotional mix.
  • Communications Mix: The combination of the five promotional elements.
  • Integrated Marketing Communications (IMC): Ensuring all five elements work together in harmony.
  • Implication for Selling: The sales force must be kept fully informed of all new sales promotions, direct marketing, and advertising campaigns.

Relationship Between Sales and Marketing

  • Organizational Structure:
    • Sales-Oriented Company: Sales and marketing are often treated as separate or competing silos.
    • Marketing-Oriented Company: Personal selling is viewed as a part of the marketing function. The marketing function takes a wider controlling and coordinating role across all company activities.
  • Collaboration: Sales efforts are influenced by marketing mix decisions, and marketing efforts are influenced by sales feedback. Sales and marketing must be fully collaborative.
  • Complementary Functions: While the functions are different, they are complementary. Organizations promoting cooperation and collaboration are more likely to see benefits.
  • Joint Goal: Selling and sales management are concerned with analyzing customer needs and satisfying them through the company's total marketing efforts.

Marketing Strategy and Sales Management

  • Personal selling is not a standalone element but must be considered in light of the overall marketing strategy.
  • Target Market Choice:
    • Defining a target market has clear implications for sales management and target accounts.
    • Once a target market size/specification is defined, sales management translates this into individual target accounts.
    • Sales-force resources are deployed to maximum effect based on these choices.
    • Target audiences (target segments) are relevant in both B2B and B2C contexts.
  • Strategic Objectives:
    • Marketing strategy affects personal selling through objectives such as Build, Hold, Harvest, and Divest.
    • Selling objectives and strategies must be consistent with other elements of the marketing mix.
    • Sales activities must align with achieving stated marketing objectives.

Sales Buy-in of Marketing Strategies

  • Sales buy-in is defined as the sales team believing that a proposed marketing strategy or initiative is appropriate and has merit.
  • Salespeople are the individuals responsible for the actual implementation of marketing plans.
  • Research indicates that the chances of achieving successful sales buy-in are improved when the strategy is clearly communicated and supported.