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Sales and Management

Lecture 3

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Organizational Buyer Behaviour1. Objectives for buying:• further production• usage in operating the organization• resale to other consumers

2. Decision-making unit(DMU)/buying agents:

• A group of people(various constituencies) in an organization involved in the decision making of purchase of product/services.

• the marketer should be aware of the needs of these various constituencies.

• there can be constituencies in an organization who do not have decision making authority, but who might have some influence over the purchase and consumption process.

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Sales and ManagementPurchase a typewriter for the secretary.

•Initiators: Those who begin the purchase process (Office Manager/Secretary)

•Users: Those who actually use the product. (Secretary)

•Influencers: Those who provide information and add decision criteria throughout the process ( Office manager was consulted with regard to features or specifications to set in the purchase of new typewriters. Although the office manager might have no decision making authority with regard to the purchase, whatever specifications that s/he requests could be used without change in making the purchase. A salesperson might need to be aware of these influencers - a special trick is to get the influencer to write a specification list that happens to match the seller's product features! An influencer is someone who has influence over what is purchased. )

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•Deciders: Those who have the authority to decide on the purchase. (In this case, some middle manager, ignorant of the needs of secretaries, might have made the decision as to when and what to purchase. The seller must be aware of how it is that decisions are made and often must focus some or all efforts at whomever it is that makes decisions in the organization. Note, however, that decision making authority does not necessarily mean that this person exerts any influence on what is purchased. The company president might be the only person who signs all purchase requisitions, and therefore has ultimate decision authority, but might otherwise merely sign some requisitions without question or involvement. A decider is someone who ultimately has authority if or what to purchase.

•Buyers: Those who execute the contractual arrangements. The final purchase transaction might be left to a purchasing agent. A responsibility of salespeople, is often to maintain good, trusting, long term relationships with the purchasing agents in prospective buying organizations, whether or not they have purchased in the past. A buyer is someone who arranges the transaction.

•Gatekeepers: Those who control the flow of information. E.g, Secretary may allow/prevent access to a DMU member. Why do salespeople often give secretaries little gifts of chocolates or flowers or an occasional free lunch? The prospective buyer's secretaries can be helpful in providing names, telephone numbers, and office hours of key members of a buying center in an organization, or passing messages from the salesperson to members of the organization.

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Important Criteria of organizational buyers

1. Quality(reliability, durability, upgradability, safety) Buyers look for consistency of products or service quality which is controlled by the total quality management(QTM)

2. Price and life-cycle costs(technical assistance) Price is a key consideration as it is related to the cost of production. Life-cycle costs include productivity savings, such as maintenance costs and the initial purchase price.

3.Continuity of supply(delivery )Prime consideration of organization. This can prevent delay or disruption of production run. Organization usually like to maintain close relationship with “accredited suppliers” who can guarantee reliable supply.

4.Other emotional factors: Prestige, convenience, office politics…

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Factors affecting organizational buyer behaviourThe buy class

new task: - first time purchase, huge information needed.

- always involve various constituencies(purchasing and

senior manager, engineer, ..)

- take more time in the purchasing processModified re-buy:

- purchased before. A regular requirements for the type of

products exist, buying alternatives are known. But some

changes have to made.

- purchasing officers, production managers needed except very senior managementStraight re-buy:

- Organization re-purchases the product without any changes

- no senior management needed.

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What should the seller do in these 3 different scenarios?Selling to new task situation: If sellers can enter into the new task organization, it would be a big gain Should provide information and help with any technical problems that

may arise to create goodwill. Sellers need to invest heavily in human resources for a long time (due to

the long time and many people involved in the buying organization) Employ missionary sales team, including the best salespeople to secure

the new-task orders

Selling to straight re- buy situation: Salespeople should ensure that no change occurs in the buying

organization Regular contact/visit to ensure buyer’s needs are satisfied

Change class buy from straight re-buy to modified re-buy involves price changes, small order at first, delivery/quality guarantee etc.

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Sales activities always take place within the context of an overall strategic marketing plan, so it is important to know how a marketing plan is developed. Sales strategies and tactics may only be generated through developing the objective and strategic planning process.

Chapter 3 Sales Strategies

Company mission

Analyze current market situation

SWOT analysis

Statement of objective

Determine potential

SalesForecast

Selection of strategies

PrepareMarketing program

Budgeting

Implement plan

Measure & controlAn overview of the marketing planning process

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1. Mission

-essential,ensure that a company is operating in terms of customer’s wants/needs and the planning process. It forms a focusing mechanism for the operation activity

2. Analysis of current marketing situation-current size and growth of market by product/market geographic segment

-Customer needs, trends in purchasing behaviour

-Current marketing mix

-Competitor analysis, including: current strategy, performance, market share, strengths & weaknesses

- Analysis of macro –trends: political, social, economic, demographic, technological, cultural influences

Analysis of strengths/weakness,opportunities and threats by SWOT

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3. Statement of objectives-company then needs to determine specific objectives and goals which it wish to achieve. This also serves as the basis for the selection of marketing strategies and tactics. Objectives should be expressed clearly with an indication of time span (e.g. what to do within 5 years…)

4. Sales forecasting-Prepare a detailed sales forecast including the portion of sales potential that the company estimates that it will achieve.

-An important step in the preparation of company plans because not only the marketing and sales functions are directly affected by this forecast, but other department, such as production, purchasing, personnel will use this forecast in their planning activities

-The forecast should also include an estimated of costs and revenue

5. Generating and selecting strategies-company then need to generate alternative strategies and then select the best one to achieve the company’s objectives.

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6. Budgeting-Next step is to assemble a budget for the marketing mix elements, including the allocation of resources in 4P.

7. Implementation and control -Details of the marketing plan should be communicated to everyone involved. Moreover the company Finally the plan should include an outline of the control mechanisms. This should include details of major objectives and key parameters in the measurement of the degree of success in achieving the objectives. It also needs to mention what to do if there is a deviation from the plan.

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The influence of the marketing plan on sales activities: sales strategies and tactics

The marketing plan’s influence is most clearly shown through the decisions relating to the marketing program or marketing mix

(A) Promotional mix: Advertising, sales promotion, publicity and personal selling

The marketing plan should decide which emphases within the promotional mix according to :

1. Type of market: E.g, more advertisement and sales promotion on consumer products while more personal selling in industrial products.

2. Stage in the buying process: advertisement and publicity is more useful in the earlier stage of moving potential customers from unawareness to comprehension. Personal selling is more effective at the conviction and purchase stage.

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The influence of the marketing plan on sales activities: sales strategies and tactics

3. Planning also influences the company on deciding to use push or pull strategy:

Push strategy: pushing the product through the channel of distribution. Emphasis on personal selling and trade promotion in the promotional mix

Pull strategy: rely on advertising to promote product to final consumers

4. Different promotional tools vary in their relative effectiveness over various stage of product life cycle: Advertising and sales promotion are most effective in the introduction and growth stages of life-cycle while personal selling needs to increase market matures and eventually declines

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The influence of the marketing plan on sales activities: sales strategies and tactics

(B) Coordinating the promotional efforts: the relationship between advertising and selling

An effective marketing plan can ensure the coordination of both sales and advertising in order to achieve the company objectives:

E.g advertising can help to build up the brand image of consumer goods while personal selling can contribute to increased market penetration by the persuasion

It is important for sales personnel to be informed about company advertising campaigns and the advertising should be utilized and reinforced in the sales presentation

(C) From sales strategies to tactics

Sales strategies are definitely influenced by the marketing and sales objectives specified in the marketing planning document. Then the sales manager should determine the specific actions required to achieve the sales goal: tactics