Chapter 1 – Introduction to Sales Management in the Twenty-First Century
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Chapter 1
Introduction to Sales Management in the Twenty-First Century
Learning Objectives for Chapter 1
• Identify and discuss key trends affecting sales organizations and sales managers
today.
• Present a general overview of the sales management process.
• Identify and illustrate the key external and internal environmental factors that
influence the development of marketing strategies and sales programs.
Definition of Key Terms in Chapter 1
• Transactional selling
o A series of transactions, each one involving separate organizations entering
into an independent transaction involving the delivery of a product or service
in return for compensation.
• Relationship selling
o Act of working with customers to solve their problems, improve efficiencies,
and, in general, add value to their customers’ businesses.
• Leading versus managing
o (1) Communicating with salespeople rather than controlling them, (2)
becoming a cheerleader and coach instead of a supervisor or boss, and (3)
empowering salespeople to make decisions rather than directing them.
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• Sales management
o All activities, processes, and decisions involved in managing the sales function
in an organization.
• Sales management process
o Consists of three interrelated sets of decisions or processes.
▪ Formulation
− Creation of a sales management process that takes environmental and
other factors into consideration.
▪ Implementation
− Involves the selection of appropriate sales personnel and the creation of
policies and procedures that will direct efforts toward the desired
objectives.
▪ Evaluation and control
− Development of methods for monitoring and evaluating sales force
performance.
• External environment
o Conditions outside of the company boundaries that affect the company.
o Economic environment
▪ (1) The amount of growth, the unemployment rate, and the level of
inflation, (2) the existing distribution structure in an industry, and (3) the
amount of competition in the industry.
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o Legal-political environment
▪ Three broad categories of laws are relevant to sales programs: (1) antitrust,
(2) consumer protection, and (3) equal employment opportunity. These are
aimed primarily at preserving and enhancing competition among firms in
an industry.
o Technological environment
▪ The technical environment can create the ability to improve the processes
of managing sales and accounts, provide opportunities for product
development, and improve transportation, communication, and data
processing.
o Social and cultural environment
▪ Social values set the standards for ethical behavior.
o Ethics
▪ Development of moral standards by which actions and situations can be
judged.
o Natural environment
▪ Nature can influence demand for products. A shortage of raw materials and
the energy needed to make, package, promote, and distribute products can
lead to limitation on sales of products and may lead to demarketing.
• Demarketing
• Occurs in cases where the sales force is required to help administer rationing
programs that allocate scarce supplies according to each customer’s purchase
history.
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Internal (organizational) environment
o Five broad categories: (1) goals, objectives, and culture, (2) human resources,
(3) financial resources, (4) production capabilities, and (5) research and
development capabilities.
• Corporate culture
o Developed by a well-defined mission together with a successful corporate
history and top management’s values and beliefs. Shapes the attitudes and
actions of employees and helps determine the kinds of plans, policies, and
procedures salespeople and their managers can implement.
Chapter Outline
I. Sales Management in the Twenty-First Century
A. Innovation Fuels Success in Selling Today
B. Sales Effectiveness Is Enhanced through Technology
C. Leadership Is a Key Component in Sales Management Success
D. Sales Management Is a Global Endeavor
E. Ethics Underlies All Selling and Sales Management Activities
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II. What Is Involved in Sales Management
A. Selling Process
B. Sales Management Process
III. Environmental Factors Impact Success in Selling
IV. External Environment
A. Economic Environment
B. Global Legal and Political Environment
C. Technological Environment
D. Social and Cultural Environment: Ethics
E. Natural Environment
V. The Internal (Organizational) Environment
A. Goals, Objectives, and Culture
B. Human Resources
C. Financial Resources
D. Production and Supply Chain Capabilities
E. Service Capabilities
F. Research and Development (R&D) and Technological Capabilities
VI. Summary
VII. Key Terms
VIII. Breakout Questions
IX. Leadership Challenge: The New Kid on the Block
X. Role-Play: Inventron Pharmaceuticals
XI. Minicase: iTeam, Inc.
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PowerPoint Program—each chapter of the text has been captured in animated PowerPoint
slides.
Chapter Outline with Suggestions
Use PowerPoint slides 1.1 through 1.3 to introduce the book and to explain how Chapter 1
and subsequent chapters are organized.
Ask students to discuss the impact of e-commerce on personal selling and sales
management in the twenty-first century. PowerPoint slides 1.4 through 1.12 cover the basic
concepts of sales management in the twenty-first century.
• Sales Management in the Twenty-First Century
o Innovation Fuels Success in Selling Today
o Sales Effectiveness Is Enhanced through Technology
o Leadership Is a Key Component in Sales Management Success
o Sales Management Is a Global Endeavor
o Ethics Underlies All Selling and Sales Management Activities
Suggestion: PowerPoint slides 1.13 and 1.14 provide an overview of sales management.
• What Is Involved in Sales Management
o Selling Process
o Sales Management Process
Suggestion: Highlights of the environmental factors are listed on PowerPoint slide 1.15.
• Environmental Factors Impact Success in Selling
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Suggestion: PowerPoint slide 1.16 identifies the various components of the external
environment.
