196 ◾ The Guide to Entrepreneurship: How to Create Wealth for Your Company
by Al Ries and Jack Trout in their bestseller book Positioning—The Battle for
Your Mind.
18
Positioning is the great antidote to commoditization in your market. The
centrality of positioning is shown graphically in Figure9.11.
9.8.1 Famous Positioning Statements
The positioning statement is a subset of an optimized value proposition for
marketing communications purposes. It identies the target audience, the prod-
uct and its category, and a specic benet, and is differentiable from the near-
est competitive alternative. It is a non-ambiguous statement that becomes the
messaging cornerstone of an integrated marketing campaign, as shown here:
◾ Target Audience: The attitudinal and demographic description of the
core prospects. The group of customers that most closely represents the
brand’s most passionate and enthusiastic users.
Table9.5 Pros and Cons of Segmentation Strategies
Strategy Advantages Disadvantages
Targeted Low volume/high margins
Lowest competition level
Brand equity
Highest overall cost
Smallest market share
Super specialization
Concentrated Better designs
Compete with larger rms
Greater brand recognition
Specialization
Smaller markets
Commoditization
Needs nancial staying power
All eggs in one basket
Differentiated Greater customer
satisfaction
Better prot margins
Cannibalization potential
Rapidly changing
requirements
Difculty in maintaining
distinctiveness
Undifferentiated Lowest marketing costs
Savings on production
Lowest development costs
High volume/low margins
Unimaginative offering
Susceptible to lower cost
competition
High distribution costs
Globalization
Marketing and Sales ◾ 197
◾ Frame of Reference: The specic category in which the brand competes.
Provides brand relevance to the customer.
◾ Differentiation: The most compelling and motivating benet relative to
the competition.
◾ Credibility: The most convincing proof that the brand will deliver its
promises.
19
9.8.2 Template for a Positioning Statement
“For (target audience), is the (frame of reference) that delivers (differentia-
tion) because only (brand name) is (credible)”. As inspiration, read through
these positioning statements from large and small companies:
◾ Mercedes-Benz: “Engineered like no other car in the world”
◾ BMW: “The ultimate driving machine”
◾ Southwest Airlines: “The short-haul, no-frills, and low-priced airline”
◾ Avis: “We are only Number 2, but we try harder”
◾ Famous Footwear: “The value shoestore for families”
◾ Miller Lite: “The only beer with superior taste and low caloric content”
◾ Lexus: “The relentless pursuit of perfection”
◾ Beck’s: “The only German word you need to know”
Market
research
Competitive
analysis
Positioning
Desired
outcomes
* Premium product
* Bonus pricing
* Prestige
* Long-term profits
* Value creation
Positioning Your Company
Marketing
strategy
Segmentation
Differentiation
Figure 9.11 Positioning your company—Distinguishing your products from the com-
petition through positioning.
198 ◾ The Guide to Entrepreneurship: How to Create Wealth for Your Company
9.9 Sales and Sales Promotions
A sale is the act of selling a product or service in return for money or other
compensation.
20
Signaling completion of the prospective stage, it is the
beginning of an engagement between customer and vendor or the exten-
sion of that engagement.
21
Sales promotions are the short-term incentives
(lower price, better terms, faster delivery) to encourage purchase of a prod-
uct or service.
The sales eld is composed of individuals who perform “personal” sell-
ing. Examples are salespeople, sales representatives, district managers,
regional managers, account executives, sales engineers, agents, account rep-
resentatives, etc.
9.9.1 Your Sales Force
“Set the sale goals, then empower your sales force to accomplish
those goals.”
Salespeople include order takers (behind a counter or by web/telephone) or
interpersonal (face-to-face communications or teleconferencing). They may
be home-based or out in the eld. Keep in mind that salespeople represent
the company to customers and, conversely, represent customer interests to
the company.
The sales force is managed by the methods shown in Figure9.12.
9.9.2 Sales Force Compensation
The purpose of the sales force compensation metric is to determine the mix
of salary, bonus, and commission that will maximize sales generated by the
sales force. When designing a compensation plan for a sales force, managers
face four key considerations: level of pay, mix between salary and incentive,
measures of performance, and performance-payout relationships.
The level of pay, or compensation, is the aggregate amount that a com-
pany plans to pay a salesperson over the course of a given year. This can
be viewed as a range because its total will vary with bonuses or commis-
sions.
22
Surveys consistently show that 95% of sales force compensation
schemes had a combination of quotas and commissions.
23
Compensation
packages can be complex and affected by multiple forces, as seen in
Table9.6.
Marketing and Sales ◾ 199
Management enjoys considerable freedom in designing compensation sys-
tems. The goal is to start with a reasoned forecast for sales and a range for
each salesperson’s compensation. After these elements are determined, there
are many ways to motivate a salesperson. Key formulas in this area include
the following:
Total Compensation Package ($) = Salary ($) + Bonus 1 ($) + Bonus 2 ($)
Total Compensation Package ($) = Salary ($) + [Sales ($) × Commission (%)]
The dynamic effects of sales force compensation coupled with corporate
sales objectives are visually presented in Figure9.13. Our goal is to demon-
strate how compensation schemes can affect the sales output.
Your Sales Force
Profitability
Market share
Company
reputation
Commercialization
Sales management
Technical
Features
Benefits
Cost
Availability
Technical
Complex
requirements
Product
development
Manufacturing
Follow up
Field reps
Trade shows
Account
management
Technical service
Demonstrations
Governmental
Industrial
Trade relationships
Distribution
Warehousing
National
International
Regional
Territorial
Product
sales
Complex
sales
Outside
sales
Inside
sales
Territorial
Figure 9.12 Your sales force—Sales force management and goals achievement.
Table9.6 Balance between Company Policies and Market-Specic Elements
Financial incentives Salary, commissions, bonuses, promotions, sales
contests
Non-nancial incentives Awards, personal recognition, vacation
200 ◾ The Guide to Entrepreneurship: How to Create Wealth for Your Company
9.9.3 Sales Force Time Management
While salespeople spend their time widely from company to company, most
salespeople report their time is typically divided between ve major activi-
ties as shown in Table9.7.
To apply the 80/20 rule to sales, only 20% of your time results in actual
orders. As a result, salespeople should:
◾ Focus your time on your highest-potential customers.
◾ Use qualied leads and referrals only.
◾ Focus on results, not activities.
Sales Objectives
Commission Per diem
Salary
Sales Force Compensation
Bonus
Stock
options
Awards
Attract
most qualified
Organizational
sales goals
Quotas
ceilings + floors
Motivation
to excel
Promotion
Sales
achievements
Team
players
Figure 9.13 Sales force compensation—Compensating the sales force to maximize
sales.
Table9.7 Time-Activities Performed by Salespeople
Weekly Percent Time Spent Activity
30 Personal selling
25 Phone calls
20 Traveling
17 Administrative activities
8 Service
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