What is the real difference between marketing and sales in practice?

Sales function is a part of marketing - only on the paper of text books. As Philip Kotler himself says, the economics and culture of the marketing and sales departments is so very different.

Marketing is more about being attentive and listening to the customers. Sales is about talking to them and convincing them.

Marketing spends money.  Sales earns money.

Marketing is full of MBA types who are analytical and intelligent but somewhat cold - and operate in a world of excel sheets and conference rooms and consists of collecting data, analysis, creatives, messages, charts and  presentations.  Sales is full of leader types who can judge people and what they are really saying - and they operate mostly in front of their customers asking, telling, demonstrating, persuading, objection handling, closing, bonding, motivating. Marketing and sales are different worlds in reality. In fact Kotler says that it is very difficult to find an individual to become the Head of Marketing and Sales because the two functions are so different in practice.

Actually it gets much more complex than that because the exact job description of marketing and sales varies significantly from company to company and industry to industry. It is very contextual. You must read the full article to get an appreciation of how CEOs look at the marketing and sales departments.

The marketing function (In its broadest sense - as per the diagram below) is as below

The broad marketing function in reality can be broken into 3 sub-components

1. DISCOVERING AND DIAGNOSING : Collecting the situational data through market sensing, discovering what it means, bringing this "voice of the customer" to the decision makers' table. The key metric is how useful the data becomes in anticipating and becoming proactive for the people who take marketing strategy decisions. Discovery and diagnosis is a specialized / investigative / research work and needs a different mindset. Normally analytical and creative people are assigned to such jobs.
2. DESIGNING THE STRATEGY : because the company relies on the marketing strategy to take long term decisions like what manufacturing, servicing, people, structure, competencies and focus will needed. This job requires people who are senior enough to understand what the data from the previous stage means and to formulate a cross-functional strategy that can travel successfully to the next stage of implementation. Deciding long term marketing strategy has 4 (MCVG) interdependent elements
• Market : which customers and needs to target  
• Competitors : which competitors' customers to target
• Value Proposition : how to position and hence what marketing mix 
• Go-To-Market : Route to access / engage / promote / sell / service the target customers
3. MANAGING THE IMPLEMENTATION OF STRATEGY : requires co-ordination with internal functions and external entities and, being a management function, it covers (A) Planning and Budgeting (B) Organizing by allocating resources (C) Managing people and directing and coordinating them (D) Monitoring and reviewing. In many practical situations the implementation happens through separate groups and committees
1. Market research department ( Discovery and Diagnosis )
   This is generally a function of the marketing department
2. Marketing Management ( Strategy )
   This is a function of senior management. CEO also may be involved!
3. Advertising ( a part of go-to-market dealing with ad agency and media)
   This is generally a function of the marketing department
4. Sales Promotion( Generally under sales department)
5. Distribution and supply chain ( Generally under sales department)
6. Sales recruitment and training ( Generally under sales department)
7. Field sales management ( Under sales department)
8. Sales administration  ( Under sales department )
9. After-sales-service ( can be under sales or a separate department)

Example 1 : In steel business the marketing mix (that which matters to the customer) may be typically grade of the steel, price, fulfillment time, and application support. This in turn depends upon the raw material used, energy source, inventory and transport, location etc and, once decided, it is difficult to change such expensive decisions. Therefore in such companies the "marketing department" essentially performs the data collection and advisory function. In such companies the strategy is decided by the CEO and the implementation is done by the sales department which is frequently called "commercial department". In such companies the marketing department is more of a staff function and is not seen as being powerful.

Example 2 : In the business of being a vendor doing OEM supply (let us say of injection molded parts to an auto industry firm) there is no need for the marketing function at all because the discovery, diagnosis and design is done by the client himself. In such a company the Key Account Manager ( who services a big OEM client) is very powerful and everyone dances to his tune. .
   
Example 3 : In consumer durables the marketing mix (that which matters to the customer) may be typically freshness of models, leading features, price, showroom experience, demonstration shown at the showroom, reputation of after sales service and advertising which drives traffic to showrooms. In such circumstances, both the marketing department (which takes new model decisions, advertising decisions and pricing decisions) and the sales department (which controls the showroom experience and availability) are equally powerful. In the long run even the sales department is powerful because good after-sales service is important in building the reputation and the brand value. 

