Developing Sales Strategy

A Satish Kumar

Developing Sales Strategy 1

Topics
 Deciding Market Segments
 Deciding Product Offerings
 Developing Selling Process
 Case Studies:
◦ Titan Watches
◦ Gillette Co.

Developing Sales Strategy 2

MARKET SEGMENT &
ANALYSIS

Developing Sales Strategy 3

Case – Market Segmentation in
Indian Passenger Car Industry
•Mercedes, BMW, Audi, Toyota Lexus, Jaguar
•Skoda Octavia, Laura, Hyundai Sonata
Luxury

•Toyota Fortuner
•Maruti Grand Vitara
SUV •Renault Duster, Ford EcoSport

•Honda Civic, Toyota Corolla, Skoda Rapid

•Maruti Ciaz, Honda City, Volkswagen Vento
Mid Size •Hyundai Excent, Swift Dzire, Tata Zest, Tata Tigor, Ford Aspire
Family

•Grand i10, i20 Elite, Swift, Polo

•Wagon R, Stingray, Honda Brio
•Alto, Eon
Economy •Nano

Developing Sales Strategy 4

Fundamentals of an Effective Sales
Strategy
Market Environment Analysis
 Current size & growth of the market
 Consumer needs, attitudes & buying trends
 Competitor analysis
◦ Their strategies
◦ Current performance
◦ SWOT
 Competition Structures
◦ Pure Competition – identical undifferentiated products. E.g loose sugar,
atta, etc
◦ Monopolistic Competition – large number of sellers of a generic
product BUT each seller’s brand is differentiated. E.g nail polish remover
◦ Oligopolistic Competition – small number of competitors, who are
known to each other
◦ Each competitor is large, so strategies impact each other

Developing Sales Strategy 5

Criteria for a Sound Sales Strategy

Should be well-defined & unambiguous statements

Should have specific product-market focus, i.e. target

segments, etc

Must be aligned to company’s mission & objectives

Must be able to use company’s available resources to

make it operational

Must have a good resource plan to meet business

objectives

Must give direction to enable a Right Marketing Mix

Must have the right ingredients to counter competition. Should

act to gaining Competitive Advantage

Developing Sales Strategy 6

Common Drivers of Sales Strategy
Tapping
Sales force
unconventional Unique pricing
development
markets

Niche Technological Value for

marketing leadership money

Product Cost Customer

positioning leadership service

Using core
Direct selling Team selling
competencies

Developing Sales Strategy 7

Steps in Strategic Sales Management
Finding out the target market

Disaggregating the market into sales territories

Designing the marketing mix program

Choosing appropriate selling techniques

Arranging the logistical functions to deliver product

Measuring customer satisfaction

Developing long term relations with customers

Developing Sales Strategy 8

What is meant by Segmentation?
Segmentation Groups  Process of dividing a
Heterogeneous Consumers
into Homogenous Sub-units potential market
into distinct subsets
of consumers with
After Segmentation, Consumer common needs or
will Vary ‘across’ Segments, BUT
be Homogenous ‘within’ characteristics
 Separating a
heterogeneous
It is the Consumers who are
Segmented, NOT the Product
market into smaller
or Price homogeneous units

Developing Sales Strategy 9

Important Elements of Market
Segmentation
 Each market segment has unique needs and
wants and will have a unique demand curve
 Each market segment requires its own
marketing strategy and marketing plan
 Market segmentation produces increased costs
to the firm in the short run
 Increased costs are generally offset by
increasing sales in the long run

Developing Sales Strategy 10

Why Segment the Market?
Facilitates the Right
Choice of Target
Market

Facilitates Effective
Benefits the
Tapping of Chosen
Consumer as Well
Market

Helps Identify Less Makes Marketing

Satisfied Segments & Effort More Efficient
Focus on Them & Economic

Developing Sales Strategy 11

Bases of Segmenting
Demograph
ics

Buying
Geographic
Behavior

Market
Segmentation

Psycho- Socio-
graphics Cultural

Developing Sales Strategy 12

Segmentation Bases
 Geographic  Demographic
◦ Country ◦ Age
◦ Region ◦ Sex
◦ County size ◦ Income
◦ SMSA population ◦ Education
◦ Density ◦ Occupation
◦ Race
◦ Family life cycle

Developing Sales Strategy 13

Segmentation Bases
 Psychographic
◦ Social class
◦ Personality
◦ Lifestyle
◦ Activities, interests, &
opinions (AIO’s)
 Behavioralistic
◦ Decision unit
◦ Usage rate
◦ Readiness
◦ Benefits sought
◦ Occasion
◦ Brand loyalty
Developing Sales Strategy 14
Tasks involved in Segmentation
Profiling the Finding out their Disaggregating the
differences between descriptive consumers into
segments characteristics appropriate segments

