Lesson 2: Sales Management in the 21st Century

OVERVIEW

The module 1 will let the students familiarize about the Sales Management in
st
the 21 Century.

LEARNING OUTCOMES

1. Identify and discuss key trends affecting sales organization and sales managers
today
2. Discuss the general overview of the sales management process
3. Discuss the key external and internal environmental factors that influence the
4. development of marketing strategies and sales program

LET US EXPLORE

In today’s day and age, sales executives are professionals. They plan, build,
and maintain effective organizations, and design and utilize efficient control
procedures. The professional approach requires thorough analysis, market efficient
qualitative and quantitative personal-selling objectives, appropriate sales policies,
and personal-selling strategy. It calls for skillful application of organizational
principles to the conduct of sales operations. In addition, the professional approach
demands the ability to install, operate, and use control procedures appropriate to the
firm’s situation and its objectives. Executives capable of applying the professional
approach to sales management are in high demand today. Sales executives have
certain responsibilities to their organizations, the customers, and society.

Top management holds them responsible for:

1. Obtaining sales volume
2. Providing profit contributions
3. Continuing business growth.

The customers (most often, wholesalers, retailers, or industrial users) expect

them to supply easily resalable products and services, backed up by supporting
activities e.g., training dealers’ sales personnel, help in preparing local advertising,
and the provision of credit) and assurance that the products and services are wise
investments in the competitive marketplace.

Society looks to them to assure the delivery of goods and services that final
buyers want at prices that final buyers are willing to pay and—of increasing
importance—to develop and market products whose potential for damaging the
environment is minimal. If the goods and services made and sold are needed and
accepted by the buying public, and if these products are “socially responsible,” then
it is likely that management’s objectives will have been achieved.

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Lesson 2: Sales Management in the 21st Century
Ultimately, a business’s earnings depend upon how well, or how poorly, the
interests of the firm, the final buyers, and society are blended. To the extent that
these interests are in harmony, the firm experiences sales volume, net profits, and
business growth. Sales Management defines as all activities, processes, and
decisions involved in managing the sales function in an organization. Sales
Management is concerned with managing a firm’s personal selling function. Sales
managers are involved in both the strategy (planning) and people (implementation)
aspects of personal selling, as well as evaluating and improving personal selling
activities. Sales Management is influential in charting the course of future operations.
It provides higher management with informed estimates and facts for making
marketing decisions and for setting sales and profit goals.

Objective of Sales Management

There are three general objectives of sales management: sales volume, contribution
to profits, and continuing growth. Even though these objectives are important to an
organization, the objectives, relating to sales-volume, market share and profitability
are greatly affected by the effectiveness and efficiency with which the sales-function
is managed. Sales executives, of course, do not carry the full burden in the effort to
reach these objectives, but they make major contributions. Top management has the
final responsibility, because it is accountable for the success or failure of the entire
enterprise. Ultimately, too, top management is accountable for supplying an ever-
increasing volume of “socially responsible” products that final buyers want at
satisfactory prices.

Sales Management Process

The sales management process, or process of effective management of a
company’s sales force, involves three interrelated sets of decisions or processes.

1. The formulation of a sales program. The sales program should consider the
environmental factors faced by the firm. Sales executives organize and plan the
company’s overall personal selling efforts and integrate these with the other
elements of the firm’s marketing strategy. The formulation process is represented by
Part One of this book.

2. The implementation of the sales program. The implementation phase involves

selecting appropriate sales personnel and designing and implementing approaches
that will direct their efforts toward the desired objectives.

3. The evaluation and control of the sales program. The evaluation phase
involves developing methods for monitoring and evaluating sales force performance
through appropriate metrics. Evaluation and control allows for adjustment of the
sales program or the way it is implemented when performance is unsatisfactory.

ENVIRONMENTAL FACTORS IMPACT SUCCESS IN SELLING

External and internal (organizational) environmental factors influence sales
managers in four basic ways.

