Teacher: Ragheb Bseiso
BUSINESS STRATEGY:
Strategic planning is employed to make better use of company resources
and to create and sustain an advantage over the competition. Business
strategy involves defining and articulating an overall business mission,
developing specific business goals, and designing a strategy for achieving
these goals.
The factors influencing the strategic management planning process are
depicted in Figure 2-2.
Business Mission:
A well-defined business mission provides a sense of direction to
employees and helps guide them toward fulfillment of the firm’s
potential. The basic character of an organization's business is defined by
the three Cs—customers, competitors, and the company itself.
Top managers should ask, “What is our business?” and “What should it
be?” A business mission statement should include information regarding
(1) the types of customers it wishes to serve,(2) the specific needs to be
fulfilled, and (3) the activities and technologies by which it will
fulfill these needs.
Establishing Goals:
the organization’s goals—specific objectives by which performance can
be measured. These objectives are usually stated in terms of profits, sales
revenue, unit sales, market share, survival, and social responsibility.
Measurable organizational goals must be communicated down the
organizational structure.
Strategies:
A strategy is the means an organization uses to achieve its objectives.
all successful businesses focus on creating superior customer value by
achieving one of the following market positions: low cost, differentiation,
or a niche.
MARKETING STRATEGY:
Marketing strategy is the set of integrated decisions and actions a
business undertakes to achieve its marketing objectives by addressing the
value requirements of its customers. marketing strategy is concerned with
decisions related to market segmentation and target marketing, as well as
development and communication of a positioning strategy.
1- targeting : Target marketing refers to the selection and prioritizing of
segments to which the company will market.
or to decide where or for whom to go to sell your product and its involve
two steps :Selecting your markets , and set priorities .
2- segmentation: Market segmentation involves aggregating customers
into groups that (1) have one or more common characteristics, (2) have
similar needs, and (3) will respond similarly to a marketing program.
3- Positioning:
occur in the mind of the customer and refers to how the customer
perceive us versus our competitors .
--Some of the fundamental questions that customers ask about brands are:
(1) Who are you? (brand identity); (2) What are you? (brand meaning);
(3) What do I think or feel about you? (brand responses); and (4) What
kind of association and how much of a connection would I like to have
with you? (brand relationships).
STRATEGIC IMPLEMENTATION DECISIONS: (level 2)
Its require cross functional cooperation and coordination , and in its sales
executives work with top executive from ( marketing , operation ,
engineering , customer service departments ) in making these decisions .
Strategic implementation decisions refer to a set of processes that
organizations will develop to create customer value and achieve a
competitive advantage.
==The fundamental decisions that most companies will have to make
with respect to these level 2 processes include: (1)How will customers
be accessed?(Go-to-Market Strategy)
An essential set of activities must be performed in order to attract and
retain customers. A go-to-market strategy defines who will perform these
activities and for which customers.
The process for determining a go-to market strategy consists of answering
the four major questions shown in Figure 2-5.12
Segmenting the Market:
Customer segments and go-to-market strategies will vary depending on
the products old. Adult diapers and baby diapers are very similar in how
they are manufactured, but they have very different go-to-market
strategies. Most adult diapers are sold in bulk to nursing homes via
distributors, and with very little advertising. Most baby diapers are sold at
retail with massive advertising support. Customer characteristics
commonly used to segment a market for purposes of developing a go-tomarket strategy include, but are not limited to, the following:
• Industry What business is the customer in?
• Size What is the revenue size of the customer? How many employees?
What is the sales potential?
• Geography Where is the customer located? Does the customer have
global operations?
• Behavior Who are the key decision markers? What are their adoption
tendencies? Does the customer currently use our product? A competitor’s
product? Does the customer buy
centrally for all its plant locations?
Sales Process Activities:
The sales process activities consist of all the activities needed to serve a
customer properly. Essential activities can be divided into four groups:
interest creation, prepurchase, purchase, and post-purchase. These
activities roughly mirror the selling cycle and are shown in Figure 2-6.
Notice that the activities recycle, as good post-purchase activities and
support can lead to interest creation, building a continuing relationship
with the customer.
