Integrated Marketing Environment Putting New Pressure on Sales Management

James T. Berger, Managing Editor, September 2006

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When the integrated marketing communications movement took hold about a decade ago the main benefit appeared to be the opportunity to put traditional rivals, advertising and sales promotion, on the same page.

But, changes in the marketing environment has put new pressure on the need to better integrate selling and sales management into the integrated marketing communications process. This thinking was articulated by Harvard Business School Prof. Benson Shapiro in a 2002 article entitled “Want a Happy Customer? Coordinate Sales and Marketing” in Harvard Business School Working Knowledge, a valuable and free on-line resource
(http://hbswk.hbs.edu/).

Shapiro writes: “If marketing and sales do not cooperate, the company’s strategy will be inconsistent and weak and execution will be flawed and inefficient. In today’s hyper-competitive world, the sales and marketing functions must yoke together at every level — from the core central concepts of the strategy to the minute details of execution.”

80-20 Rule Changing

Shapiro points out that many companies have seen the traditional 80-20 (80 percent of sales from 20 percent of customers) rule undergo changes brought on by such things as global competition and the Internet. “When companies generally made their money in large number of mid-sized accounts, marketing was typically seen as the strategic function that concentrated on product and service lines, market segments and competitive positioning,” Shapiro writes. “Marketing did the thinking, managed the brand and customer franchise in consumer goods companies and provided support to the sales force. In this simpler world, sales did the execution in the field and sold to end users and distributors in business markets, and the ‘trade’ (wholesalers and retailers) in consumer goods markets. Marketing was cerebral, creative and long-term oriented; and sales was action-oriented, relationship-focused, and short term.”

But the world has changed, Shapiro observed. In most industries there are a relatively small number of large major accounts and a shrinking number of mid-sized ones. Taking their place are growing numbers of smaller accounts. Moreover, these accounts have evolved into “complex collections of diffuse buying teams involving different customer functional departments (purchasing, engineering, information technology, operations, finance, etc.), different levels in the consumer’s organization hierarchy , and different customer regional and line of business organizations.’ According to Shapiro.

New Channel Systems Needed

This new buying organization has necessitated new sales management channel systems. Shapiro points out that customers are reached through complex overlapping systems including global and national teams; field sales organizations that include market and product specialists as was a territorial generalists, and telesales and Internet ordering. The channel system has been widened beyond the typical wholesaler, dealer, retailer networks to include value-added integrators, resellers and packagers and fulfillment specialists.

Bentonville, AK, the home of Wal-Mart, has become home to hundreds of sales people whose function is to serve the needs of the this giant customer. Proctor & Gamble alone has more than 100 people housed in its Bentonville office. “The days of easy separation of sales and marketing are gone along with the homogeneous, simple, mid-sized account,” writes Shapiro.

Marketers service the Wal-Mart-type accounts require sales and marketing to work closely together and make joint decisions on product, price, brand and support. For example, when the largest distributors seek private label merchandise, both sales and marketing must be involved. This also goes for pricing, product customization and service customization.

At the opposite extreme — the growing numbers of smaller accounts — sales and marketing must coordinate such activities as telemarketing, direct mail, Web-based e-commerce, and non-traditional channel systems. Shapiro points out marketing to smaller accounts used to be the exclusive domain of marketing, but he writes, “The sales force can no longer passively accept and execute plans from marketing. Account managers, product managers and advertising managers need to develop new respect for and understanding of individual customers, account managers and sales managers. No longer will headquarters reign supreme. As power shifted from seller to buyer, it also shifted from headquarters to field.”

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Author
James T. Berger, Managing Editor of The Wiglaf Journal, specializes in both finance and marketing and has spent a number in both the investor relations field as well as an account manager and officer at several Chicago advertising agencies.

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