B2B Advertising

The Role of Advertising

1. Integrated Communication Programs.

2. Enhancing Sales Effectiveness.

3. Increased Sales Efficiency.

4. Creating Awareness.

Advertising

• Cannot be a Substitute for effective personnel selling.

• Cannot, by itself, create product preference.

Advertising is only one aspect of the entire marketing strategy.

The advertising decision process begins with the formulation of advertising objectives.

Equally important is the evaluation and selection of the media.

The Decision Stages for Developing the Business-to-

Business Advertising Program

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

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.

Setting Ad Budgets:Commonly Used Methods

Developing the B2B Advertising Message

• Determine advertising objectives.

• Evaluate buying criteria of target audience.

• Analyze most appropriate language for presenting message.

Organizing the Sales Force

Typical Methods of Organizing the Sales Force

• Line Organizations (& Line/Staff)

• Functional Organizations

• Specialization Organization– Sales Activities– Geographic Areas– Products– Customers

A Simple Line Organization

S a lesp erson A S a lesp erson B S a lesp erson C

S a les M an ag er

A Two-Level Line Organization

S a lesp erson

R eg ion AS a les M an ag er

S a lesp erson

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S a lesp erson

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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 and 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

M arke t F orecas te r

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S a lesp eop le

R eg ion BS a les M an ag er

S a lesp eop le

R eg ion CS a les M an ag er

Tra in in g D irec to r

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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

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S a lesp eop le

R eg ion BS a les M an ag er

Tra in in g D irec to r

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M arke t F orecas te r

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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• 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

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

S alesp erson A S a lesp erson B

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S a lesp erson C S a lesp erson D S a lesp erson E

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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

S alesp eop le

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W es tern R eg ionS a les M an ag er

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N ation a lS a les M an ag er

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

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P rod u c t BS a lesp eop le

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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

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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