Interest creation activities include all the ways that customers can learn
about the benefits of the product and the company. After all, only
customers who want to buy will buy. Specific activities involved in
interest creation include prospecting, generating leads, creating awareness
and interest, and providing information about the company’s products.
Essential activities in the prepurchase phase include explaining features
and benefits, qualifying prospects, assessing customer needs.
Activities in purchasing: negotiating, bidding, finalizing terms and
conditions, and writing proposals.
The post-purchase activities may include delivery, installation, and
servicing of products; addressing customer questions that need
answering; providing information about new features; and collecting
payment.
Go-to-Market Participants:
The combination of go-to-market participants that is most appropriate for
each customer segment and type of essential activity will depend on a
number of factors, including cost, efficiency, and effectiveness. The
efficiency of a marketing instrument refers to its ability to generate
customer contacts for the money spent. On the other hand, the more
results created from the number of customers contacted, the more
effective the marketing instrument is.
Advertising and Promotion. Advertising and promotion consists of
instruments such as broadcast media, magazines, trade publications,
newspapers, and direct mail. The marketing program required a
coordinated effort among advertising, sales promotion, channels of
distribution, and the sales force. (not very effective)
Telemarketing. Telemarketing refers to customer contacts utilizing
telecommunications technology for personal selling without direct, faceto-face contact.
Internet. The extensive use of the Internet to gather information and to
make purchases is a key business go-to-market development.(more
expensive but more effective at generate desire customer behaviors .
“Today we notice that trying to get our customers to purchase through the
Web has not worked. But we do know that buyers will make their
purchasing decisions because of the Internet.
Face-to-Face Selling Alternatives. Upon deciding that a face-to-face
sales force should perform some of the essential activities, a company
must still address another question. Should the selling be performed by a
direct company sales force, a selling partner, or some combination? The
main outsourcing options available to most companies are agents,
resellers, integrators, and alliances.
Independent Sales Agents.
Independent sales agents are not employees, but rather independent
businesses given exclusive contracts to perform the selling function
within specified geographic areas. Unlike distributors, they take neither
ownership nor physical possession of the products they sell and are
always compensated by commission.
Resellers. Resellers are channel members, retailers, and distributors, who
take title to the offerings they sell to end-users.
(they market their supplies offering to their own customers )
Integrators. Set solutions for complicated problems that end customer
face (powerful buying influence with complex choice )
value-added resellers (VARS)
ERP (enterprise resource planning
• SFA (sales force automation
• CRM (customer relationship management)
• PRM (partner relationship management)
Alliances. An increasingly popular alternative for accessing markets is to
establish an alliance with another organization in a joint venture to sell
products to specific markets.
2-(2) How will new offerings be developed and existing products be
improved? (product development management [PDM])
The sales force will almost always play a major role in the launching of
new products. Professors Wotruba and Rochford have shed new light on
the changes that most companies make in their sales
force programs when introducing new products.25 Some of the more
common changes are as follows.
1. Motivation
2. Sales Competencies
3. Leadership
4. Compensation
5. Sales Structure
At the same time, studies indicate that new product failure rates are
around 50 percent of all launched products and that on average it takes
3,000 new product ideas to produce one successful new product launch.
(3) How will physical products be created and delivered to the
customer? (supply chain management)
In short, supply chain managements about producing world-class
products that are available at the right time, at the right place, and in the
right form and condition.
Following are some of the important implications of SCM for the
evolution of the sales force :
1. Knowledge of the entire upstream and downstream supply chain.
2. Thinking strategically about partnering.
3. Establishing good lines of communications and influence with
senior corporate management.
(4) How will customer relationships be enhanced and leveraged?
(customer
relationship management [CRM])
CRM is a comprehensive set of processes and technologies for managing
relationships with potential and current customers and business partners
across marketing, sales, and service regardless of the communications
channel.
Successful CRM efforts depend on a combination of people, processes,
technology, and knowledge.
The processes involved in customer relationship affected by CRM
technology include:
 Marketing.
 Sales
 Service
According to CRM Group Ltd., CRM efforts tend to evolve through three
phases. First, companies look to manage customer relationships as a
driver of revenue. The focus is on utilizing cross-selling and up-selling
opportunities, and on finding new solutions to customer situations that
could be packaged as new offerings.