Checking feasibility Finding out segments

of formulating that are ‘happy’; thus Estimating likely
marketing strategies considered natural levels of purchase
for each segment targets

Ensuring the
segments arrived are
Effective

Developing Sales Strategy 15

Attributes of Effective Segments

Growing (not at end

Identifiable Profitable
of life cycle)

Sizeable (reasonably
Compatible (with
Distinct (from one sized to be
firms resources &
another) commercially
skills)
tapped)

Measurable (to Accessible (must be

determine market possible to reach; Actionable
size) NOT a fiction)

Developing Sales Strategy 16

CASE STUDY – TITAN
WATCHES
VALUE BASED
SEGMENTING
Step – 1
Arrived at 3 broad segments

The rich / high

income consumers

The middle
income consumers

The lower income

consumers

Developing Sales Strategy 17

CASE STUDY – TITAN
WATCHES
VALUE BASED
SEGMENTING
Step – 2
Went for Value Segmenting
Raised the below questions

Do they all look for the

Within a given segment,
What do different buyers say rich, do all buyers eek
seek in their watch? the same value
proposition?
same experience in
owning a watch
OR
are they driven by distinct
desires/motives/value-
needs?

Developing Sales Strategy 18

CASE STUDY – TITAN
WATCHES
VALUE BASED
SEGMENTING
Step – 3
Classifying the Rich, Middle Income & Lower
Income groups

Men formed one sub-segment in Rich; wanted gold,

some wanted fine jewelery studded

Younger Rich wanted Fashion & Lifestyle; more into

partying & picnicking; so did NOT want a throw away
item. Some wanted designer watches like the Swiss type

The Middle Income Segment wanted a durable & good

watch. Many of those also wanted fashion & design to
come along

The lower income consumers went purely by price.

Within a lower price band, they wanted more variety

Developing Sales Strategy 19

CASE STUDY – TITAN
WATCHES
VALUE BASED
SEGMENTING
• Titan’s Value Segmenting
found a larger spectrum
of value needs
• Titan went in for a wide
range of offers, across
varied price points – INR
295 to INR 1.5 lakhs
• Xylus – in the INR 10,000 – 50,000 range
The Luxury Segment • Edge -
• Set up retail stores - Helios
• Aurum & Royale lines; with 18 carat jewelery, studded with stones in INR
The Gold Lovers 20,000 – 100,000 range
• Nebula – more higher on gold content, in INR 80,000 – 3 lakhs range
• Titan had to make several sub-segments within Lifestyle – Aviator,
The Lifestyle Segment Fastrack, (cool, young & vibrant for 15-20 year olds)
• For the Digital segment, it launched Fastrack Digital
The Designer Segment • The Euro Collection – INR 5000 - 8000
Wedding Collection • For Wedding seasons & at specific price points & designs
Children Segment • Dash & Zoop
Middle Income Group • Exacta – in INR 500 – 700 range
Women • Raga Collection
Rural & Low Income • Sonata
Developing Sales Strategy 20
Segmenting – Other Bases &
Examples
 Geographic Segmentation – Mumbai Mirror,
Andheri Times, etc
 Gender Segmentation – TVS Scooty for
Women. Maruti Sx4 for Men
 Income Segmentation – HCL & Zenith
Desktops, under INR 10,000
 Lifestyle Segmentation – Café Coffee Day
 Benefit Segmentation – Diet Coke, Diet
Horlicks
 Volume Segmentation – Reynolds ballpens

Developing Sales Strategy 21

DECIDING PRODUCT
OFFERINGS

Developing Sales Strategy 22

What is a Product?
 Product is more than a Physical Entity
◦ It has a personality – brand, image, association, etc
 Components of a Product
◦ Core Product
◦ Associated Features Potential
Product
Augmented
Product
Expected
Product
Basic Product

Core Benefit

Developing Sales Strategy 23

Product Attributes
 CORE BENEFIT:
Service or benefit the consumer is actually buying
Eg: Sleep and rest in case of a hotel guest
 BASIC PRODUCT:
Service or benefit is given more tangibility
Eg: Hotel room includes bed, towel, desk, etc.
 EXPECTED PRODUCT:
Attributes and conditions buyers usually expect
Eg: Clean room, fresh towels, etc.
 AUGMENTED PRODUCT:
Product that exceeds expectations
Differentiation takes place at this level
 POTENTIAL PRODUCT:
All possible augmentation result into potential product

Developing Sales Strategy 24

Product Classification
 DURABILITY & TANGIBILITY
◦ Non-Durable Goods
◦ Durable Goods
◦ Services
 CONSUMER GOODS CLASSIFICATION
◦ Convenience Goods
◦ Shopping Goods
◦ Specialty Goods
◦ Unsought Goods
 INDUSTRIAL GOODS CLASSIFICATION
◦ Material & Parts
◦ Capital Items
◦ Supplies

Developing Sales Strategy 25

Product Hierarchy
 It stretches from basic needs to particular
items that satisfy them.
 There are six levels which can be
understood with the example of insurance.