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Lesson 2: Sales Management in the 21st Century
1. Environmental forces can constrain the organization’s ability to pursue certain
marketing strategies or activities. An example is when the government declares the
sale of a product to be illegal or when a well-entrenched competitor makes it
unattractive for the firm to enter a new market.

2. Environmental variables, and changes in those variables over time, help

determine the ultimate success or failure of marketing strategies. The rapid growth in
the number of women in the labor force in recent decades, for instance, helped
ensure the success of Stouffer’s Lean Cuisine, ConAgra’s Healthy Choice, and other
quality brands of convenient frozen entrées.

3. Changes in the environment can create new marketing opportunities for an

organization, as when a new technology allows development of new products. The
emergence of electronic commerce software, for instance, enabled HP to develop
solutions to problems such as security, design, and flow of data over the Internet,
some of the more important challenges that customers face. As one customer said,
“There is a lot of value in companies like HP offering to help customers put up
electronic commerce sites.” Not surprisingly, HP has reorganized to shift its main
emphasis from printers to enterprise systems.

4. Environmental variables are affected and changed by marketing activities, as

when new products and promotional programs help change lifestyles and social
values. In view of the increased activity by consumer groups, environmentalists, and
other public interest groups and agencies, marketers today must consider how
proposed programs will affect the environment as well as how the environment will
affect the programs.

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Lesson 2: Sales Management in the 21st Century

EXTERNAL ENVIRONMENT

By definition, factors in the external environment are beyond the control of the
individual manager; however, companies do try to influence external conditions to
the extent they can through political lobbying, public relations campaigns, and the
like. But for the most part, the sales manager must take the environment as it exists
and adapt strategies to fit it. Markets consist of people. As the demographic,
educational, and other characteristics of the population change, market opportunities
change. This also affects opportunities in business markets, since an organization’s
demand for goods and services is derived from the demand for its own products.
Further, economic systems are becoming more open, meaning that there is
everincreasing competition from global companies.

External environmental factors can affect the way a company competes globally,
which will then influence how the company competes locally. As indicated in Exhibit
1.2, variables in the external environment that affect sales and marketing may be
grouped into five broad categories: (1) economic, which includes competition; (2)
legal and political; (3) technological; (4) social and cultural, focused on ethics; and
(5) natural.

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Lesson 2: Sales Management in the 21st Century

Economic Environment

People and organizations cannot buy goods and services unless they have
the money. The total potential demand for a product within a given country depends
on that country’s economic conditions—the amount of growth, the unemployment
rate, and the level of inflation. These factors must be considered when analyzing
market opportunities and developing sales forecasts. Keep in mind, though, that
global economic conditions also influence many firms’ ability to earn a profit. A
second aspect of the economic environment is the existing distribution structure in
an industry. This includes the number, types, and availability of wholesalers,
retailers, and other intermediaries a firm might use to distribute its product. Much of a
firm’s
personal selling effort may be directed at trying to persuade such intermediaries to
stock and provide marketing support for the company’s products

Understanding Competitors

Another critical economic variable is the amount of competition in the firm’s

industry—both the number of competing firms and their relative strengths in the
marketplace. Ideally, a company’s marketing and sales programs should be
designed to gain a differential advantage over competitors. For example, rather than
trying to compete with the low prices of foreign competitors such as Komatsu,
Caterpillar has been successful in the heavy construction equipment business by
providing superior product quality and excellent service, while charging prices as
much as 10 to 20 percent higher than its competitors. Salespeople go head to head
with competitors on a daily basis; as a result, the sales force is often the first to
observe changes in competitive strategy and activity.

One of the critical issues is getting information from the sales force to
strategic planners so that the company can act on those observations. Reports that
detail competitive activity, such as analyses of lost sales, can summarize competitive
activity for sales and marketing management. Sophisticated customer relationship
management (CRM) software systems can greatly aid in facilitating information
collection, analysis, and dissemination. Salespeople are particularly important when
exploring market opportunities in other countries. Given the added risks involved
when selling in a foreign country, accurate and timely market information may be
more important than in domestic marketing. In many cases, foreign salespeople are
the only link the company has to the customer. Companies with international sales
forces survey their salespeople, with either formal written surveys or informal
telephone surveys, in order to assess foreign markets.