Example 4 : In consumer service business like banks the marketing mix (that which matters to the customer) is actually co-created by the front line employees and the customer together. Under such circumstances the supervisors of such front liners and how they select, train and motivate the employees really decides the customer satisfaction. A good marketing department in the service business addresses how to help the operations to select, train and motivate employees. In addition they also prepare advertising and POS material. 


MARKETING ( DISCOVERING AND DIAGNOSING)

Normally marketing is responsible for bringing the customer to the stage where he makes a contact with the sales force or the sales channel of the company. After that, the sales function takes over

MAIN FUNCTION OF MARKETING
The primary and fundamental marketing function of any company is "listening and learning" function which enables the company to get influenced by the market. Good marketers want to study the market, select the customers they want to service, listen carefully to such selected customers to understand their needs and wants, and then try and formulate an offering (marketing mix) that meets these needs in such a way that they are better than the offerings of their competitors.

THE DESTINATION OF MARKETING
The destination of a marketing person is to create a SALABLE PRODUCT  which is in line with the policies of the company and which his company can make, sell and profit from. He creates this by looking at his TARGET AUDIENCE (Potential Customers)

CHALLENGES FACED BY THE MARKETING FUNCTION
The most important resource of a marketing person is the needs and wants of the customers in his chosen industry and the ability of his own company to compete in the industry through its own capabilities as well as the capabilities of his channels and allies. His limitations and challenges are therefore lie in figuring out :

1. What are / will be the changes in the size and location of his target audience.
2. What are / will be the trends in the needs of the said target audience.
3. What are / will be the competitive developments that need to be taken seriously
4. What needs can (cannot) be met competitively and sustainably by the company
5. What products / offerings can (cannot) be carried by the company’s sales channel

CONCERNS OF THE MARKETING FUNCTION

1. the needs and wants of various types of consumers and customers (a) which are at various stages (Latent, under-surface, on-surface, established, standard) (b) so that they can select the consumers / customers whom they can make a difference to
   and who can make a difference to them
2. the offerings (marketing mix 7 Ps) of the competitors and how much they meet the needs and wants of different types of customers so that they select the competitors whose customers they will take away from because their companies can serve those customers better than the selected competitors
3. defining their own offering (marketing mix) in the light of this information so that, ideally (a) it meets the needs of the selected consumers / customers better (b) its offering is better than that of the selected competitors
4. Regarding customers, the main concerns are
1. Customers outside the category (Can they be brought in? )
2. Customers not buying from us (Can they be brought to us?)
3. Customers not buying sufficiently from us (Can they buy more from us?)
4. Customers not buying at a higher price from us (Can they pay more price?)
5. Customers who not talk highly about us (Can they be more vocal about us?) 

SALES 

MAIN FUNCTION OF SELLING
Sales function plays an important part in the day to day operations of a company because the company relies on it to generate revenues and money collections in order to run and fund the regular operations of the company. Many inputs like sales, inventory and collection forecasts are given by the sales function and help the company run operations like supply chain, procuring short term funds and plan capacity creation and utilization.Selling is about influencing and helping the target buyers - to determine if they want any of the products or offerings that are currently being made by the company – and to generate planned revenue for the company.The main tasks are

1. Lead Generation / qualification / Nurturing
2. Customer contact to qualify, understand, present, overcome objections
3. close 
4. transact and service
5. Managing the sales force : recruit, induct, motivate, train, deploy, monitor

DESTINATION OF SELLING
The destination of a sales person is to MEET HIS MONTHLY SALES REVENUE TARGETS. He creates this  e company and which his company can make, sell and profit from. He creates this by looking at his TARGET AUDIENCE (Potential Customers)

CHALLENGES OF THE SALES FUNCTION
The most important resource of the salesperson is his own caliber and time. His biggest challenge is to spend most of his time with the customers who have BANTF

