B 2 B Advertising The Role of Advertising

B 2 B Advertising

The Role of Advertising 1. 2. 3. 4. 5. Integrated Communication Programs. Enhancing Sales Effectiveness. Increased Sales Efficiency. Creating Awareness. Interactive Marketing Communications.

Advertising Cannot • Substitute for effective personnel selling. • Advertising alone cannot create product preference.

The Decision Stages for Developing the Business-to. Business Advertising Program ü Advertising is only one aspect of the entire marketing strategy. ü The advertising decision process begins with the formulation of advertising objectives. ü Equally important is the evaluation and selection of the media.

Setting Ad Budgets: Commonly Used Methods Percentage of Sales • Allocate some percent of sales to advertising. • Makes advertising a consequence rather than a determinant of sales and profits. • Useful only if possess VALID historical data • Most commonly used method

Setting Ad Budgets: Commonly Used Methods • • Affordability Method Firm spends on advertising what it has available to spend Good cash flow control Most common with small firms Sales drive the advertising

Setting Ad Budgets: Commonly Used Methods Objective-Task Method • An attempt to relate advertising costs to the objective it is to accomplish. • Focuses on the communications effects of advertising, not on the sales effects. • Generally considered the “best” method.

Developing the B 2 B Advertising Message • Determine advertising objectives. • Evaluate the buying criteria of the target audience. • Analyze the most appropriate language for presenting the message.

Developing the Message • Perception • Focus on Benefits • Understanding Buyer Motivations

Organizing the Sales Force

Typical Methods of Organizing the Sales Force • Line Organizations (& Line/Staff) • Functional Organizations • Centralized vs. Decentralized Organizations • Specialization Organization – Sales Activities – Geographic Areas – Products – Customers

A Simple Line Organization

A Two-Level Line Organization

Line Organizations • Characteristics – Authority/responsibility for planning/implementing sales activities lie in hands of sales manager. – Each person has only one boss.

Line Organizations • Advantages – Very simple to understand use. – Easy to trace accountability. – Relatively inexpensive (only a few highly-paid executives are necessary) – Quick action possible since decision-making is in hands of relatively few people.

Line Organizations • Disadvantages – As organization size increases, problems become more complex. – Specialized skills often needed. – Many sales managers cannot keep on top of all functions that relate to sales. – Lack of trained replacements.

Line Organizations • Implications – Best used by small organizations where operations can be clearly divided into basic functions of sales, finance, and production.

Line and Staff Organizations • Characteristics – Same as line organization except staff positions added – Staff positions don’t have authority over line positions • Advantages – Staff provide sales manager with specialized skills – Allows sales manager to be more efficient/ effective. – Doesn’t dilute his/her authority/contact w/salespeople.

A Line & Staff Organization

Line and Staff Organizations • Disadvantages – Can be more expensive than a line organization. – Conflicts may arise between line & staff executives. – Staff executives may attempt to exert authority over line personnel. – Line executives may ignore the counsel of the staff

Line and Staff Organizations • Implications – If sales managers find themselves spending less time working with subordinates and more time performing planning & evaluating functions, may want to consider this organization

Functional Organizations • Characteristics – Organization divided by function. – Functional specialists have line authority. – Salespeople report to multiple bosses. • Advantages – Specialist ensure their functions are carried out. – Should improve performance in each functional area due to the specialization.

A Functional Organization

Functional Organizations • Disadvantages – Breakdown in the unity of command due to conflicting orders – Each salesperson is no longer accountable to only one boss • Implications – Typically used in large firms that feature numerous functions and that have the need for several specialists.

Centralized vs. Decentralized? Factors That Influence • Costs – Decentralized can be expensive due to duplication – Expenses increase as the numbers at each location increase in terms of specialists, inventory, and service facilities – Can offset with lower delivery costs, greater customer satisfaction or a higher sales volume.

Centralized vs. Decentralized? Factors That Influence • Size of Sales Force – As sales force size increases, the need to decentralize increases. – Span-of-control problems emerge – More field managers will be necessary – Decentralization more feasible

Centralized vs. Decentralized? Factors That Influence • Geographic Size of Market – As size of market grow geographically, need for decentralization increases – More difficult to efficiently/effectively supervise sales activities from central location – Sales expenses increase; such as transportation, lodging, and meals – Supervisors have less opportunities to work with individual salespeople

Organizing by Sales Activities • Characteristics – Usually employ simple line organizations – Separate selling functions (present account maintenance and new account development) • Advantages – Allows salespeople to become proficient in their respective sales functions. – Places special emphasis on searching out and selling new accounts.

Line Organization Structured by Sales Activities

Organizing by Sales Activities • Disadvantages – Customers may resent being turned over to a different salesperson. – Salespeople may want to cultivate the accounts they have developed.

Organizing by Sales Activities • Implications – Use when there is a large turnover of customers – Use when there is a significant difference in the skills needed in each separate area – Use when fast growth through new account acquisition is deemed necessary

Organizing by Geographic Areas • Characteristics – Sales force is reorganized on a geographic basis – Salespeople sell all the company’s present products to all customers within their assigned territories

Line Organization Structured by Geographic Area

Organizing by Geographic Areas • Advantages – Salespeople and managers become more familiar with their territories – Local problems may be solved more quickly – Sales force can rapidly react to changes in the local competitive environment – Can provide better service at lower cost – Lower chance for customer confusion

Organizing by Geographic Areas • Disadvantages – Diversity/magnitude of product line may limit salesperson’s knowledge of any one product – Duplication of overhead expense – Greater level of salesperson control (which products to push, which customers to service) • Implications – Best used if product line is relatively homogeneous – Best used if customers are widely dispersed

Organizing by Products • Characteristics – Sales force is reorganized on a product basis – Salespeople specialize in particular products carried by the sales organization

Sales Force Organized by Products

Organizing by Products • Advantages – Each product line receives a higher degree of specialized attention – Allows for decentralization of both authority & responsibility for each product line – Allows decisions to be made closer to the problems with any particular product line

Organizing by Products • Disadvantages – If specialization occurs above salesperson level, additional overhead expense may be suffered. – More than 1 salesperson may be calling on customers – Difficult to maintain a consistent image

Organizing by Products • Implications – Best used if product line is relatively heterogeneous – Best used if have a wide variety of customers with quite different needs – Best used if products are technically complex – Broad, in-depth knowledge of product essential for the sales task

Organizing by Customers • Characteristics – Sales force is reorganized on a customer basis – Salespeople specialize in selling to/ servicing particular customer types

Sales Force Organized by Customers

Organizing by Customers • Advantages – Most consumer oriented approach – Organization of sales force is based on customer needs – Control remains at the management level (which customers to call on, etc) – Allows salespeople to specialize in customer needs

Organizing by Customers • Disadvantages – Potential for overlapping territories is high – Hence, overhead costs may rise – Salespeople must become knowledgeable about company’s entire line of products

Organizing by Customers • Implications – Customers in a given market buy several different products/lines from single supplier – Same buying factors apply across product lines – Significant proportion of income is derived from a small number of accounts who require high service levels