Global Legal and Political Environment

Many of the changes in society’s values are eventually reflected in new laws
and government regulations—that is, where the social–cultural–ethical environment

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Lesson 2: Sales Management in the 21st Century
intersects the legal–political environment. In recent years, the number of laws
regulating the conduct of business, including personal selling, has increased
dramatically at all levels of government.

Three broad categories of laws are particularly relevant to sales programs:

(1) antitrust
(2) consumer protection
(3) equal employment opportunity

These laws vary greatly by country and can be very complex. Salespeople
themselves can hardly be expected to know all of the legal details, hence most sales
organizations of any size employ HR and legal experts to advise sales managers on
these matters. Antitrust laws are aimed primarily at preserving and enhancing
competition among firms in an industry. They restrict marketing practices that would
tend to reduce competition and give one firm a monopoly through unfair competition.
The restrictions on anticompetitive behavior spelled out in the antitrust laws apply to
firms selling goods or services to intermediaries, business users, or ultimate
consumers. When a firm sells to consumer markets, however, it faces additional
restrictions imposed by consumer protection laws at all levels of government. These
laws are aimed more directly at protecting consumer welfare by setting standards of
quality and safety. They also require that consumers be provided with accurate
information to use in making purchase decisions. Since personal selling is one
means of providing consumers with information, many laws requiring full disclosure
and prohibiting deceptive or misleading information have a direct impact on selling
activities.

Misrepresentation of a company’s product by a salesperson can have both

ethical and legal consequences, whether the salesperson is dealing with end-user
consumers or organizational customers. Many salespeople are unaware that they
assume legal obligations every time they approach a customer. By making certain
statements, they can embroil their companies in a lawsuit and ruin the very business
relationship they are trying to establish. But recent court cases around the world
have held firms liable for multimillion-dollar judgments for misrepresentation or
breach of warranty due to statements made by their salespeople, particularly when
the sale involved big-ticket, high-tech products or services. Over the past few years,
so-called “no-call” lists have become prevalent, blocking the ability for firms to do
telemarketing to customers who choose to be listed. In some countries, severe fines
are imposed on sales organizations that violate these no-call lists.

Technological Environment

As mentioned earlier, technology not only influences sales strategies, it often

drives the firm’s capability to effectively sell. The most obvious impact of the
technological environment on marketing is in providing opportunities for product
development. Technology advances have been occurring at a rapidly increasing
rate, and new products are accounting for an increasing percentage of total sales in
many industries. For example, historically at 3M more than half of the current sales

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Lesson 2: Sales Management in the 21st Century
volume is generated by products that were not in existence five years ago. Most
analysts believe the importance of new products and services to the marketing
success of many firms will continue to accelerate. Rapid development of new
products requires adjusting a firm’s sales programs. New sales plans must be
formulated, the sales representatives must be retrained, and, in some cases, new
reps must be hired. Advancing technology also affects sales management in more
direct ways.

Improvements in transportation, communications, and data processing are

changing the way sales territories are defined, sales reps are deployed, and sales
performance is evaluated and controlled in many companies. New communication
technologies—together with the escalating costs of a traditional field sales call—are
changing how the personal selling function is carried out. The satchel full of samples
has given way to the laptop computer; and telemarketing, teleconferencing, and
computerized reordering have replaced the face-to-face sales call in a growing
number of situations.