In the second phase, companies look for possibilities to manage
customer relationships as drivers of profits. Successful CRM initiatives
have focused on using customer knowledge and emerging new channels
to decrease cost to serve and frequently on using advanced price
mechanisms.
third phase of CRM, which is to view the management of customer
relationships as a driver of economic value added(EVA). At this stage,
customer relationships and sales are regarded as a true driver of
shareholder value.
The market value of the company is considered the sum of the net present
value (NPV) of all current and future customer cash flows.
*-the four skills most important to top sales professionals in a phase 3
CRM environment are the following:
 Collaboration
 • Relationship Management
 • Finance and Business Skills
 • Consultative Skills
In short, companies will need to develop a CRM strategy and define the
sales force’s role within the organization’s strategy. The sales force's role
will dictate the skills the sales force needs.
SALES FORCE PROGRAM DECISIONS:
A sales force program is a tool for planning how the sales force will
perform its role in achieving the firm’s objectives.
Account Relationship Strategy:
A firm’s account relationship strategy refers to the type of relationship it
intends to
develop with its customers.
this decision determines which customers can be profitably served
because it calls for very different levels of investment into customer
relationships.
Account relationships may take a variety of forms, each having major
implications for the sales force with respect to recruiting and selection,
compensation, necessary competencies, and behaviors.
Types of Account Relationship:
1-A transactional relationship is one in which the relationship is based
on the need for a product of acceptable quality, competitively priced, and
a process and relationship convenient for the buyer.
it is usually based on a personal relationship between individual buyers
and sellers.
This type of relationship like all relationships, is based on the nurturing
elements we will describe in Chapter 4, including a history of building
trust, creating value, and meeting or exceeding customers’ expectations.
-68 percent of all firms focus on a transactional relationship. Consumer
goods firms and large organizations are most likely to emphasize
transactional-type relationships with their customers.
2- Consultative Relationship. A consultative relationship, a quite
common relationship in industrial markets, is based on the customer’s
demand and willingness to pay for a sales effort that creates new value
and provides additional benefits outside of the product itself.
-get very close to the customer and to intimately grasp the customer’s
business issues.
the sales force attempts to create value for the customer in three
ways:
• Helping customers understand their problems and opportunities in a
new or different way
• Helping customers develop better solutions to their problems than they
would have discovered on their own
• Acting as the customer’s advocate inside the supplier’s organization,
ensuring the timely allocation of resources to deliver customized or
unique solutions to meet the customer's special needs.
-Much more time is spent learning the special needs of the individual
customer and marshaling resources inside the supplier’s company to meet
those needs.
-Sales representatives also use a software program called Activity-Based
Cost Management(ABCM) to measure costs by activity, customer, and
product.
-The relationship must usually be long term in nature for the customer
equity
consultative relationship is most appropriate when one or more of the
following conditions are present:
• The product or service can be differentiated from competitive
alternatives.
• The product or service can be adapted or customized to the needs of the
customer.
•The customer is not completely clear about how the product or service
provides solutions or adds value.
• The delivery, installation, or use of the product or service requires
coordinated support from the selling organization.
• The benefits of the product or service justify the relatively high cost of
consultative relationships.
3-Enterprise Relationship.
Fewer suppliers make customer leverage the volume of their purchases
for enhanced service and cost at the customer strategic success.
An enterprise relationship is one in which the primary function is to
leverage any and all corporate assets of the supplier in order to contribute
to the customer’s strategic success.
-To achieve successful enterprise relationships, the supplier must deliver
exceptional customer value while also extracting sufficient value from the
relationship.
Local Customer Teams (LCTs)
Enterprise Relationship tend to lower overall customer operating
cost
The focus also shifts to some degree from sales volume generation to
management and maintenance of the relationship and the conflicts that
are likely to arise over time.
-A critical mistake is to assume that more investment in the customer
relationship will automatically create a better relationship with improved
results. It turned out, however, that most customers simply didn’t want
advice or help. They needed packaging material, pure and simple, and
that’s all they were prepared to pay for.