1. Need Family Security

2. Product Family Savings & Income
3. Product Class: Financial Instrument
4. Product Line Life Insurance
5. Product Type Term Life insurance
6. Item ICICI Prudential
Developing Sales Strategy 26
The Different Levels of a Product

Product
The
Augmented
The The Product The Potential
The Generic Customized The Branded Differentiated (Voluntary Product
Product Product Product Product Improvement (tomorrow’s
Eg loose rice, Eg LensKart Eg Annapurna Eg Maggie, s by product)
loose sugar Reading Atta, Tata Salt Dettol, etc marketer) Eg Flying Taxi
Glasses Eg Gillette (Drone)
Fusion Razor
(with motor)

Developing Sales Strategy 27

Product Design – A Big Value Adder

Developing Sales Strategy 28

Product
 Features v/s Benefits

 Brand Name

 Logo

 Packaging

Developing Sales Strategy 29

Product Type

Automobiles

Electronics
& Kitchen FMCG
Appliances
Product Type
Impacts Selling
Strategy

Banking &
Consumer
Financial
Durables
Services

The Product Type is a very CRITICAL driver that determines the type of
Selling Approach to be adopted
Developing Sales Strategy 30
 Product Mix & Product Line
E.g. of HUL
Product Mix Width

Product Line-1 Product Line-2 Product Line-3 Product Line-4

Bath Soaps Fabric Wash Beverages Beauty Products

Dove Surf Bru Fair & Lovely

Liril Rin Brooke Bond Lakme
Le Sancy Wheel Lipton Vaseline
Pears Sunlight 3 Roses Aviance
Product Rexona Ala Taaza Ponds
Line Lifebuoy 501 Taj Mahal
Length Hamam
Breeze
Jai
Moti

Developing Sales Strategy 31

Product Line Appraisal
How is the line faring? • Lengthening Product Lines
• Stretching Up/Down
How is each member of the line faring? • Filling
• Deepening Product Lines
Is it achieving its sales/profitability/market
• Line Pruning
share?

Which is the best performing brands in the

line & which are the weak ones? Examples –
• Surf at high-end price point
How are recent launches faring? • Launched Sunlight at low
price point
Does the line need any pruning? • Ariel Micro at high price
point
• Launched Ariel Super
How effective is the current pricing?
Soaker at low end

Developing Sales Strategy 32

DEVELOPING SELLING
PROCESS

Developing Sales Strategy 33

Designing the Selling Process
Type of
Sales Force
Required

Transaction Size of
Cost Sales Force
Analysis Required
Selling
Process

Channel Territory
Support Design

Developing Sales Strategy 34

Type of Sales Force
 Depends of type of role the sales force has to
play
◦ Do they have to play the entire role from prospecting to
commissioning? E.g Eureka Forbes salesman v/s Kotak Bank
salesman
◦ Product Specialists – in case of highly technical nature of the
product
◦ Market Specialists – in case of generic product in a complex
territory

Developing Sales Strategy 35

Determination of Sales Force Size

Sales
Potential
Work Load Method
Method
Incremental
Method

Developing Sales Strategy 36

 Incremental Method
 Principle: Increase the size of the sales force till the incremental revenue exceeds
incremental costs
 Assumption: Profits will increase when additional sales persons are added
No of salesmen Sales Volume in Cost of goods Gross Margin
Rupees sold 60% 40%
11 250000 150000 100000
12 200000 120000 80000
13 150000 90000 60000
14 100000 60000 40000
Suppose all salesmen receive salary & travelling expense of Rs 20k+15k & 6% commission on sales, then
profits will vary per below table
No of salesmen Gross Margin Sal. + TA + Net Profit
Comm
11 100000 35000+15000 50000
12 80000 35000+12000 33000
13 60000 35000+9000 16000
14 40000 35000+6000 -1000
Developing Sales Strategy 37
Sales Potential Method
 Considers what an average sales person with an average
performance will accomplish
 Thus the amount of sales that will be made by a
salesman
 Then find the forecasted sales volumes
 Divide total sales volumes by the work which one sales
person can do
◦ N = S/P
◦ N is number of sales persons
◦ S is forecasted sales volume
◦ P is estimated sales productivity of one person
◦ If S=100000 & P=10000 then N = 10

Developing Sales Strategy 38

Work Load Method
The method can be applied only if a company is in position to decide on:
 (1) Different groups of customers based on size of purchase,
 (2) Number of calls required by the different groups of customers, and
 (3) Average number of calls a salesman can make in a year.