1. Budget to spend
2. Authority to purchase
3. Need for the product
4. Time Urgency for buying
5. Favourable disposition towards the company

Hence his limitations and challenges are in figuring out :

1. How to search who, in his territory, has BANTF
2. How to avoid spending time in chasing someone who may not ultimately buy
3. How to recognize at what stage is a potential buyer on his “Buying Journey”
4. What to do, what questions to ask, what answers to give : to speed up the buying journey 
5. What offer to give so that the customer will accept quickly and also be satisfied later
6. How to deliver appropriate sales messages to the right customer depending upon buying stage
7. How to recruit and train the right sales people
8. How to organize and motivate the sales force 

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Use the following with care because you must realize as stated above that each marketing or sales job is contextual - there is no universal definition !

(General ) Responsibilities of the Marketing department  

1. Establish / Justify the company's best competitive position within a market
2. Locate and profile potential markets and key DMU participants within
3. Generates quality sales leads
4. Develop effective selling tools
5. Formally analyze and track competitor's business strategies and tactics
6. Define, prioritize and justify product / service - improvements and developments
7. Promote an explicit company product or service image
8. Facilitate  information transfer from customers to the rest of the company
9. Simplify the customer's travel on his buying journey  

CMO (Chief Marketing Officer Responsibilities) 

1. New Product Rollouts:
   Strategy development, program incentives, timing and media coverage
2. Agency Evaluation:
   Selection and evaluation of outside marketing contractors
3. Customer Database Management:
   Software selection, training, maintenance of customer contact Information
4. Market Research:
   Market definition, prioritization, project management, data gathering
5. Pricing Analysis:
   Pricing as a marketing tool, initiate and analyze competitor's pricing practices
6. Product Audits:
   Establishment of a formal means to evaluate competitive offerings
7. Public Relations:
   Establishment, guidance and coordination of all areas of public
8. Relations Trade Shows:
   Definition, participation, prioritization and audit for effectiveness of all trade shows
9. Product Promotions:
   Strategy formulation, program composition, premium definition, all media coverage
10. Marketing Communications:
    All printed / electronic communication: brochures, catalogs, price lists, case histories
11. Media Selection:
    Assist in selection and prioritization of all media options: print, broadcast, multimedia
12. Internal Communications:
    Establish and maintain all inter-company corporate communication means
13. International Marketing:
    Establish company presence in targeted international markets, audit for effectiveness
14. Strategic Planning:
    Offer strategic information and alternative insights to corporate management strategies
15. Board Meeting Participation:
    Communicate and reinforce the company marketing priorities, strategies and tactics
16. Corporate Vision Statement:
    Proliferate and reinforce the corporate vision throughout the Organization Corporate Identity
    Create, maintain, improve and "manage" all corporate images and symbols

CSO (Chief Sales Officer Responsibilities) 

1. PEOPLE
• on-boarding : New hires reach full productivity faster
• succession planning : Develops 1 successor every year
• attrition of high potential : Less than 5% turnover of his  ‘A’ players .      
2. CUSTOMERS
   
• Field people under him know the customer's buying process 
• Field people can use this to state customer objectives and answer objections
• He knows how “buying journey” is divided between marketing and sales
3. PEERS  
• His peers can lean on his advice.
• His peers use him as an influence on the CEO to things done
• He helps peers get on board with new ideas quickly
4. FIELD EXECUTION
• His team follow a documented and disciplined coaching cadence
• All his first-time managers go through a development program before promotion
• He spends 50% time out of office and in the rest in the field with reps and managers
5. COMPETITORS
   
• He uses quarterly win/loss data to ensure best practices are captured 
• He regularly “mystery shops” from competitors to understand their tendencies
• His team can communicate the unique differentiators on every offer

Attack strategies : 3 options of whom and 19 ways of how

1. Head-On attack on the chosen competitor with the intention of grabbing the entire market of the said competitor and thus to injure the competitor so seriously that he exits the market. But sometimes the competitor turns on you and signals his willingness to “fight till finish” and it can cause much blood letting from both the sides. Ultimately one side either withdraws from the market or withdraws into a small corner. ( This happened to HMT when attacked by Titan).
   
