Chapter 1: Sales Function & Strategies Flashcards
What are the different types of sales markets?
- For Profit
- Non-Profit
What is the strategic goal for “For Profit” sales markets?
Competitiveness
What is the strategic goal for “Non-Profit” sales markets?
Mission effectiveness
What are success factors for “For Profit” sales markets?
- Market Share
- Growth Rate
- Earnings
What are success factors for “Non-Profit” sales markets?
- Management Practices
- Social Impact
- Cost Efficiency
What do “For Profit” sales markets value?
- Innovation
- Creativity
What do “Non-Profit” sales markets value?
- Accountability to public
- Integrity
Name the 4 Sales strategies to implement into a market
- Build
- Hold
- Harvest
- Divest
What are the sales objectives of the Build strategy?
- Build sales volume
- Increase distribution
- Provide high service levels
What are the sales objectives of the Hold strategy?
- Maintain sales volume
- Maintain distribution
- Maintain service levels
What are the sales objectives of the Harvest strategy?
- Reduce selling costs
- Target profitable accounts
- Reduce service costs and inventories
What are the sales objectives of the Divest strategy?
Clear inventory quickly
What are the sales strategies of the Build strategy?
- High call rates on existing accounts
- High focus during call
- Call on new accounts (prospecting)
What are the sales strategies of the Hold strategy?
- Continue present call rates on current accounts
- Medium focus during call
- Call on new outlets when they appear
What are the sales strategies of the Harvest strategy?
- Call only on profitable accounts
- Consider telemarketing or dropping the rest
- No prospecting
What are the sales strategies of the Divest strategy?
Quantity discounts to targeted accounts
Porter’s Generic Business Strategies
A framework for achieving sustainable competitive advantage by positioning themselves strategically in the market
Advantages of Porter’s Generic Business Strategies
- Product Oriented
- Cost Oriented
Limitations of Porter’s Generic Business Strategies
- May not suit every business or industry
- Dynamic markets require hybrid approach
Name the strategies of Porter’s Generic Business Strategies
- Cost Leadership Strategy
- Differentiation Strategy
- Focus Strategy (differentiation)
- Focus Strategy (Low Cost)
Cost Leadership Strategy
- Broad Target/Market Scope (Industry wide)
- Advantage: Low Cost
Differentiation Strategy
- Broad Target/Market Scope (Industry wide)
- Advantage: Product/Service Uniqueness
Focus Strategy (Differentiation)
- Narrow Target/Market Scope (Market Segment)
- Advantage: Product/Service Uniqueness
Can a business strategy alone work?
NO - Each business strategy needs to be accompanied by a sales strategy
Focus Strategy (Low Cost)
- Narrow Target/Market Scope (Market Segment)
- Advantage: Low Cost
Ansoff Matrix
A strategic planning tool used to identify and evaluate growth opportunities
Name the strategies within the Ansoff Matrix
- Market Penetration Strategy
- Product Development Strategy
- Diversification Strategy
- Market Development Strategy
Market Penetration Strategy
- Existing Product
- Existing Market
Product Development Strategy
- New Product
- Existing Market
Diversification Strategy
- New product
- New Market
Market Development Strategy
- Existing Product
- New Market
Sales objectives of Market Penetration Strategy
- Boost sales volume
- Strengthen market share
- Optimize distribution channels for improved product availability
Sales objectives of Market Development Strategy
- Expand geographically or into new segments
- Build brand recognition
- Develop relationships with new distributors/partners
Sales objectives of Product Development Strategy
- Increase revenue through cross-selling new offerings
- Drive engagement
- Leverage established distribution networks
Sales objectives of Diversification Strategy
- Establish Sales infrastructure and relationships in unfamiliar markets
- Build early adoption through targeted campaigns/partnerships
- Reduce dependency on current product catalog by spreading risk
Reason to “Hold” a product
Product is at a point where it reaches its “cap.”
BCG Matrix
a strategic tool used to evaluate a company’s product portfolio or business units based on their market growth rate and relative market share.
What is considered a relatively high market share?
+1%
Name the categories within the BCG Matrix
- Stars
- Question Marks
- Dogs
- Cash Cow
Stars (BCG Matrix)
- High Market Growth Rate
- High Relative Market Share
Question Marks (BCG Matrix)
- High Market Growth Rate
- Low Relative Market Share
Dogs (BCG Matrix)
- Low Market Growth Rate
- Low Relative Market Share
Cash Cows (BCG Matrix)
- Low Market Growth Rate
- High Relative Market Share
What Sales Strategy is linked to Stars (BCG Matrix)?
Build / Hold
What Sales Strategy is linked to Question Marks (BCG Matrix)?
Build
What Sales Strategy is linked to Cash Cow (BCG Matrix)?
Hold / Harvest
What Sales Strategy is linked to Dogs (BCG Matrix)?
Divest
Tracy and Wiersema’s Value Strategy
A framework used to deliver exceptional value to customers and achieve competitive advantage
Name the strategies of Tracy & Wiersema’s Value Strategy
- Product Leadership
- Operational Excellence
- Customer Intimacy
Pareto principle (80/20 rule)
20% of customers account for 80% of a company’s revenue or profits
ABC Analysis
A business tool used to categorise customers based on their value or impact, following the Pareto principle (80/20 rule)
A Items within ABC Analysis
High value items / customers (20%)
B Items within ABC Analysis
Moderate value items / customers (20-50%)
C Items within ABC Analysis
Low value items / customers (50-100%)
How much % of a company’s revenue/profits do A items account for?
80%
How much % of a company’s revenue/profits do B items account for?
15%
How much % of a company’s revenue/profits do C items account for?
5%
What are the steps to conduct an ABC Analysis?
- List all items / customers and their value
- Rank them in descending order of value
- Classify them into A, B or C categories based on contribution %
RFM model (ON EXAM 100%)
a marketing and customer segmentation tool that helps businesses evaluate and categorize customers based on their purchasing behavior
Name the components within the RFM model
- Recency
- Frequency
- Monetary
Recency (RFM model)
How recently a customer made a purchase
Frequency (RFM model)
How often a customer makes a purchases in a given period
Monetary (RFM model)
The total amount a customer spends over a period of
