Importance of Sales Force to Strategic Development of a Company Flashcard
EXECUTIVE SUMMARY The report has discussed the ‘Importance of Sales force to Strategic development of a company’. The case of Auckland Engineering Plc. has been examined and the various problems like higher price and over expenditure on advertising have been discussed. The role that a sales team can play in solving these problems like defending their price by focussing on the quality of the product has been observed. Sales team play a vital role in gathering up-to date information about the market and help the management of the company in forming growth strategies. Salespeople operate at the boundaries of their firms with buyer and are in the best position to not only adapt to initial on going changes in the customer needs but also to anticipate customer’s future desires” (Flint 2002) The report also states the much required co-ordination between the advertising and the sales department of Auckland Engineering Plc. and how the transfer of information from the sales department to the advertising department can help in forming effective advertising strategies. The report also examines the SWOT analysis of Auckland Engineering Plc. nd the ways in which it is of relevance to the sales force of the Company. The report suggests the use of TOWS matrix by the sales force to capture Opportunities using Strength and correct weakness to eliminate threats. The report finally discusses the use of Ansoff Matrix by the company and how the sales team plays a crucial role in these development strategies, CONTENTS INTRODUCTION3 ISSUES AND PROBLEM RELEVANT TO THE SALES FORCE4-5 PROMOTIONAL MIX OF AUCKLAND ENGINEERING PLC. 6-8 RELEVANCE OF SWOT ANALYSIS9-11
ANSOFF’S MATRIX12-13 CONCLUSION14 REFLECTION15 REFRENCES16 Appendix 1 Appendix 2 Appendix 3 INTRODUCTION This report aims to discuss ‘the value and contribution of a sales team to the strategic development of a company’. The case of Auckland Engineering Plc. (appendix 1) has been examined throwing light at the problems faced by the company and its sales force. The report begins with the examination of the problems faced by the sales team of Auckland and then tries to observe the promotional mix of Auckland Engineering Plc.
Later in the report, the SWOT analysis and its importance to the sales force has be explained and finally how the sales force play an important role in achieving the growth strategies mentioned in Ansoff Matrix has been described. METHODOLOGY The evidence used in the report to form opinions and suggestions has been collected by the author using books, online journals and internet. The report consists of all the secondary sources of data collection. ISSUES AND PROBLEM RELEVANT TO THE SALES FORCE At Auckland Engineering Plc.
The Marketing director is unhappy with the unsystematic planning of the company’s strategies and is planning to re-define the business in customer terms. Looking at the memo sent by the marketing director to the sales manager, few problems and issues concerned for the sales force can be highlighted. Higher Price: The prices of the machinery produced by them are approximately 10 % above industry average. This can be termed as one of the issues that the company and the sales person has to deal with while negotiating with a prospective client.
But if the sales force is well skilled in negotiations and tackling objections, they can easily justify the higher price highlighting the benefits of the product. A sales person has to translate how higher cost will result into greater benefits for the client. Looking at the SWOT analysis (appendix 1), one of their main strength is quality and reliability. A sales person can highlight the reliability and the quality of his product, may be comparing them with the competitor’s product to justify the higher price.
As the company also possess manufacturing flexibility second to none, the higher price can be justified by the sales force by making the customer aware of the fact that the company has got the ability to quickly and effectively respond to the individual customer needs. Another related threat to Auckland Engineering Plc. Is that their largest customer is threatening to switch because of the higher prices. It can be said that in this case, the company needs to re-define its relationship with the customer using the sales force.
One of the best methods to execute this is by using the Buying Facilitation process by Sharon Drew Morgen. This method of collaborative and facilitative selling requires much greater involvement and understanding of the sales person in the buyer’s business and helps in reducing confrontation. Sales force not skilled in generating new leads: Another problem faced by the sales force is that they are not skilled in generation new leads. If the sales force can’t generate new leads, then they won’t be useful in achieving the marketing target of generating ? 5 million as sales revenue. One of the best ways to generate new leads is to ask for referrals from the existing clients and should the sales team should utilize their advertising campaigns to search for any potential customers. Another method of generating leads is to attend the trade shows of the industry the company is working in to look for potential clients. Buyers in the industry seem prone to switching suppliers: One of the major opportunities mentioned in the SWOT analysis (appendix 1) is that the buyers are prone to switching.
This can be helpful to the sales force as the buyers have a natural tendency to switch the suppliers and these buyers can be easily approached by the sales team. This can also be a big disadvantage if Auckland Plc. is losing its own customers. Losing a buyer leads to not only loss of future orders but also the effort put by the company to build the relationship with the buyer. ‘A company should have a customer retention and development strategy which should enable it to retain its customers. ’ (Jobber 2009 pg. 56) PROMOTIONAL MIX OF AUCKLAND ENGINEERING PLC.
