Name: Video 2 - Pricing Impact on Sales - Pt 2 (Pricing Generic Strategies)
Uploaded: 2017-12-18T08:03:03.345Z
Duration: 5 min 7 s

Fundação Instituto de Administração

Sales & Marketing Alignment

4 notes

Cours 4 sur 5 dans Specialization Strategic Sales Management

Welcome to Course 4 – Sales & Marketing Alignment. This course focus on what is considered by most academics and practitioners as the biggest challenge that sales professionals have to face. As we discussed in Course 1 – Effective Sales, strategy, and sales must be integrated to support a high potential for value creation through the sales functions. We also mentioned that strategy and sales integration can be supported by marketing functions. The discussions then went through sales strategy supported by intelligence analysis (Course 2), sales models and frameworks to support sales planning (Course 3). By the consequence, at this point of this specialization, you are in a good position to go further in the sales planning and management functions. And this is the moment to tackle one of the biggest challenges that most sales professionals must address with diligence – Sales & Marketing Alignment. The primary learning outcome of this course is to prepare you to apply concepts to support this alignment, with prescriptions and recommendations that contribute to improving the alignment. The improvement in the knowledge, competencies, and skills regarding sales & marketing alignment will contribute to increasing the potential for value creation from a strategic sales planning approach.

À partir de la leçon

MODULE 1 - Marketing Principles for Strategic Planning

This module is aimed to deepen the discussion regarding marketing and strategy concepts. And these concepts play a critical role in the sales planning and management functions. A company's managers can perform this role smoothly; another company's managers may have limitations in this process. In the latter case, marketing and sales functions will be misaligned, which reduces the company's value creation potential through the sales. Therefore, this module initiates Course 4 with focus on the marketing foundations that relate to sales. The module's primary learning outcomes are - Improved understanding of the foundations of marketing and how they interact with sales; identify the interactions between marketing related variables and the sales functions; and improved knowledge and skills to support marketing planning through the sales team contributions in product development, pricing, place, and promotions.

Video 1 - Pricing Impact on Sales - Pt 14:33

Video 2 - Pricing Impact on Sales - Pt 2 (Pricing Generic Strategies)5:07

Video 3 - Pricing Impact on Sales - Pt 3 (Revenue Management)7:30

Video 4 - Pricing Impact on Sales - Pt 4 (Improving the Pocket Price)5:19

Rencontrer les enseignants

Samantha Mazzero
MSc, MBA, BS Math
FIA Profuturo – Futures Studies Program
Nelson Yoshida
Ph.D., MBA, B.Eng.
FIA Profuturo – Futures Studies Program
Cesar Rodrigues
Specialist Professor

Hi. How are you all doing today?

You remember the last lesson,

we talked about the impact of pricing in volume,

in sales and in profits.

In this lesson, we will address pricing strategies.

According to Philip Kotler,

there are four major business objectives that

companies can pursue when they are setting prices,

they are: Current profit maximization,

market share leadership, product quality leadership, and survival.

Let's talk about current profit maximization.

The companies that pursue this objective,

they focus on the short term.

What they do, they estimate the demand and costs associated with different price levels,

and they choose the one that produces maximum current profit.

The orientation is financial.

They do not worry about long term consequences.

Some products that can have this type of pricing approach are fashion items,

seasonal items or niche products.

Another approach, market share leadership.

Some companies want to dominate the market.

They believe that who gets the largest market share will have lowest costs,

and in the long run will maximize the profits.

They will go for the lowest price level.

The orientation is clearly sales,

and firms that have high fixed costs tend to favor this approach.

Next pricing objective, product quality leadership.

Firms that adopt this pricing direction shoot for top notch quality.

This implies in charging premium prices that

can cover superior product performance and service.

This does not mean profits or sales will be maximized.

Last one, survival.

At some point companies may find themselves in

a situation where they have high inventories that won't move,

high capacity, increased competition or all three.

They are starving for cash.

And will price their products as low as they can to move the inventory.

Profit is no longer a concern,

only survival. They need the money.

Now a relevant question,

how much pricing authority should salespeople have to negotiate with customers?

There are arguments for giving a lot of pricing authority

to salespeople and some of them are,

they are in a better position to negotiate,

they have superior knowledge of local markets,

clients needs and willingness to pay.

A caveat in this scenario,

how salespeople are rewarded is crucial.

If their bonuses are based on gross sales,

the higher discounts they give,

the more they sell and the more money they make.

But the company would be making less money or even losing money.

So in this approach,

the sales force would have to be rewarded by some profit metric, not sales.

What are the pros for giving less pricing authority to the sales force?

There is some evidence that points to the fact that giving

less price authority to salespeople, increases companies' profits.

The higher profitability comes from more functions being

involved in authorizing extraordinary discounts including finance.

Having too much pricing authority also seems to

weaken salespeoples' skills to deal with pricing objectives.

What's the right amount of pricing authority?

For no authority to full authority,

many degrees of freedom exist.

Each firm will have to perform its own tuning in order to find the best level.

It will depend on line of business,

company culture, and salespeople maturity.

Hope you have enjoyed our class today.

I'll see you next time. Chao.