Sales Environment

SALES ENVIRONMENT ANALYSIS

In this chapter we analyze the major forces that affect selling and sales management.

We then consider specific sales settings such as sales channels, industrial/ commercial/public authority, retail and services selling. Related activities that support selling activities, namely sales promotions, exhibitions and public relations, are also examined.

ENVIRONMENTAL AND MANAGERIAL FORCES THAT IMPACT ON SALES

A number of major environmental (behavioral and technological) and managerial forces impact on how selling and sales management are and will be carried out.

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) Customer avoidance of buyer–seller negotiations;

(c) Expanding power of major buyers;

(d) Globalization of markets;

(e) Fragmentation of markets.

 

Rising consumer/organizational buyer expectations and fulfillment of higher order needs

As consumers experience higher standards of product quality and service, so their expectations are fuelled to expect even higher levels in the future. This process may be hastened experiences abroad and new entrants to industries (possibly from abroad) that set new standards of excellence.

Technological advances have created new higher customer expectations. The existence of the internet means that customers expect salespeople calling on them for the first time (and after) to be familiar with their firms, its products and personnel

 

Customer avoidance of buyer–seller negotiations

Studies have shown that the purchase of a car is the most anxiety-provoking and least satisfying experience in retail buying.  Some car salespeople are trained in the art of negotiation supported high pressure sales tactics. Consequently, customers have taken to viewing the purchase as an ordeal to be tolerated rather than a pleasurable occasion to be savored.

 

Expanding power of major buyers

The growing dominance of major players in many sectors (notably retailing) is having a profound influence on selling and sales management. Their enormous purchasing power means that they are able to demand and get special services, including special customer status (key account management), just-in-time inventory control, category management and joint funding of promotions.

 

Globalization of markets

As domestic markets saturate, companies are expanding abroad to achieve sales and profit growth. The global challenge includes a correct balance between expatriate and host country sales personnel, adapting to different cultures, lifestyles and languages, competing against world-class brands and building global relationships with customers based in many countries.

As companies expand into new overseas markets, there is a need to understand different cultural expectations and to give thought to various cultural issues. Ethical differences are also important what is ethical in one country may be unethical in another.

 

 Fragmentation of markets

Driven differences in income levels, lifestyles, personalities, experiences and race, markets are fragmenting to form market segments. This means that markets are likely to become smaller with an increasing range of brands marketed to cater for the diverse needs (both functional and psychological) of customers. Marketing and sales managers need to be adept at identifying changes in consumer tastes and developing strategies that satisfy an increasingly varied and multicultural society.

 

Technological forces

Three major forces are at play:

  • Sales force automation;
  • Virtual sales offices;
  • Electronic sales channels.

Sales force automation includes laptop and palmtop computers, mobile telephones, fax, email and more advanced sales software which aid such tasks as journey and account planning, and recruitment, selection and evaluation of sales personnel. In addition, electronic data interchange (EDI) provides computer links between manufacturers and resellers (retailers, wholesalers and distributors), allowing direct exchange of information.

Improved technology has encouraged the creation of virtual offices, allowing sales personnel to keep in contact with head office, customers and co-workers. The virtual office can be home or even a car. This means cost and time savings and enhanced job satisfaction for salespeople who are spared time waiting in traffic that is a feature of the job.

The fastest growing electronic sales channel is undoubtedly the internet.  Its impact is not simply to reduce the size of sales forces but also to change the focus of the sales team. The internet has also raised customer expectations regarding salesperson knowledge about their company and responsiveness.

 Managerial forces

Managers can respond to the changes in the environment developing new strategies and tactics to enhance sales effectiveness, including:

(a) Employing direct marketing techniques;

(b) Improving co-operation between sales and marketing;

(c) Encouraging salespeople to attend training programmes and acquire professional qualifications.

Sales channels

Distribution channels involve two separate, yet closely connected, activities: logistics, or physical distribution management (PDM), and channels of distribution.

Logistics or physical distribution management (PDM)

The terms logistics and PDM are interchangeable, although some writers infer that logistics is more concerned with strategic issues whereas PDM relates to tactics. Basically, 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.

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