SALES PLANNING AND OPERATIONS
Difference between B2B and B2C Buyer Behaviour
There are a number of outstanding differences between organisational and consumer buying that every company expanding from one set of customers to the other need to be aware of. These differences affect the marketing of goods and services in general and more specifically the personal selling function (Hart and Baker 2008). Therefore, for the company to successfully market its products, it has to understand how consumer buying processes differ from business buying processes. This is the only way, that a company that had previously marketed its products or services to businesses can realign its products along with the consumer buying behaviour.
The dominant consumer behaviour model shows that consumer decision making moves in a series steps: need identification/ problem awareness, information gathering, evaluation of alternative solutions, selection of an appropriate solution and post purchase evaluation of the decision (Blackwell, Miniard and Engel 2003; Hart and Baker 2008, p. 151). The processes are almost the same with organisation buying only that the behaviour vary in each different stage.
In both B2B organisation market and consumer market, the decision to buy starts with identifying a need. However, the two sets of customers differ in how they identify the need. While in organisational buying the need is identified in line with the overall business strategy, in consumer market the needs are essentially practical, that is, they are geared towards solving a problem or needs satisfaction. Thus when marketing a consumer product, the sales person is expected to emphasise how the product will solve the consumer’s problems or satisfy their needs (U.S. Bureau of Labour Statistics, 2011). In B2B, the sales person is expected to show a business how a particular product fits in its overall strategy (Brauner, 2008). When selling a car, for instance, an automotive company may prevail upon consumers on how their car is best for the family while in B2B selling, the company will emphasise on how the car easies the business movement.
In addition, while the needs in organisations arise out of business strategies, the needs in consumer market may be stimulated by such factors as advertisement, promotions and how the sales people present their products or services. For instance, while an organisation may buy a computer to improve on its record keeping, a consumer may buy the same computer based solely on persuasion.
In identifying the needs, consumers are more influenced by emotions than organisational buyers (Johns, 1999). Although organisations have like and dislikes, it is evident that organisation buying is more influenced by rationality than emotions and aspirations. A company buying a machine may be influenced by its cost of maintenance, efficiency and the product life cycle. Thus, even if a product may have initial huge cost, a company will arrive at its decision based on a long run analysis. In contrary, consumers may be persuaded more by the initial appeal without carrying a long time analysis of the product. According to Hart and Baker (2008), researches into the role of emotions have shown that emotions not only influence customer responses to advertisement, they also influence their satisfaction.
Similarly, organisation buying is likely to be directed by specific requirements (Nicholson, Meek and Sherrat, 2009). Before an organisation starts shopping for a product or service, it is more likely than not to have specific details for what it wants. For that reason, organisations may force companies to adjust their products to fit their specific requirements. Consumers are flexible and can sacrifice some of the specifications. This means that consumers are liable to seek for alternatives if their first choice does not appeal to them. The nature of flexibility makes consumer more liable for stimulation. In addition, the fact that organisations are detail oriented makes them evaluate product more than consumer. Before making a purchase, organisation will have obtained quotation from different suppliers. In contrast, consumers are likely to be carried by brand reputation and loyalty.
In consumer market, decisions are made by individuals or a household (Gitomer, 2005). When it comes to buying a phone for instance, individuals are best placed to make their choices based on their needs and aspirations. However, when buying household items like furniture, the wife may be more influential. In organisation, the decision to buy a particular product may involve a whole department. A purchasing agent has to solicit approvals from department heads or managers before making the purchase. This makes it easier for consumer to make impulse buying more that organisations. This information helps sales people to target the person who has the most influence in the decision making process. While in the organisational market the target can be the manager, in the consumer market the target can be the wife.
AIDA concept is a sales and advertising tool. The acronym, which stands for Attention, Interest, Desire and Action, describes what happens when a consumer engages with an advertisement (Rawal 2013). The essence of the concept is that, in marketing, the effectiveness of advertising depends with how the target audience receive and act on the advertising message. According to the concept, an effective advertisement has to attract Attention, win Interest, conjure up Desires for the product or service and ultimately obtain an Action, thus the acronym AIDA (Nicholson, F, Meek and Sherrat, 2009). The AIDA concept is applied in marketing communication mix.
When a company launches a product, the first goal of the sales team is to create awareness or grab the attention of potential consumers. It would be a marketing failure if the sales team assumes that potential buyers are already aware of the product. A company cannot jump into the other processes of the AIDA concept – Interest, Desire, and Action – thinking that potential consumers are already aware of its product (Hart and Baker, 2008).