Social and Cultural Environment: Ethics

The values of a society affect marketing and sales programs in a variety of

ways. Firms develop new products in response to trends in consumer tastes and
preferences. In the United States, the well-documented demographic trends of an
aging society, greater influx of minorities as a percentage of total population, two-
income households, greater mobility, and ever-increasing desire for more leisure
time and more convenience-oriented products all have greatly affected selling. In
twenty-first-century sales management, nowhere is the impact of societal values
more important than in the way social values set the standards for ethical behavior.
Ethics is more than simply a matter of complying with the laws and regulations. That
is, a particular action may be legal but not ethical. For instance, when a salesperson
makes extreme, unsubstantiated statements such as “Our product runs rings around
Brand X,” the rep may be engaging in legal puffery to make a sale, but many
salespeople (and their customers) view such little white lies as unethical.

Ethics is more proactive than the law. Ethical standards attempt to anticipate
and avoid social problems, whereas most laws and regulations emerge only after the
negative consequences of an action become apparent. Two sets of ethical dilemmas
are of particular concern to sales managers. The first set is embedded in the
manager’s dealings with the salespeople. Ethical issues involved in relationships
between a sales manager and the sales force include such things as fairness and
equal treatment of all social groups in hiring and promotion, respect for the individual
in supervisory practices and training programs, and fairness and integrity in the
design of sales territories, assignment of quotas, and determination of compensation
and incentive rewards. Ethical issues pervade nearly all aspects of sales force
management. The second set of ethical issues arises from the interactions between
salespeople and their customers. These issues only indirectly involve the sales
manager because the manager cannot always directly observe or control the actions
of every member of the sales force.

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Lesson 2: Sales Management in the 21st Century
The most effective way for managers to influence the ethical performance of
their salespeople, however, is to lead by example. Formal policies do not have much
impact when top management gives lip service to one set of standards while
practicing another. Sales managers who expect ethical behavior from their
employees should apply high ethical standards to their own actions and decisions.
The level of ethical standards in the sales force ultimately is a reflection of the
integrity of the firm, as manifest in its culture and value system.

Natural Environment

Nature influences demand for many products. Natural disasters such as storm
and floods can influence demand for building products and the like. But
unseasonable weather can damage or enhance sales, depending on the type of
product. The natural environment is an important consideration in the development
of marketing and sales plans. The natural environment is the source of all the raw
materials and energy resources needed to make, package, promote, and distribute a
product. Over the past three decades, firms in many industries—such as concrete,
aluminum, plastics, and synthetic fibers—have encountered resource or energy
shortages that have forced them to limit sales of their products. Some of these
shortages in developed nations are partly attributable to the extreme growth rate in
developing areas of the globe, such as China. One might assume that sales
representatives could take life easy under such circumstances, letting customers
come to them for badly needed goods.

INTERNAL (ORGANIZATIONAL) ENVIRONMENT

The policies, resources, and talents of the organization also make up a very
important part of the marketer’s environment. Sales managers may have some
influence over higher-level organizational factors due to their participation in planning
processes, but in the short run, sales programs must be designed to fit within
organizational situations and limitations.

The variables in the internal (organizational) environment can be grouped into six
broad categories:

(1) goals, objectives, and culture;

(2) human resources;
(3) financial resources;
(4) production and supply chain capabilities;
(5) service capabilities;
(6) research and development and technological capabilities.

Goals, Objectives, and Culture

Successful management of customer relationships begins with top

management’s specification of a company mission and objectives that create a
customer-centric organization. As the company mission and objectives change,
customer management approaches must be adjusted accordingly. A well-defined
mission together with a successful corporate history and top management’s values
and beliefs leads to development of a strong corporate culture. Such cultures shape

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Lesson 2: Sales Management in the 21st Century
the attitudes and actions of employees and help determine the kinds of plans,
policies, and procedures salespeople and their managers can implement.

Human Resources

Modern sales organizations are highly complex and dynamic enterprises, as

are their customers’ firms. The sheer number of people in many sales organizations,
together with the widely varying needs in terms of key success factors in relationship
selling creates challenges. In view of the difficulties involved in recruiting highly
qualified people for sales positions and the often-lengthy training programs needed
to bring new salespeople up to speed on knowledge and skills, it is often difficult to
expand a sales force rapidly to take advantage of new products or growing markets.
In some cases, however, it may be possible for a firm to compensate for a lack of
knowledgeable employees by utilizing outside agencies or specialists on a fee-for?
service or commission basis. For example, many companies use distributors when
entering new markets, particularly foreign markets, because entering the market can
be accomplished so much more quickly by utilizing preexisting sales forces.

