Homework assignment

SBS STAGE 2 (4) SBS 2017-20

Submit the answers to below questions by 19th April 2019 (max length of each answer: 500 words)

Explain the difference between selling to consumers and selling to organisations. (10 marks)
There are many differences between selling to consumers and selling to organizations.

1. Salespeople
Salespeople sell directly to both consumers and businesses. However, direct sales are less
common in consumer markets. Although sales reps play an important role in the sale of
complex or higher-value consumer products, such as cars, financial services or electrical goods,
they may be working for a dealer or retailer rather than the manufacturer. That makes it
difficult for manufacturers to build relationships with individual consumers. In business
markets, reps play an important role in all sales except simple repeat purchases in which
customers order by self-service.

2. Size of the Account

In consumer markets, companies typically sell to large numbers of customers, with each
customer accounting for a small proportion of the company’s sales. In business markets,
companies deal with smaller numbers of customers; in some situations, large customers may
account for a high percentage of sales. Where large customers dominate a business, companies
focus sales and marketing efforts on their key accounts.

3. Who is the User?

When you sell to consumers, you are selling to the people who use the products. In business
markets, the person who makes the purchase may not be the user. Companies may employ
purchasing managers who deal with sales reps but buy products and services on behalf of other
users. They may buy raw materials for the manufacturing department, for example, or tools for
the service department. In some companies, purchasing departments authorize users to buy
their own products or services directly, but the purchases are typically low value.

4. Who Decides?
In business markets, the decision to buy may involve a number of different people. Simple low-
value products, such as stationery or office supplies, may involve only a sales call to the
purchasing manager and an office manager. The more complex the product, the more people
are involved. To sell a technical product, such as a computer system, you may need to
influence the chief information officer, finance director, IT manager and departmental
managers who will use the system in addition to the purchasing manager. In consumer markets,
an individual or several members of a family make the decision.

5. Time Duration
The time between an initial decision to buy and the final sale, known as the sales cycle, can be
lengthy in business markets. Companies identify a need to purchase a product or service, put
together a specification, identify potential suppliers and request bids, evaluate the offers,
 negotiate prices and terms, and finally select a supplier. At each stage, the sales team must
supply information and try to influence all the decision makers. In contrast, consumer
purchases typically require a single transaction. When consumers have carried out initial
product research and decided to buy, they visit a store or place an order by phone or online.

How motivation can have a positive impact on the performance of the sales employees? (10 marks)

Stonner (1992) in their equity theory holds that an individual’s motivation and performance depend on
his or her subjective evaluation of the relationship between his/her effort, reward ratio and effort
reward ratio of others in similar situation. Management should therefore ensure that the ratio of
employee’s rewards is commensurate to their personal input in comparison the person’s at the same
positions in other organization.

Frederic H(1959) stated that there are certain satisfiers for employees at work. Intrinsic factor is related
to job satisfaction while extrinsic factors are associated with dissatisfaction. He concluded that the
opposite of satisfaction is not dissatisfaction. Removing dissatisfaction characteristics from a job does
not necessarily make the job satisfying .He states that presence of certain factors in an organization is
natural and the presence of the same does not lead to motivation. However, their absence of which
causes no dissatisfaction but their presence as motivational factors. He identified examples of hygiene
factors as security, status, relationship with subordinates, personal life, salary, work conditions,
relationship with supervisors and company policy and administration. Motivational factors are growth
prospectus, job advancement, responsibility, challenges, recognition and achievements.

In human resource management literature, there is strong recognition of the importance of rewards and
recognition in supporting to achievement of strategic goals. Therefore, reward and recognition are
tools to support the achievement of innovation strategy. There are several decisions to be made
concerning reward and recognition; the amount of reward and recognition planned; the performance
and sort of behavior to be targeted; the types of reward and recognition that will be offered; and when
to inform employees of new reward and recognition.

Expectancy theory tells us that impossible goals will lead to frustration, un rewarded wills, will not be
taken seriously and good performers will only be motivated by rewards that they value. The overall
level of monitory rewards available is normally driven by profitability. From this, a particular sum
may be reserved for overall pay increases with the remaining sum available for all of the performance
related increase. It is useful to re assess how motivation can be focused toward innovation by
launching schemes specifically linked to innovation. Here we can learn from expectance theory and
investigate the sort of recognition that good performers themselves value. Akey decision is which
reward and recognition schemes are targeted at the individual and which should be targeted at
encouraging team work unless it is rewarded. One of the rewards for good performance is obviously
promotions (Keith Goffin and Rick Mitchell, 2005).