2. Because of the risk and uncertainty involved in head-on attacks, a flanking attack
   is much more common. The attacker aims only for a small part of the competition’s pie. In such cases the defending company also may not fight as hard - and may even cede to you – if the market segment ( customers, geography, application) is small or not worth picking a fight on. ( This happened when SONY sliced off a segment of the laptop market with VAIO which catered to the segment of customers who wanted a good audio visual and gaming experience on their laptops ) 
   
   
3. Bypass attack is actually an attack on the future of the competitor. You, the attacker, figure out what the competition is likely to do next and then do it before he does. ( This happened when Kent attacked Eureka Forbes Ultra Violet Water Purifier business by figuring out that the demand for Reverse Osmosis products will go up when the customers - increasingly using borewell water - will find that only RO softens the water. They first launched RO in their attempt to stop Eureka Forbes in its tracks )

Note : If you plan to convert non-users of the category into users, you do not need to attack anyone at all. When Nirma launched its low priced detergent, it was designed to convert people using soap suds and not detergent users at all !

19 ways "How to attack" 

7 Ways of "street smart" attack 

1. Counterfeit ( and ride on him )
2. Imitate ( and confuse the market )
3. Overpower
4. Move fast and reach markets earlier than him
5. Block his entry
6. Initiate litigation against him
7. Create a fighter brand / unit
   

12 ways of attacking with differentiation

You can create differentiation not only through a better value proposition but also through a better Go-To-Market strategy

BETTER VALUE PROPOSITION CAN BE ACHIEVED BY

1. Better targeting  of customers /  regions / applications
2. Better insight (understanding of what matters : needs, wants and motivations)
3. Better offer (based on "what matters")
4. Better "Reason Why"

BETTER CONNECTION CAN BE ACHIEVED BY

1. Better insight into how customer behave which make following possible
2. Better ways to search (or be searched by) potential customers
3. Better ways to contact (or be found by) such customers
4. Better ways to engage ( or be engaged with) such customers
5. Better ways to communication ( or inbound inquiries by ) customers
6. Better ways to facilitate purchase by customers
7. Better ways to transact ( take order, deliver, get paid) with the customer
8. Better ways to service after purchase ( AMC, spares, recondition, replace)

Marketing Decisions Taken By Whom

LONG TERM DECISIONS TAKEN AT CORPORATE LEVEL

which become an input to creating expensive, long term and irreversible decisions  regarding the type of assets that need to be created which can affect 

earnings and competitiveness for a long time to come

• Which  customers  to  serve
• Which  need / application to target
• Which intangible assets to build
• What VFM band to operate in (work on what GOM)
• Brand Architecture and Positioning  
• Which  Channels to build
• How to prospect,  present, close, transact
• Norms for customer Operations / Servicing

DECISIONS THAT ARE TAKEN AT THE MARKETING LEVEL

 which impact the P&L of the year under consideration

• Promotions : timing and extent   
• Communications : messages, materials, media   
• Channel operations   
• Manpower operations  
• Customer contact operations  
• Revenue operations  
• Service operations

What is expected from Head of Marketing

Heads of the company, finance, operations and HR are interested in the following. Ideally the CMO should give all this but in practice some of it is picked from the sales department too.

1. Budget / Forecast of sales volumes - product wise
2. Budget / Forecast of selling prices - product wise
3. Calender of sales volumes for each product - month or week wise
4. If and when some existing products will get dropped   
5. When new products will be introduced and their specs
6. Whether / when some existing products will be modified : from what to what
7. What changes in the marketing, selling and servicing organization and infrastructure
8. Whether our partners, processes, policies will change - from when and how

If a CMO gives these and delivers what he said he will, the internal customers will be happy.