• External Environment
Suggestion: PowerPoint slide 1.17 lists some of the economic conditions that have a major
impact on buyer-seller interactions.
o Economic Environment
Suggestion: Use PowerPoint slides 1.18 through 1.20 to discuss the major laws affecting
sales.
o Global Legal and Political Environment
Suggestion: Use PowerPoint slides 1.21 to discuss the effects of technology on sales and
salespeople’s job frame.
o Technological Environment
Suggestion: PowerPoint slide 1.22 defines ethics and identifies the dilemmas ethics create for
salespeople.
o Social and Cultural Environment: Ethics
Suggestion: PowerPoint slide 1.23 provides a brief explanation of issues created by the
natural environment.
o Natural Environment
Suggestion: PowerPoint slide 1.24 lists the five internal environment variables that influence
sales force activities. PowerPoint slides 1.25 through 1.30 cover each of the five variables in
greater detail.
• Internal (Organizational) Environment
o Goals, Objectives, and Culture
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© 2016 Taylor & Francis
o Human Resources
o Financial Resources
o Production and Supply Chain Capabilities
o Service Capabilities
o Research and Development (R&D) and Technological Capabilities
Answers to Breakout Questions
1. To some extent, the Internet has already replaced some of the traditional salesperson’s
role in the sense that companies are using the Internet for prospecting (finding new
customers), researching, and for taking re-orders from current salespeople. As discussed in the
2. “Selling” a public organization in the community can successfully use the same
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to the charity and the recipients of the services, as opposed to traditional “purchasers.” A
public organization can build relationships with its donors, just as a for-profit enterprise
3. A representative is someone who is empowered to act for someone else. This strict
definition means that the salesperson does not just represent a product, but rather represents
the people who are responsible for making the product, shipping it, billing the customer, and
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© 2016 Taylor & Francis
by customers and their own company. By recognizing these responsibilities, salespeople can
make judgments about appropriate and inappropriate behavior. Sales managers can also
recognize that salespeople have multiple obligations and recognizing the multiple dimensions
of representation can help sales managers make appropriate demands on their salespeople. We
will later learn that these characteristics of the sales role are called “boundary–spanning.”
4. The two Planter’s Peanuts situations are designed to get students to think about how a
grocer buys Planter’s, considering that they will turn around and sell to end-consumers. On
5. The stereotype is either Herb Tarleck, the plaid-suited bumbling salesman of WKRP in
Cincinnati, or perhaps the pitiful figure Willy Loman of the Arthur Miller play Death of a
Salesman. Stereotypes exist because so many people go into sales for the wrong reasons and
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© 2016 Taylor & Francis
management’s responsibility to see that the company’s code of ethics is carried out, the
ultimate responsibility really rests with each individual salesperson and sales manager.
6. Advancing technology is inexorable. Salespeople who embrace new technologies and
use them to enhance their efficiency and effectiveness will be well positioned to achieve the
success they desire with their customers and from their own companies. Sales managers and
their organizations must provide adequate training on technology usage, especially for more
senior salespeople who did not “grow up” using the technologies that newer salespeople take
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in other parts of the country, and senior management at MIT believed it was time for major
changes. They had passed over the district sales managers and gone outside the company to
1. While there may be slight differences in the prioritization of the items Grace needs to
learn when she starts at MIT, the first three things Grace should learn about are the
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© 2016 Taylor & Francis
If it has not been done already, Grace may want to conduct a customer analysis to determine
the real profitability of current customers. More importantly, get to know the major accounts
personally and all customers by contact (e-mail, letter). Finally, she must develop a clear
understanding of the region’s strengths and weaknesses. Certainly her own evaluation of the
situation will be critical; however, learning from salespeople, district managers, and others
will be an important part of her job.
2. For many managers, one of the most difficult parts of the business to learn is the
3. There is little doubt that Grace should spend a lot of her first day and probably the first
developing new action plans.
Role-Play: Inventron Pharmaceuticals
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• The key to a meaningful list is to focus on Inventron’s specific industry—small-
animal pharmaceuticals sold primarily to veterinarians.
• Students should provide specific examples of factors and not just list relevant
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implement the changes he is considering. In addition, the financial resources may not be
1. External Environment
a. Economic Environment: Because of its growth, iTeam finds itself in a new,
highly competitive environment. Its previous low-cost strategy will not work
unless it is able to adopt the production efficiencies of its competitors. It will
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c. Technological Environment: Technology is the core of iTeam’s business, and
iTeam must be at the forefront of technological changes in order to keep its
2. Internal Environment
a. Goals, Objectives, and Culture: As the “I” in iTeam suggests, the company has
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b. Human resources: Andrew has personnel issues because the company does not
have a formal sales program and has little or no sales management in place.
Having the right personnel to implement a strategy is key because of the time it
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© 2016 Taylor & Francis
f. Research and Development and Technological Capabilities: Again, this is an
issue for iTeam because it is in a high-tech industry, and its technological and
engineering expertise will be a major factor in determining whether it will be
leader or follower in product and service development.
3. There is no single answer that will save Andrew Taylor and iTeam. However, Andrew
must develop a sales force and change from iTeam’s previous transactional selling approach
to a relationship selling approach. Andrew must first formulate a sales program, and take into
consideration the environmental factors faced by iTeam. Second, he must implement the sales
Chapter 1 – Introduction to Sales Management in the Twenty-First Century
Given the current environmental circumstances, iTeam’s decision to expand its