Promotion mix is a form of communication designed and implemented to persuade others to accept ideas, concepts or products and to motivate consumers to take action. (Pickton 2010 pg. 270)The Promotional Mix traditionally consists: * Public relations: PR uses different activities designed to promote goodwill between and organisation and the outside world. * Sales Promotion: Sales promotional activities include special short duration special offers intended to induce the customers to buy or try the product. * Personal Selling: It can be termed as the most personal form of marketing communications.
It is an approach favoured for B2B sales where the products are expensive and need persuasion. * Advertising: “It includes any paid form of non-personal presentation of ideas, goods and services by an identified advertiser. ” (Pickton 2010 pg. 281) Considering the above mentioned elements in the promotional mix of Auckland Engineering Plc. : Sales promotion: Considering the information given in the memo sent by the marketing director (appendix 1), it can be said that no sales promotion takes place. Sales promotion helps in making the overall promotional more effective.
Sales people in Auckland Engineering Plc. can generate more sales by giving special discounts to existing customers on repeat purchase. Another form of sales promotion includes giving incentive to existing customers on referring the company’s product to potential buyer. This encourages word of mouth. Advertising: According to the marketing director of the Auckland Engineering Plc. , the company has been spending too much as compared to the competitors in the industry i. e. 1% of the turnover and still their market share is down at 35% from last year.
This shows that excessively spending on advertising has not helped them is growing but has made them gain excellent customer awareness. Advertising and publicity are more effective to move the potential consumers from the stage of unawareness to the stage of comprehension in the buying process but as in the case of Auckland Engineering Plc. , it is not sufficient alone to generate sales. The sales force of the company can provide the marketing department with valuable information about the market and the buyer behaviour to make advertising campaigns more effective and precise.
Personal Selling: Personal Selling can be termed as the most important element in the promotional mix for Auckland Engineering Plc. and they are technically qualified. ” Personal selling is most cost effective than other forms of promotional activities at the conviction and purchase stage of the buying process” (Jobber 2010 pg. 65) As mentioned earlier, the sales team also help in market auditing as the front line people are closest to the customer and in the best position to examine the customer and increase brand loyalty. The sales team should be able to build up on the advertising campaigns.
To achieve the company’s objective the sales and marketing activities should be perfectly co-ordinated. The information provided by the sales force and the sales manager regarding the competitors and the nature of the market should be utilized. There should be a frequent and transparent exchange of information between the both departments to benefit from each other’s expertise. RELEVANCE OF SWOT ANALYSIS SWOT is an acronym for Strengths, Weaknesses, Opportunities and Threats SWOT analysis is a general management tool used to describe the current state and the future prospects of an organisation.
Strength and Weaknesses come from within the organisations whereas Opportunities and Threats are external. SWOT analysis headings provide a good basis for revising tactics, situation and course of a company or business proposition. The SWOT analysis mentioned in the memo of Auckland Engineering Plc. tries to examine the current internal and external environment and is of considerable importance to the Sales force as it attempts to define their future course of working. TOWS Matrix (Weihrich 1993) (appendix 2) based on SWOT analysis is a good tool to define the future course of action for the sales team for Auckland Engineering Plc.
Matching Strength with Opportunities: The SWOT analysis will help the sales team of the company to from strategies using strength to exploit opportunities. One of their main strength is excellent customer awareness and image of quality and reliability. Their sales team can use these features to track customers who are having problems with their competitors because of quality and delivery problems. Auckland Engineering Plc. also has a technically qualified sales force which can be used to gain an edge above the competitors and gain buyer in the industry as they have a tendency of switching suppliers.
Matching Strengths with Threats: Sales force can use strengths to minimise threats. One of the main threats to the Auckland Engineering Plc. is that their largest buyer is threatening to switch because of higher prices. As mentioned earlier in the report, the sales team can easily justify higher prices of the machinery by highlighting the quality and reliability of the machinery and using their technical know-how. Another threat for Auckland Engineering Plc. is that they are not keeping pace with the rapid technological change in the industry.
The sales team can provide the company with the valuable up to date information about the changes in the market and the sales manager can offer the his views on where the company stand in terms of competition. Matching Weakness with opportunities: The management should correct the weakness to exploit the opportunities in the market. Auckland Engineering Plc. has been spending much more than its competitors on advertising. If the money is better spend on training the sales force in generating new leads, the customers who are unhappy with the competitors can be can be easily traced and approached.
