Chapter 5

Sales contexts and

customer management
 Objectives
• After studying this chapter, you should be able to:
• 1. Understand the forces that impact on selling and sales management
2. Understand the concept of the customer portfolio
3. Appreciate why selling channels are structured in different ways
4. Evaluate push and pull promotional strategies and tactics
5. Understand the unique problems and forces that surround
organisational and service sales settings
6. Evaluate the usefulness and application of exhibitions and trade
shows as a promotional medium
7. Be aware of implications of selling and the internet
 Environmental and
managerial forces that
impact on sales
 Behavioral forces

• As customers adjust to a changing environment, so

sales have to adapt to a variety of influences:
(a) rising consumer and organizational buyer
expectations;
(b) ethical considerations;
(c) expanding power of major buyers;
(d) globalization of markets;
(e) fragmentation of markets;
(f) buyer–seller negotiation.
 Behavioral forces
• Rising consumer/organizational buyer expectations and fulfilment of higher
order needs
• Ethical considerations
• Expanding power of major buyers
• Globalization of markets
• Fragmentation of markets
 Technological forces

• Three major forces are at play:

● sales force automation;
● virtual sales offices;
● online sales channels.
 Managerial forces
• Managers can respond to the changes in the environment
by developing new strategies and
tactics to enhance sales effectiveness, including:
• (a) employing a range of sales and marketing techniques;
• (b) improving cooperation between sales and marketing;
• (c) encouraging salespeople to attend training
programmes in the use of new technologies,
and to acquire professional qualifications.
 Sales and marketing interface

• Strategic customer management requires three

activities to be performed
1.Intelligence
2.Managing Customer Interface
3.Integration
 The customer portfolio
• The customer portfolio is the database of all the customers,
past and present, with whom the selling organisation
trades.
• These customers or accounts should be categorised so that
they can be managed appropriately by the sales team.
• For example, those accounts that are strategic to the
company’s survival, which may be described as key
accounts, are those that are likely to receive the greatest
attention and resources.
Sales Channels
 Logistics
• Logistics means the effective and economic planning,
implementation and control of the physical flow of
materials in their unprocessed state through to finished
goods, from the point of origin to delivery to the end-
consumer.
• Logistics conventionally starts with customers and
works back towards the original source of supply.
• The term ‘supply chain integration’ is sometimes used to
describe its effective coordination
 Logistics
• The logistics mix describes the functional elements involved in this
process:
• 1 Order processing: this first stage calls for close liaison with the
customer. A well-designed system should have simple administrative
procedures and be speedy and effective.
• 2 Materials handling: this is usually a function of the product in terms of
physical characteristics such as weight, bulk related to value and
perishability, all of which will determine how the product is stored and
transported.
• 3 Warehousing: the location of depots and warehouses relative to end-
customers is very important in some industries (e.g., agricultural
machinery – where spare parts must be immediately available during the
harvesting period). Again, this process requires a balance between service
levels and costs.
 Logistics
• 4 Inventory control: with the widespread adoption of just-in-time, or
lean, manufacturing, this has become a critical issue. It is now customary
to think of stockholding in terms of hours rather than days or weeks.
• 5 Transportation: this involves the physical delivery of goods to
customers, and organisation of materials from suppliers to be used in the
production process. Smaller batch and load sizes are most costly as they
often result in partial loads that have to be delivered more frequently.
• 6 Packaging: packaging design for the container that is displayed on the
shelf of a supermarket is normally a marketing communications issue,
but in terms of outer containers and appropriate packaging for shipping
via various modes of transport, this falls under the logistics mix
classification.
 Channels of distribution