Among the marketing communication mix tools, advertisement is the most effective way to create awareness. Some of the advertisement strategies employed to grab consumers’ attention include disruption, location and personalisation. In disruption for instance, a company may pay for their adverts to appear at the bottom of the screen as football fans watch world cup. For location a company may place a billboard along a busy street.
Once the consumer is aware of the product, the next process in AIDA’s concept is to create interest. This done by clearly displaying the product features and showing the consumers how they can benefit from buying the product. In the phone advertisement for instance, it common for marketers to states a phone memory, the megapixel units, size of the screen, the phones internal and external memory, the processing speed as well as the applications the phone can support. Such marketing communication tools as advertisement, personal selling and public relations can be used to secure interest.
Securing interest paves way for creating consumer desire. After the consumer has already developed interest, it is the responsibility of marketer to show how the product satisfies the needs or solves a problem. In the Smartphone industry for instance, consumer have been experiencing the challenge of shorter battery life. Sale teams in mobile phones can create desire by showing convincing consumers how their phones battery last longer. Persona selling, advertisement, public relations are effective in securing consumer desires.
After all this is done, the final stage is to trigger a consumer action. This is when a potential consumer is turned into a customer. Such marketing tools as promotion and direct selling are used to trigger action. Promotions may include discount for buyers who will buy up to a particular date.
The Role of the Sales Force
The primary responsibility of a sales force is to generate income and revenue for a company. This means that the ultimate goal of a sales strategy is to increase sales and revenue. Since the lifeline of every business is selling, a sales strategy is a function of the overall cooperate objectives. In this regard, sales team have acquired new and important roles than it was hitherto known in traditional sense. Some of these roles include, customer relation management, database and knowledge management, customer retention and deletion, marketing the product, prospecting, problem solving, customer and competitor intelligence, information gathering, satisfying and adding value, maintaining and updating sales reports and records and stock allocation (Jobber and Lancaster 2009, p. 30, 249; Miller, 2009).
Jobber and Lancaster define prospecting as “searching and calling upon customers who, hitherto, have not purchased from the company (2009, p.249). This is a key role of the sales team. It is the objective of the sales team to increase a company’s customer portfolio. This in turn increases a company’s revenue and income.
In modern times, the details of the company’s customers are kept in database. Modern sales team have the responsibility of creating and using a customer’s database. A database shows a customer’s critical information. It is this information that can be used to target customers and close deals. Similarly, sales person are also involved in information gathering. The company needs specific information on prospective customers. It needs to know their location, the type of goods they need, in what amounts and how they need their products packaging. This information informs the sales strategy and helps the company produce goods in the way and where the customers need them. This also makes sales person responsible for maintaining and updating customer’s record.
Stock allocation is also a primary responsibility of the sales force. Proper stock allocation helps in maintaining a balanced stock and optimal sales performance. As a company expands, it will automatically have regions or segments. It is the role of the sales force to know the amount of stock required in every region. This in turn eliminates over supply or under supply. It also increases inventory turnover for the company and reduces wastage as the company produces only what it can sell. In food and beverage industries for instance, where there are likely to be perishable, the sales team must determine what is needed in a particular time to ensure there are balanced stocks.
The other crucial role for sales force is customers and competitor intelligence. A company needs to have crucial information about its customers so that it can align its strategies with what is likely to happen in the market. In competitor intelligence for instance, a company needs to know in advance when its rival is about to unveil a new product so that it can develop strategies to counter the companies move in the market. A company that is always caught flat footed is likely to be pushed out of the market.
Sales team also have a role in customer relationship management. This role is about creating long time relationship with customers. As Jobber and Lancaster (2009) and puts it, managing sales is not only about closing the next sale, it is also about ensuring the customer comes again and again. As the sale people relate with customers, they are able to discern their needs and advice the company accordingly. This is also related with the role of customer retention and deletion. As the sales people establish a long time relationship with customers, the sales volume expands.
In modern selling, the role of a sales force is not only about closing a deal; it is also about solving a customer’s problem. This means that sales people have to understand consumers problem and offer them company’s product that solves them. In addition, a modern seller is also undertaking what was regarded as marketing activities such as marketing the product. In that regard, modern sales team can as well be involved in product development as well as market development and segmentation (Cohon, 2004). The role of marketing the product as comes with creating product awareness and brand loyalty. However, it is important to point out that the role of the sales force may vary slightly in B2B selling as compared to B2C selling. In the latter selling, the sales team may adopt a more restrictive role of taking and closing orders. In B2B selling, the role of the sales team expands as this category of customer is more involving, demanding and informed.
