Sales Management

Chapter - 02
Sales strategies
Sales planning process
 ESTABLISHING MARKETING PLANS
There is no universal way of establishing an ideal marketing
plan; nor is the process simple in practice because every
planning situation is unique. Conceptually, however, the
process is straightforward, consisting a series of logical
steps. The marketing plan can be portrayed as a hierarchy
consisting of three levels:

• Objectives: where do we intend to go? (goals)

• Strategies: how do we intend to get there? (broadly
descriptive)
• Tactics: the precise route to be taken (detailed)
An overview of the marketing planning process
 Business definition (corporate mission or
goal)
• As a prerequisite to the determination of marketing plans,
careful consideration should be given to defining (or re-defining)
the overall role or mission of the business. This issue is best
addressed by senior management’s asking and answering the
question: ‘What business are we in?’ The definition of the role of
a business should be in terms of what customer needs are being
served by a business rather than in terms of what products or
services are being produced.

• For example, In the automobile industry, companies might

define their business as being the provision of transport,
conferring status, etc., rather than manufacturing cars.
Situation analysis/marketing audit
• The precise content of this step in preparing
the marketing plan will vary from company to
company, but will normally consist of a
marketing analysis and an analysis of
strengths/weaknesses, opportunities and
threats (SWOT).
 Market analysis (or marketing audit)
Examples of data and analysis required under the internal audit include:
1. Current and recent size and growth of market. In the multi-product
company
• this analysis needs to be made in total, by product/market and by
geographical segment.
2. Analysis of customer needs, attitudes and trends in purchasing behavior.
3. Current marketing mix.
4. Competitor analysis, including an appraisal of:
• current strategy;
• current performance, including market share analysis;
• their strengths and weaknesses;
• expectations as to their future actions.
• The external audit consists of an analysis of broad
macro-environment trends –Political, Economic,
Socio-cultural and Technological (PEST) – that
might influence the future of the company’s
products. This original description was first
extended to SLEPT with the introduction of Legal
factors, and then to PESTLE with the introduction
of Environmental factors and now to STEEPLE with
the introduction of Ecological factors.
 Statement of objectives
The following criteria are necessary for setting objectives:

1. Ensure objectives focus on results

• Because the effects of marketing activity are essentially
measurable, sales and
• marketing strategies should enable the quantification of marketing
achievement

2. Establish measures against objectives

• Return on investment.

3. Where possible have a single theme for each objective

• Imprecise objectives such as ‘reduce customer defections by 20
per cent through best-in-class service’ are not acceptable. There are
at least two objectives here and each should be quantified.
4. Ensure resources are realistic
• Best practice: attempt to answer common marketing problems
through the use of test and roll-out plans.
• Because testing enables roll-out costs to be estimated
reasonably accurately, this should ensure that campaign running
costs are realistic. (Although overheads or labor cost may not be.)

5. Ensure marketing objectives are integral to corporate objectives

• This is indisputable, because there will be a serious mismatch if
corporate objectives differ from marketing objectives, e.g.
general corporate objectives suggest expansion into new member
countries of the European Union, and specific marketing
objectives only include current member countries.
 Determine sales and market potential
and forecast sales

• A critical stage in the development of

marketing plans is the assessment of market
and sales potential followed by the
preparation of a detailed sales forecast.
Market potential is the maximum possible
sales available for an entire industry during a
stated period of time.
 Generating and selecting strategies
• This step in the process is complicated by the fact that
there are often many alternative ways in which each
objective can be achieved. Although several strategies
may be evaluated, only one strategy can be employed,
giving rise to the formula: one strategy per objective.

• For example, an increase in sales revenue of 10 per

cent can be achieved by increasing prices, increasing
sales volume at the company level (increasing market
share) or increasing industry sales.
 Examples of strategies
• Strategy 1: Targeting To the marketer, targeting is equivalent to segmentation.
A segmentation/targeting strategy may be based on any or all of the following:
• value (high or low consumption, value of goods purchased);
• customer preference (telephone/email ordering service, type of
products/services purchased);
• lifestage (status of relationship between supplier and customer:
active/lapsed/dormant customer/months since last purchase).

