Sales orientation


Sales orientation

Gradually business people began to appreciate that in a highly competitive environment it was simply not enough to produce goods as efficiently as possible. They also had to be sold. The sales concept stated that effective demand had to be created through the art of persuasion using sales techniques. The sales department was thought to hold the key to the firm's prosperity and survival. Very little attention was paid to the genuine needs and requirements of the final consumer, but at least it was understood that goods and services did not necessarily sell themselves.

Even today, many firms think of marketing as a modern term for selling. They change the name of their sales office to 'Marketing Department' to keep up with the times. In fact selling, although important, is but one of several functions for which a true marketing department is responsible. Peter Drucker, one of the most respected American management theorists, has explained the relationship between selling and marketing in an eloquent manner, stating that:

There will always, one can assume, be a need for some selling. But the aim of marketing is to make selling superfluous. The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself. Ideally, marketing should result in a customer who is ready to buy!'

In a sales-orientated firm, sales volume is the success criterion. Planning horizons tend to be relatively short-term, with the actual customer and how they perceive the value of the goods being sold, being of secondary importance. The implicit premises of a sales-orientation are that:

1 ]     The firm's main task is to establish a good sales team.

2 ]     Consumers naturally resist purchasing and it is the salesperson's role to      overcome this resistance.

3 ]     Sales techniques are needed to induce consumers to buy more.

In a sales-orientated firm, selling is a major management function, and is often given status equal with that of production and finance. This is illustrated in fig. 2.2.

 Managing Director

Production Director          Sales Director               Financial Director

Manufacturing                Training                           Pricing

Quality control               Sales force                      Budgets

Distribution                   Incentives                        Credit management

Research &                  Sales forecasting             Accounting

development               Promotion

Personnel Manager          Sales Manager               Accounts Manager

Marketing orientation

The marketing concept is that, in order to survive in the long term, a firm must ascertain the needs and wants of specifically defined target markets and then produce goods and/or services that satisfy customer requirements profitably. Under the marketing concept it is the customer who becomes the centre of business attention. The firms no longer see production or sales as the key to prosperity, growth and survival, but the identification and satisfaction of customers' needs and wants. The marketing concept is shown schematically in fig. 2.3.

The main difference between production and marketing orientation is that while the management of a production-orientated firm focus its attention on existing products, paying scant attention to the changing needs and wants of the market place, the marketing-orientated firm produces goods and services which it has determined the prospective customers actually want to purchase.

The main difference between sales and marketing orientation is best summed up by Theodore Levitt:

Selling focuses on the needs of the seller; marketing on the needs of the buyer. Selling is preoccupied with the seller's need to convert his product into cash; marketing with the idea of satisfying the needs of the consumer by means of the product and the whole cluster of things associated with creating, delivering and finally consuming it.

Sales-orientated firms tend to use rather short-run production methods and are preoccupied with achieving current sales targets. In such a company, customer considerations are often restricted to the sales department. In a marketing-orientated organisation, the whole firm appreciates the central importance of the customer and realises that without satisfied customers there will be no business. To be able to progress from a sales to a marketing orientation, the senior management of the organisation must work to cultivate a company-wide approach to customer requirements.

The main problem facing a sales-orientated firm in progressing to a marketing orientation is the management of organisational change. The marketing department is likely to require proportionally more influence and authority over other departments in order to bring about an integrated and cohesive organisation which is pulling in the same direction'. Unless the philosophy of marketing permeates the entire organisation from top to bottom it will never achieve its full potential. It is quite natural, for other departments such as sales and production, which may experience the sense of anxiety often brought about by major organisational change, to resent having to adjust their activities in line with marketing requirements. The human implications of such a change need to be taken into consideration. The reallocation of power within the company can be an uncomfortable experience for those with a vested interest in keeping the status quo.


    Decide which                         Design products                Test products

    needs and wants                    and services of                 and services and

    to meet - may                        value which meet               modify if

    concentrate                           prospective                       necessary.

    upon certain                          customer's

    segments of the                    requirements.

    target market.


    Identify needs and                 Achieve    wants of specifically                   organisational goals

    defined target                        through customer

    markets.                               satisfaction.

REVIEW QUESTIONS / TASKS NO. 3

1)     A sales-orientated firm plans tend, to be relatively short term.

     How does a sales-orientated firm measure its success, is it by :-

     A]     A high profit margin

     B]     Sales volume

     C]     A good distribution network      (please circle your answer)

2)     What two ingredients must a firm plan to survive in the long term.

          

1.........................................................................................................................     ............................................................................................................................

     ............................................................................................................................

     ............................................................................................................................

     ............................................................................................................................     ............................................................................................................................

     ............................................................................................................................

     ............................................................................................................................

3)     Theodore Levitt summed up the main difference between sales and marketing orientation. The first is that

     `Marketing on the needs of the buyer.'

     What is the second.

     1]     Selling focuses on the total needs of the market.

     2]     Selling focuses on making a large profit.

     3]     Selling focuses on the needs of the seller.  (please circle your answer)

4)     What is the main problem facing a sales-orientated firm, in progressing to a marketing firm.

     ............................................................................................................................     ............................................................................................................................     ............................................................................................................................     ............................................................................................................................     ............................................................................................................................     ............................................................................................................................     ............................................................................................................................     ............................................................................................................................     ............................................................................................................................

The main departmental differences and possible organisational conflicts between marketing and other areas of the firm are summarised below.

____________________________________________________________________

Other               Other department's           Marketing department's

department          priorities                             priorities

____________________________________________________________________

Finance and          `Cost plus' pricing; rigid            Marketing-orientated

Accounting            budgetary control; standard      pricing; flexible budgeting;

                            commercial transactions.          pecial terms and discounts

____________________________________________________________________

Purchasing          Standard purchasing                 Flexible purchasing

                           procedures; bulk orders;          procedures; smaller orders if

                          narrow product line;                   necessary; wider product

                          standard parts.                          line; non-standard products.

____________________________________________________________________

Production          Long production lead time;       Short production lead time;

                          long runs; limited range of        short runs; extensive range

                          model's; supplier-specified;     of models; custom orders.

                         products.               

____________________________________________________________________

Sales               Time horizon -short term;            Time horizon-long-term;

                       success criterion - sales;            success criterion-customer

                       one-department-orientated          satisfaction; whole -

                       short-term sales.                        organisation-orientated;

                                                                        long-term profits

____________________________________________________________________

In a marketing-orientated firm the Managing Director is likely to come from a marketing background. The marketing philosophy is not confined to the Marketing Director or to the Marketing Department, but permeates the whole company. The adoption of a proper organisational structure is a necessary condition for marketing orientation, but is not the sole condition. A change of management labels and titles is purely cosmetic. Such changes will not bring about the necessary shift in company attitudes. A marketing-orientated firm is likely to be organised as outlined in fig. 2.4.

                               Managing Director


Production Director           Financial Director          Marketing Director

Field Sales          Product Group          Advertising           Marketing                             Manager                 Manager            Manager               Research

                                               Manager

     Regional               Manager          Manager

Sales Manager          Product A         Product B



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