Attributes of an Effective Sales Team Member
It is not everyone who can become an effective sales team member. According to Miller, effective sales people display common characteristics of “strong customer focus” (2009, p.4). There are so many attributes that a sales manager should look out for when recruiting sales team member, but these are the most important:
ü Ego drive,
ü Team player, and
Like Miller correctly observes, a successful sales person is one who has learnt to focus his “skills and attention on the customer” (2009, p4). This is a person who is empathetic. Empathy in this case does not mean sympathy. A person who is empathetic to customers is a person is able to identify with their needs and their feel. This is how effective sales people are able to close deals. They view a company’s product from a customer’s angle.
A person with focus is determined to accomplish the set goals. If the sales strategy has set the team’s sales volume at £100, 000, an effective sales team member is determined to go out of his way to ensure that the target is achieved. Similarly this person has an ego-drive, he is optimistic and never quits. Not all people who a salesperson approaches buy a product. In sales there are bound to be rejections and frustrations. Effective sales people never quit; they are optimistic that even if they have approached 9 customers without success, the tenth customer will buy. A focused person will have the inner drive to achieve. This is why an effective sales person will have also to be aggressive.
Responsibility and a team player come hand in hand. When working as team, there are going to be failures. An effective team player is responsible. He does not blame others when faced with a problem.It is the time to accept and look for way to move on. Irresponsible people are always defensive and quick to blame circumstances. As most of the western countries pull out of recession for instance, ineffective sales people are quick to blame economic meltdown for their dismal performance. Responsible sales people rise to the occasion and look for solutions.
Lastly, but not the least, an effective sales team member need to be personable. A person who is personable generally has a pleasing personality, friendly and is able to get along with other people. This is not only a necessary characteristic for being an effective team player, but it also works well when engaging with customers. It is common knowledge that when making sales, sales person will come into contact with strangers or customer to be. An effective sales person has to create a friendly environment, know how to mingle with customers well for him to close the deal. Customers are more likely to be receptive of a pleasant personality than a dull person.
Motivating Sales Force
For the sales force to be effective, the company has to constantly motivate the team. Sales people are subjected to constant pressures. While the company is pushing them to increase the volume of sales on one hand, they are faced by an ever demanding consumer on the other. In the midst of these pressures, salespeople can easily give in and resign. There are so many ways that a sales manager can motivate a sales team. Strategies range from the well known monetary rewards, work environment, giving them enough resources to execute their job to the often overlooked recognition and appreciation (Cichelli, 2004).
The task of sales team motivation can be best understood using leading employee’s motivation frameworks. According to the Maslow’s Hierarchy of needs motivation theory, human beings are motivated by five essential needs: basic needs, security needs, social needs, self-esteem and self-fulfilment (Maslow, 1943). When a company meets these needs, it has effectively satisfied its employees. Maslow structures these needs in terms of a pyramid, with basic needs being at the bottom of the pyramid and self-actualisation at the apex.
According to the Maslow’s theory, management has to fulfil the employees set of needs if it has to win their morale (Maslow, 1943). At the bottom of the pyramid, there are the basic needs which can be fulfilled by reasonable salaries paid regularly. Security needs can be fulfilled by signing formal contracts with members of the sales team while social needs can be fulfilled by encouraging and promoting team work. Self-esteem can be fulfilled by respect and recognition while self fulfilment can be achieved by Personal Development Plans. This theory recognises that employees come into a company with their personal needs that they want the company to help them achieve as they give their services.
Entering Foreign Market
As the firm plan to enter foreign markets, a sales plan is the greatest tool it will need to have. This is a tool that analyses a company current sales, explain the need for export, set the target for export, analyses the foreign market and identifies the tactics to be used to enter the foreign market.
For a small firm expanding in foreign market, the sales plan should have the following features:
(i) A detailed introduction showing the expectations of the sales team. This section should include the expected revenue targets in a given time (probably one year), the resources set aside to enter the foreign market and the Key Performance Indicators (KPI).
(ii) A broad analysis of the country in which the firm want to export: this will include cultural analysis, location analysis, and political, social and economic climate of the targeted market. This is very important since different countries will have different environment. The business climate in Russia is different from Japan, China, India or Brazil.
(iii) Competitor analysis. The sales plan should include an analysis of the competitor. These are the firms that are selling similar products or alternative products. The plan should show how the firm will counter the competition.
(iv) Marketing component: the marketing components should include the sales processes. The company should identify the method of distribution, internal organisation and procedures, terms and conditions as well as the profit and loss forecasts.
(v) A detail of the tactics or the action steps such as the primary target countries and the secondary target countries
(vi) Export budget
Agents versus Subsidiary
As the company plans to export, it might choose to enter the foreign market either through foreign based agents or subsidiary. Each of these entry strategies has its own pros and cons.
