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.
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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.
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The main departmental differences and possible organisational conflicts between marketing and other areas of the firm are summarised below.
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Other Other department's Marketing department's
department priorities priorities
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Finance and `Cost plus' pricing; rigid Marketing-orientated
Accounting budgetary control; standard pricing; flexible budgeting;
commercial transactions. pecial terms and discounts
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Purchasing Standard purchasing Flexible purchasing
procedures; bulk orders; procedures; smaller orders if
narrow product line; necessary; wider product
standard parts. line; non-standard products.
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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.
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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
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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