Firms in the global marketplace tend to practice one or more basic business philosophies or orientations. Therefore, it is important for sales managers and salespersons to under-stand how each philosophy results in a different emphasis being placed upon the roles and duties of the sales force. Orientations also dictate different levels of power, influence, and prestige within the firm for the sales, engineering, and manufacturing functional areas.
Production philosophy
Companies that adhere to a production philosophy focus on economies of scale derived from efficient and increasing production quantities. This approach may be appropriate, especially when market demand exceeds supply. If the firm can accomplish production efficiencies, then the goods produced can be marketed at lower costs, which should result in higher sales levels. Most experts agree that efficient production is necessary for supplying stan-dardized goods to a “mass” or global market.
When firms follow a production philosophy, sales force activities are often viewed as an afterthought. One role of the sales function is to allocate scarce goods to customers. Or sales personnel are expected to travel and communicate the availability and price of goods to dis-tant customers. Likewise the sales force or sales department is rarely, if ever, consulted before changes are made to products and pricing is controlled outside of sales and marketing. The role of the sales force is to help the firm find buyers for the goods once they are manufactured.
Product philosophy
Other firms believe that designing a “better mousetrap” will result in customers beating a path to their door. These firms may be approaching or have surpassed a point of economic equilibrium – supply meeting demand – which necessitates organizations to differentiate themselves from competitors. This means that engineering and design aspects of the busi-ness – like quality, durability, and functionality – are viewed as being the most important functions. This is because managers assume that customers purchase goods primarily because of these qualities.
In this circumstance, the sales force takes orders and delivers goods. However, the firm’s primary focus is on the product, rather than the customer. The sales force plays a less signif-icant role in providing needs satisfying goods to the marketplace. As an engineer informed one of the authors: “The important job is design and manufacture; anyone can sell the product.”
Sales philosophy
When markets become saturated with goods, firms may come to believe that customers will purchase only when they are stimulated. This may occur when it is difficult to differ-entiate based upon product features or capabilities. When this situation arises, firms may assume the best option is to hire sales personnel whose job it is to persuade customers to purchase the firm’s product(s). The goal is to make the sale, and often any method that results in success is tolerated. Sales-oriented firms believe that success is guaranteed by sales revenue increases in each business period.
For firms that follow a sales orientation, the sales force is viewed as a necessary evil that is tolerated as long as forecasts are met. When sales goals are not met, then the sales force may receive threats of dismissal or offers of rewards if they work harder and accomplish more. Firms that ascribe to this philosophy fail to understand that it is difficult for the sales force to be successful when there is no differential advantage. In other words, the sales force is supposed to use its ability to persuade and convince customers to buy a product that may not satisfy customer needs. These firms attempt to sell what they can make, rather than what is needed or wanted by the marketplace.
Marketing philosophy
A firm that pursues a marketing philosophy wants to produce goods that satisfy customer needs; believes that market research will uncover customer needs; that only customer-desired goods should be produced; and that profitability instead of sales revenue defines success. Firms believe that both buyers and sellers will benefit from such an orientation. In other words, customer needs are measured through market research and goods are manu-factured to address these needs. The role of the sales force, like that of all members of the market-oriented firm, is to produce satisfied customers.4
The marketing philosophy has been criticized for a number of reasons. First, when asked, customers may not always know what they want or need. Second, respondents may not know their long-term needs nor understand emerging technologies that can be incorporated into current products. Finally, following a marketing philosophy does not guarantee firm success.5
Relationship marketing
In the 1990s, more firms began implementing a marketing philosophy that resulted in an extended period of buyer–seller interaction. From a financial perspective, the customer becomes a stream of income. Rather than spending large sums of money advertising and
using the sales force to pursue potential customers, firms believe it is more efficient to build relationships that result in long-term business built around “win–win” encounters. A number of business-to-business firms have practiced a form of relationship marketing with their best customers, but they may not have always pursued an established relationship marketing orientation. The sales force works to solve problems that result in more efficient business for their customers and does not attempt to sell unneeded or unwanted products. Similarly, customers do not pursue strategies aimed at reducing the selling price by pitting suppliers against one another.
However, not all customers may want a relationship with their suppliers and firms should not attempt to form extensive relationships except with their best customers.6What many firms are able to do today, because of advances in information technology, is to gauge the degree of profitability generated by each customer. This results in firms providing varying levels of service to different customers.
Global philosophy
World-class firms practice a global orientation. This means that global firms understand there are segments of customers in most countries that desire world-class products. The firm views the world as one market and approaches it with a unified strategy that allows lessons learned to be applied globally, while saving money in the process.7 Global firms seek to create greater value for their customers by standardizing to gain economies of scale, but localize or customize the product whenever necessary to satisfy customers.
Workers, including sales personnel, are recruited worldwide. The global or transnational firm seeks to produce the highest quality products/services, at the lowest possible prices, while “delighting” their customers. The role of the global salesperson is to be culturally and linguistically competent, to interact with global customers to establish long-term relation-ships, and to serve as the global firm’s representative to customers. This means the global salesperson must be highly educated, experienced, competent, and an equal member of the corporation’s business team.8
Importance of firm orientations
When presented with a discussion of the different firm philosophies or orientations, the reader may assume that firms evolve through each philosophy. While this evolution may appear to be intuitive, it seldom happens. Based upon the firm’s world-view, a single orien-tation may be adopted and followed until forced to change by declining sales and customer losses. Generally firm orientations, and the underlying organizational culture, do not change easily or frequently.
Firms can adopt and follow one or more of these philosophies and be successful. Each philosophy has its place depending upon the marketplace. It can also be argued that certain aspects of each orientation are important for the success of the firm. Global customers expect low manufacturing costs, excellent design, and having their needs met. The firm wants to form a relationship with its best customers because this orientation appears to generate lower-cost customers. Likewise, the firm expects the sales force to work the marketplace to
reach new customers or to find outlets for products that have been overproduced or under-engineered. However, while a firm’s orientation may change slightly, depending upon the market situation, the firm normally adheres to a single orientation more than the rest.
An important reason for potential sales managers and salespersons to understand firm approaches to the marketplace is that the firm’s philosophy will impact their own role in the organization. It is imperative, for this reason, that all salespersons understand the market orientation practiced by their firm. By being aware of the firm’s general orientation, sales-persons and sales managers can ascertain the expected role they will play, as well as their ability to succeed in the organization. In effect, by understanding the orientation practiced by the firm, the salesperson can better understand the likelihood that they can be satisfied in the workplace.