At this point it is important to emphasize that:

• segments must be potentially profitable;
• segments are not mutually exclusive;
• segments are not stable.

• Hence, a consumer may fall into more than one segment or different segments
at different times. If the segment requires a special effort to reach or appeal to
it, then it must have sufficient potential purchasing power to justify the effort.
• Strategy 2: Pricing In line with the classic marketer’s approach, the
following pricing strategies may be adopted:
• make short-term tactical reductions;
• establish price premiums;
• elevate perceived quality.

• Thus, the classic principle of elevating the perceived quality of a

brand so that it can command a higher selling margin may be
adopted. Additionally, a discount has more value if the worth of what
is being discounted is understood.

• Discounting is of course prevalent in all marketing. In fast moving

consumer goods (FMCG) markets it tends to be driven by competitive
or retailer pressures. Often, tactical cuts are seen as defensive.
• Strategy 3: Customer retention Because advanced technology enables
suppliers to track the progress of an enquirer or customer, focus is
increasingly shifting from mere product profitability to the profitability of
customer relationships. However, customer profitability will be determined
by:
• the cost of acquisition;
• the losses of customers or would-be customers at various key stages in
the relationship.

Key stages in the customer relationship could be revised as:

• enquiry
• conversion to customer
• repeat purchase
• up-trade
• threatened dormancy
• recovery.
 Preparing the marketing program
• The strategy statement prepared in the previous section
provides the input for the determination of the detailed
program required to implement these strategies. The
first step in the preparation of this program is the
determination of the marketing mix. Detailed decisions
must be made with respect to product policy, pricing,
promotion and distribution. Care should be exercised to
ensure that the various elements of the marketing mix
are integrated, i.e. that they work together to achieve
company objectives in the most effective manner.
 Allocating resources – budgeting
• Having made detailed decisions with respect to the elements of
the marketing mix, the next step is to assemble a budget for
each of these elements. In most companies limited resources
ensure that managers from the different functional areas have
to compete for these scarce resources.

• It is likely that much discussion will take place between those

responsible for each element of the marketing mix. In addition,
it may be found that initial marketing objectives, strategies and
detailed plans for the marketing program to achieve the
forecast level of sales may, in the light of financial and other
resource constraints, be unrealistic. In this event modifications
to the original plan may have to be made.
 Implementation
• The procedure so far should have resulted in the preparation
of a detailed document setting out what is to be done, when
it will be done, who is responsible and estimated costs and
revenues, as well as agreed time frames for the various
activities in the plan. Once approved, details of the marketing
plan should be communicated to everyone involved.

• This communication is an essential and sometimes neglected

aspect of marketing planning. Many companies have
elaborate marketing plans that are not implemented because
key people have not been informed or have not agreed the
proposed plan.
 Control
• Finally, the plan should contain an outline of the control
mechanisms that will be applied. This should include details
of major objectives and key parameters in the measurement
of the degree of success in achieving the objectives, thereby
enabling corrections and modifications to be made as the
plan unfolds. This control part of the marketing plan should
specify what is to be measured, how it is to be measured and
what data are required for measurement.

• It may also include details of what action is to be taken in the

light of deviations from the plan. This contingency planning is
a key feature of any planning process, recognizing as it does
that plans need to be flexible in order to accommodate
possible unforeseen or unpredictable changes in the market.
 THE PLACE OF SELLING IN THE MARKETING
PLAN
Contribution of the sales function
• Throughout the planning process alternative courses of action need to be
identified and decisions taken as to which of these alternatives is the
most appropriate. Contingency planning measures such as these involve
identifying alternatives and choosing between them, which requires
accurate and timely information. A key role of the sales function in the
planning process is the provision of such information.

This becomes clearer if we examine some of the stages in the planning

process where the sales function can make a valuable contribution:
(a) analysis of current market situation (marketing audit)
(b) determining sales potential/sales forecasting
(c) generating and selecting strategies
(d) budgeting, implementation and control.
Analysis of current market situation
(marketing audit)