Financial Resources
An organization’s financial strength influences many aspects of its customer
relationship initiatives. It can constrain the firm’s ability to develop new value-adding
products as well as the size of its promotional budget and sales force. Companies

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Lesson 2: Sales Management in the 21st Century
sometimes must take drastic measures, such as merging with a larger firm, to obtain
the financial resources necessary to realize their full potential in the marketplace. For
example, in the 2000s P&G and Gillette’s merger in the highly competitive consumer
health products sector provided the latter’s product line the benefits of the more
extensive global supply chain expertise of the former. Often selling firms and buying
firms will form their own partnerships and alliances that create financial benefits for
both.

Production and Supply Chain Capabilities

The organization’s production capacity, the technology and equipment

available in its plants, and even the location of its production facilities can influence
the relationship selling initiative. A company may be prevented from expanding its
product line or moving into new geographic areas because it does not have the
capacity to serve increased demand or because transportation costs make the
product’s price uncompetitive. Vendors doing business with Walmart are expected to
fulfill orders within 24 hours and to deliver the goods to the Walmart warehouses
within a two hour assigned appointment window. Suppliers that don’t meet this
requirement pay Walmart for every dollar of lost margin. It is no wonder Walmart’s
vendors are willing to invest the necessary capital to tie their information systems
directly in with Walmart’s systems so the whole ordering and fulfillment process can
be handled seamlessly and at maximum speed.

As another example of supply chain efficiency but on the e-commerce side,

CEO Jeff Bezos at amazon.com developed a network of distribution centers
nationwide long before Amazon’s sales volume was sufficient to financially support
the warehouse capacity, principally because he wanted to ensure seamless
distribution and service after the sale and avoid inventory stockouts.

Service Capabilities

Delivering a high level of service quality is an important organizational

capability. Firms that provide great service typically enjoy a strong competitive
advantage in the marketplace and make it difficult both:

(1) other firms to compete for the same customers

(2) customers to switch to competitor sales organizations

Research and Development (R&D) and Technological Capabilities

An organization’s technological and engineering expertise is a major factor in

determining whether it will be an industry leader or follower in both the development
of valueadding products and high-quality service delivery. Excellence in engineering
and design can also serve as a major promotional appeal in a firm’s marketing and
sales programs, as customers are attracted to innovators and industry leaders. Most
companies are investing heavily in technology, particularly technology that can help
meet relationship selling objectives.

In such cases, the firm’s salespeople can communicate the R&D and
technological sophistication to customers as important value-adding aspects of the

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Lesson 2: Sales Management in the 21st Century
company and its products. This capability helps avoid the trap of over relying on
price to get the sale.

LET US ASSESS

Definition of terms:

1. Define sales management

2. Define internal environment
3. Define external environment
4. Define financial resources
5. Define human resources

Interpretation:

Choose and pick an online shop in the Philippines. Tell us how this online
shop affects the selling process in the 21 st century and how this matter in today’s
business.

INFORMATION BITS

Lazada University: Introduction to Lazada

https://www.youtube.com/watch?v=QPDrfKYrpDw

Lazada Philippines Warehouse Tour

https://www.youtube.com/watch?v=DMByopSPvGI&t=3s

REFERENCES

Bellach(2015). Sales Management for Dummies

Johnston, M. W., & Marshall, G. W. (2016). Sales force management: Leadership,

innovation, technology. Routledge.

Still, R. R., Cundiff, E. W., &Govoni, N. A. (2017). Sales management: Decisions,

policies, and cases. Pearson.

https://www.cpsa.com/resources/articles/5-characteristics-of-successful-salespeople

Sales Management & Professional Salesmanship Module No. 1 11