Foreign based agents act on behalf of the contracting company in the respective country. They are normally paid on commission, and rarely own the product. If a company choose a foreign based agent, it is likely to benefit from its extensive knowledge of the foreign market. They are also low cost entry points since the exporting country will ride on the distribution channels of the agent. However, foreign based agents are hard to control and they may also distribute competitors’ product at the same time. They can also be hard to recruit, train and retain. Despite the disadvantages, for a small company, due to their low cost entry, foreign based agents might be enticing.
Subsidiaries, on the other hand, are fully owned by the exporting company. This is when a company sets a manufacturing plant or a sales subsidiary in the foreign market. A manufacturing plant in the foreign market is more suitable for products that cost a lot to transport in the foreign market. The good thing with a subsidiary is that it is fully owned by the exporting company. In addition, due to localised production, a company can be able to adjust its products in a way that suits local consumers. Subsidiaries may also be exempted from certain importation tax. In addition, a subsidiary may benefits from low cost of labour in foreign market. Nonetheless, subsidiaries might be expensive to set up, especially for small companies. Like Jobber and Lancaster (2009) observes, the usual trend is for companies to start by using an agent; when the profit starts streaming in, the company can think of setting up a subsidiary.
One of the most challenging factors in foreign expansion is cultural barriers. Ignoring the fact that different regions have different cultures, and taking no step to appreciate the differences has caused many companies to fail on foreign market (McCort and Malhotra, 2008). Different regions exhibit different lifestyles, languages, values and decision making customs that complicates the attempt of foreign firm to sell in the local market. However, those companies that appreciate the differences can reverse them to their advantage.
One of the frameworks that have proved effective in analysing consumers’ culture in target market is Hofstede’s cultural dimension theory. According to the Hofstede’s theory there are five dimensions of values that can explain nation’s culture: power distance, individualism, masculinity, uncertainty avoidance and long term orientation (Wu, 2006). The power distance dimension measures the degree of inequality within a culture. Some of the cultures not only accept but expect that power is distributed unequally. Uncertainty avoidance explains the degree of tolerance that a culture have to uncertainty and ambiguity. The individualism dimension measures the close ties that exist within a culture- some are individualistic while others are collectivist (Hofstede and Bond, 1988). Masculinity dimension studies emotional gender values while long term orientation indicates how a culture invest in future long term goal or shorter present goals.
Appreciating these differences in culture can determine how a firm will be successful in a foreign market. In the Chinese retail market for instance, almost all of the world known retails, Tesco, Walmart, and Carrefour have found the market hard to understand. The most attributed factor to these retailers is that they fail to understand the culture of Chinese consumers (Oliver and Yau, 1988; Gregory, 1990). Even what is considered as Tesco’s secret weapon, clubcard, could not crack the Chinese market.
Exhibitions and Trade Fairs
Exhibitions and trade fairs are the best possible ways to launch products in foreign markets. It is therefore important for the company to participate in trade fairs held in the target market if it wants to succeed in the highly competitive global market (Boone and Kurtz, 2005; Rai, 2009). Most nations hold trade fairs every year. For instance, if the company wishes to enter the Indian market, it can plan to launch it product in the India International Trade Fair (IITF) commonly held between 14th and 27th of November every year.
There are numerous benefits that the company stands to gain by participating in the international trade fair. In the first place, trade fairs are the events in which producers have an opportunity to showcase their products to potential customers, business partners, suppliers as well as members of the press (UFI, 2014). In that regard, producers can take the advantage of the often well attended event (by both buyers and press) to publicise its products. Exhibitions also offer an opportunity for the producer to demonstrate how the product works and how it is going to solve the need of the customers.
A well managed exhibition display become the centre of attraction to potential customers, improves the company’s overall presentation, and provides the necessary information for customers to make choices. More importantly, the face-to-face interaction with buyers or the members of press give the sales people an opportunity to clarify information on products and possibly convince potential customers to try the product. Exhibitions are also an opportunity to build brand loyalty. They also give potential customers an opportunity to test, touch, feel and see the product to be launched.
Exhibitions and trade fairs are fertile grounds for customer and competitor intelligence. Through the different displays, sellers are able to monitor and evaluate competitors’ products for possible improvements. In terms of customer’s intelligence and market research, exhibitions and trade fairs are important places for conducting test sales (Calvin, 2004). Sellers can conduct test sales and observe how the potential customers or distributors react to the products.
Since trade fairs are neutral ground, a company can utilise the opportunity to negotiate deals with business partners, including suppliers and distributors. It is also an opportunity to learn more about the competitor and future industry trends. Nonetheless, as much as they are important, the company need to factor for the cost involved, both in displays and travelling. But more importantly, the company need to brace itself for stiff competition, since competitors will be trying to outdo each other in the end.
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