Equalized workload method involves following steps:

 i. Classification of Customers:
◦ Customers are classified into several groups on the basis of their average annual consumption.

 ii. Deciding Desirable Call Frequency:

◦ Number of calls for each of the groups of customers is determined.

 iii. Calculating Total Workload:

◦ To calculate total workload, different customer groups are multiplied by corresponding call frequency.

 iv. Determining Average Number of Calls:

◦ Average number of calls a salesman can make in year is determined.

 v. Determining Sales Force Size:

◦ Sales force size (number of salesmen) is determined by dividing total workload (calls) by average number of calls a
salesman can make in a year.
Developing Sales Strategy 39
Territory Design

Geographical Basis
Sales Potential Basis
Sales persons
grouped Servicing Requirement Basis
Splitting the
according to Work Load Basis
customer base
geographical Based on where
by dispersion of
potential servicing is
sales potential Based on
required more
account
by customers
potential &
servicing needs

Developing Sales Strategy 40

 Channel Support & Coordination
1. Adequate incentives for the dealers are a must
2. Proper feedback & communication is important
3. Measures have to be taken to promote dealer loyalty

Intensive Distribution
• Distribution is made to all outlets
spread over a large area
Extensive Distribution
• Covers large area but does not cover
all customers in an area
Selective Distribution
• Goods are distributed to ONLY
selected outlets
Exclusive Distribution
• Distribution done by exclusively only
dealer e.g automobiles
Developing Sales Strategy 41
Transaction Cost Analysis
 It’s the Cost of Transacting Business
 Delineation of territory (exclusive domains) of
middlemen & freedom of letting him cultivate a
territory
 Inventory Holding (to prevent stock-out). Price
guarantees involved here
 Installation & after-sales-service
 Price maintenance in selling to the final customer
 Price of Promotional Services
 Exclusive Dealing (not carrying competitive
brands)

Developing Sales Strategy 42

The 10-Step Sales Process

Developing Sales Strategy 43

 1. PROSPECT

 Define the target audience you want to attract and use channels such as
social media to find them. Focus on the types of customers you wish to
attract. For example, a financial adviser can use advanced search filters
on social media to find and target lawyers within a specific geographical
location and tailor messages to appeal to that audience.

 The more targeted you are with your prospecting the more likely you
are to generate contacts who fit the criteria of your ideal client type.
2. QUALIFY
By gathering answers to the
following questions can help you
qualify each lead, allowing you to
focus on those most likely to convert
to sales.
•
✔
Budget: do they have enough
money to buy the product?
• Authority: can they make a
purchase decision?
• Need: do they have a need that
the product or service in question
can fulfill
• Timescale: do they have a
specific time when they wish to
make their purchase
 3. CONNECT
 Connect with prospects through email, telephone or face to face
meeting to communicate your value proposition. Depending on
your business and proposition, email is typically the best and most
cost effective form of communication for early stage prospects.
 Automation processes provide you with a means to nurture
prospect interest through the scheduled delivery of automated
emails.
4. IDENTIFY PAIN POINTS

 Why would someone who fits within your target client profile choose
to bypass your product or service?
 To understand why, you must put yourself in their shoes, understand
their pain points and take preemptive measures to address those pain
points.
 Use your website, blog content, videos, or emails to clarify any
concerns and remove obstacles that could impact your sales
 5. PRESENT

 Show exactly what you have to offer and why it would benefit that
prospect. Use product demos, samples, examples or presentations.
 Develop a process to present your service through the most suitable
media.
 Whether it is face to face product demonstrations, videos, booklets or
online demonstrations, use the right media to fit your proposition.
6. HANDLE CONCERNS

 To help address any doubts the prospect might have, include an FAQ
section on your website.
 Help build trust and authority by providing them with testimonials and
case studies.
 For the prospects who need more time, send them regular and
valuable blog posts or email newsletters to help keep your service front
of mind.
 7. PROPOSAL

 When you understand your prospects specific needs and they see the
value in your service, draught and present to them a proposal that fits
their requirements.
 8. CLOSE

Whenever you feel you have nurtured your prospects interest and
alleviated any concerns, ask for the business and close the deal
 9. DELIVER

The most important part of any transaction is to deliver value. By

ensuring your customers receive the product or service they signed
up for is critical for business longevity and client satisfaction. Ensure
you have client care processes in place to promote customer delight.
 10. UPSELL/CROSS-SELL

 Remain in contact with clients through regular blog distribution, email

newsletters or product updates.
 Benefit from flawless customer care processes to upsell and promote
positive word of mouth and social referrals.