• A sales channel is the route that goods take

through the selling process, from supplier to
customer. Sometimes the channel is direct,
especially where goods sold are incorporated
into a manufacturing process.
• Final goods might then be sold through a
different channel.
 Appraising sales channels
• When selecting or reappraising channels, the company must
take into consideration:
● the market;
● channel costs;
● the product;
● profit potential;
● channel structure;
● product life cycle;
● non-marketing factors.
 Characteristics of sales channels
• Basically, a manufacturer has the choice of one of four
types of distribution:
1 Direct: the manufacturer does not use a middleman
and sells and delivers direct to the
end-customer.
2 Selective: the manufacturer sells through a limited
number of middlemen who are chosen
because of special abilities or facilities to enable the
product to be better marketed.
 Characteristics of sales channels
• 3 Intensive: maximum exposure at the point of sale is needed
and the manufacturer sells through as many outlets as possible.
Servicing and after-sales aspects are less important.
Examples are cigarettes, breakfast cereals and detergents.
•
4 Exclusive: the manufacturer sells to a restricted number of
dealers. An example is the car industry, where distributors must
provide levels of stockholding, after-sales service, etc.,
deemed appropriate by manufacturers, as their reputations
depend ultimately upon service back-up provided by distributors.
 Management of sales channels
• Channel decisions are strategic and there are two major reasons for this:
1. Such decisions generally involve a company in long-term commitments,
usually to other organizations. Once established, such decisions can be
difficult to change, at least in the short term.

2. Channel decisions can intimately affect all of a company’s marketing and

operating activities. Similarly, decisions about the marketing mix, such as
pricing, product and promotion, must reflect a company’s channel choice.
 Management of sales channels
• Four major strategic elements of channel choice and design are:
1 The delineation and selection of basic channel structure – included
here are considerations as to channel length, types of intermediaries and
functions of intermediaries.
2 The delineation of required market exposure – this element relates
to decisions concerning the number of intermediaries to be used and
their geographical dispersion.
3 Systems and procedures for ensuring maximum cooperation in the
channel and the minimum of channel conflict – this includes the
specification of territorial rights and franchising conditions.
4 Marketing and channel support strategies – this element concerns
the relative emphasis and focus for marketing efforts in the channel.
 Industrial/commercial/public
authority selling
• Fewer customers
• Concentrated markets
• Complex purchasing decisions
• Long-term relationships
• Reciprocal trading
• Types of production
 Types of production
• There are a number of different types of production:
1 Job (or unit, or project) production: an item is produced or
constructed to individual customer requirements. It is difficult to
forecast demand in such circumstances. Examples are
ships, tailor-made suits and construction projects such as bridges.
2 Batch production: a number of products or components are made
at the same time, but not on a continuous basis. As with job
production, batches are normally made to individual
customer requirements, but sometimes batches are produced in
anticipation of orders. Product examples are books, furniture and
aircraft.
 Types of production
• 3 Flow (or mass, or line) production: this is continuous
production of identical or similar
products that are made in anticipation of sales. Examples
are motor cars, televisions and
washing machines.
4 Process (or continuous) production: the production unit
has raw materials coming into the
manufacturing process and a finished product emerging at
the end. Examples are chemicals, brewing and plastic
processes.
 Retailing
• Different types of selling outlet:
• Multiple
• Co-operative Societies
• Department Stores
• Independents
• Mail Orders
• Direct Selling
•
 Selling Services
Selling services involve selling something that is intangible, although it may be
supported by physical items such as contracts or licenses, and buildings or
equipment.
Services come in many forms, and examples include:
• • special interests;
● repair and maintenance;
● transportation – air, sea, rail and ● travel agencies;
road; ● accounting services;
● power – electricity, gas and coal; ● business consultancy – advertising,
● hotels and accommodation; marketing research, strategic planning;
● restaurants; ● architectural;
● communications – telephone, fax, ● cleaning;
email, text messages; ● library;
● television and radio services; ● public (local) authority services and
undertakings – disposal of refuse and
● banking and insurance;
road repairs;
● grooming services;
● computing services;
● clubs – social, keep fit, sporting, ● stockbroker services.
 Services Mix
• The four Ps have been extended to include an extra three Ps; thus we have the
‘seven Ps’ of service marketing. The three extra Ps are people, process and physical
evidence:
• ● People are a critical element in carrying out a service, especially for those who
are directly involved with customers. Employees must be well trained and have a
friendly demeanor when handling customers.
• ● Process relates to how the service is provided and it deals with customers at
the point of contact in the supply of the service – for example, loading, serving and
unloading air passengers. Consistency and quality of service must be well planned
and managed.
• ● Physical evidence is included because of the intangibility of services. The
quality and nature of the service being offered should be communicated through the
environment, types of equipment and physical facilities offered to customers.