The excessive money spend on advertising can be used to train the sales team to effectively gather data from the market which can be used for better understanding of the market. In this way, SWOT analysis will prove advantageous to the sales force because it will help them in reducing resource wastage and maximising efficiency. Matching Weakness with threats: This is a potentially high risk area for the company as well as the sales force. Appropriate measures should be taken to correct weakness so as to eliminate threats.
One of the biggest weaknesses faced by the sales force is that they have to sell something that is above industry price and the threat leading to is that they may lose their biggest customer. These are the few ways in which the SWOT analysis helps the sales force of a company. SWOT analysis helps in finding the strengths, weaknesses, opportunities and threats that a sales team works with and helps in making the best of the available resources to maximise efficiency of the sales force. SWOT analysis helps in finding out where the company is wasting or putting more than required resources and helps in diverting them to the much needed areas.
Generally the management and the sales force of the company aim to: * Maximise , build and leverage Strengths * Prioritise and optimise Opportunities * Eliminate or find a remedy for Weakness * Counter all possible Threats (businessballs. com) ANSOFF’S MATRIX Ansoff matrix is one of the tools that is used by the companies to plan their development strategy. In Ansoff matrix, the company sets out to achieve one or more than one of the growth strategies mentioned in the matrix. (Appendix 3). These are described below.
Market Penetration: It’s a form of a growth strategy where the organisation aims to sell the existing products to its existing markets. One of the main reasons to adopt this strategy is to increase the market share of the company which can be gained by pricing strategies, using elements of the promotional mix, re-positioning the product, etc. or sometimes dedicating more resources to the sales department. Sales team can play a vital role in market penetration for the company by providing them the valuable information about the market, the customer and the competitors.
Sales people can not only provide the company about the current state of the buyer but also about the future needs of the market. They are also best placed to get customer feedback on the company’s advertising campaigns. For market penetrations as in the case of Auckland Engineering Plc. sales team should be encouraged to generate more leads, get in touch with potential buyer to see if they are thinking of switching the supplier, etc. They should try to build strong relationship with the buyer so as to encourage them to share more information and repeat purchases frequently etc.
Market Development: Market development is a growth strategy where the business aims to sell its existing products to new markets. If a company has got good market share in a specific market, then market development may be termed as a good strategy because moving into a different but related market is associated with low risk. Auckland Engineering Plc. may plan to sell into a different geographical region as they have considerable expertise in their business and their sales force can use their previous expertise to develop the new markets.
As the markets and the consumer are not exactly same in different regions, the sales team can quickly spot the strategies that will or won’t work in the new market and can give back valuable feedback. Product Development: It involves selling new products to its existing customers. This can be a good growth strategy if the company has got good market presence. The sales force of the company can easily persuade the buyer to buy the new product as they can capitalise on the existing relationship between the firm and the buyer.
The sales team can also contribute to the marketing audit for the new product by providing up to date information. Diversification: It’s a growth strategy where a business enters a new market with a new product. The risk in this strategy is considerably high as it is not based on firms existing experience. One of the main advantages of this strategy is that if one product in a market fails, it does not have a major impact on the other product in a different market. CONCLUSION Throughout the report the issues concerning the Marketing Director and the sales department of Auckland Engineering Plc. as been discussed. The issues of higher price and sales force not skilled in generating leads has been studied and it can be concluded that these problems can be rectified by the sales force by highlighting the product features and asking the clients about recommendations etc. The promotional mix of Auckland Engineering Plc. shows that by better coordination between sales and advertising in terms of information transfer and sales team taking advantage of advertising campaigns can result in increased sales.
Considering SWOT analysis, the sales team and the management of the company can select growth strategies by maximising on strength to capture opportunities and avoid threats. They also have to minimise their weaknesses to capture opportunities and eliminate threats. SWOT analysis helps the sales force find out and eliminate any weakness and use the strength to their advantage. From Ansoff Matrix, it can be concluded that sales force play a vital part in strategic development of the company by providing valuable frontline market information.
REFLECTION Looking back at the preparation and completion of the report, I can say that it has contributed extensively to my learning experience. After doing this report, I can appreciate the contribution of the sales force in the growth of a company. Another significant fact of this essay has been that it taught me how various strategic models like SWOT can be used by the sales force of the company to increase their effectiveness. One of the most important points that I have learned, is the place of selling in the promotional mix.
I have realised how advertising and selling can be co-ordinated to achieve maximum efficiency. I found working on Ansoff Matrix a bit difficult initially, but after consulting my first year’s notes and the module guide, I managed to complete it. This report has helped me in understanding the importance of proper planning in an organisation and in the university. After completing the report, I can say that this time I had planned it much better than the previous essay in the module and managed to complete it comfortably before the deadline.