In addition to this, 10 expectations of the CEO from marketing is that

1. Marketing should help improve profit through more customers, better realization, lesser cost, improved asset utilization, reduced waste
2. The market share should improve - at least in strategic markets
3. Strategic assets like brand equity and networks should get built up in the course of business
4. Contribution of revenue from strategic parts ( new products, sunrise ) should increase
5. The loyalty of customers should improve - at least of strategic customers
6. The leadership pipeline in the marketing, selling and servicing organization should be full
7. Marketing should help improve organizations's market intelligence, customer focus and proactivity
8. Marketing should leverage financial, operating and other strengths of the organization
9. Marketing should spot opportunities / trends ahead of others and guide the organization what to do
10. Marketing should spot threats / problems and help address them when they are beginning ( better still, not make them start )

Symptoms of lack of Marketing ...

A good way of conducting a marketing audit

How well are the 5 vital marketing processes established ?

Check if these 5 vital processes of marketing are existing in your company & also how well are they established ? The symptoms of absence of these processes are given later.

1.    MARKET SENSING PROCESS : Process of observing the reality and learning from it so that a sound plan can be formulated depending on it. This process tracks, analyzes and interprets what the  environment  and  competitive developments and thus provides a foundation of reality to all actions. 

2.   STRATEGY FORMULATION PROCESS : This process helps the marketing company decide what value it plans to create, for whom, and how will it compete sustainably.
 

3.   CUSTOMER FULFILLMENT PROCESS : This is a process of coordinating with internal departments so that the strategy gets implemented, the product portfolio gets developed and supported in line with the market needs, the stock gets produced and distributed to the right locations and supply chain works properly end to end. 

4.   GO TO MARKET PROCESS : This process consists of locating, prospecting, contacting, promoting, advising, closing, transacting - and thus acquiring customers - in order to generate revenues for the company. 

5.   CUSTOMER FEEDBACK PROCESS : This process gives frequent customer feedback on existing operations / marketing mix . It consists of  managing complaints, customer recovery, learning from mistakes. It also consists of what gives rise to customer satisfaction from existing ways of the business.

Symptoms (What happens) if these 5 processes are absent ?

1. WHAT HAPPENS IF MARKET SENSING PROCESS IS ABSENT ? The “alignment” between the markets and the company is never measured (except by the very obvious and post-facto measure of sales – “if we are selling well, we must be aligned to the market”). If you do not sense the market at the time of market entry you will fail because you may not be able to give what the market wants – and which is better than what the competition is offering. Even if you start with a good alignment and hence success in sales, the market and the company may drift in different directions without continuous market sending and thus the "fit with the market" may goes down progressively till the company finds itself  hopelessly out of date.
    
   
2. WHAT HAPPENS IF STRATEGY FORMULATION PROCESS IS ABSENT ? the company will try and go after multiple types of customers - and for each it will try to create value – and in multiple ways. Ultimately the company does not create a superior focus on any of these markets (customers) and does not become a leader (among top 3) in any of the markets it operates. In each market it becomes a "follower" and is subject to the pricing and other rules set by the leaders and hence operates with its margins under pressure. Being not a leader it also does not enjoy warm patronage of the users, buyers, trade and vendors. No one's life depends much on such a company but the company is at the mercy of a lot of people. 
   
   
3. WHAT HAPPENS IF CUSTOMER FULFILLMENT PROCESS IS ABSENT ? the right products, with right product specifications, may not come to market at the right time.  Or the right products may not get produced and distributed such that the right product is available at the right time.  
   
4. WHAT HAPPENS IF GO TO MARKET PROCESS IS ABSENT ? The revenue generation and customer relationship creation suffers. Even if you make the right product, revenue will not get generated unless you reach out to them, talk to them, convince them, demonstrate to them, persuade them and make them buy.
   
5. WHAT HAPPENS IF CUSTOMER FEEDBACK PROCESS IS ABSENT ? you lose out on chances to learn by doing. Since the customers do not connect back to you, you never learn what they think and want, and you do not come to know where are the areas of opportunity. The customer relationship suffers because there is no connect. The customer loyalty suffers and you lose a part of the "total lifetime value" of the customer base - created by you - to your com

4 Checks for your value proposition - will you succeed?

The books say that you need to define your value proposition in order to brief the ad agency and the creative people and salespersons so that they can communicate with your customers. I say that value proposition is a story you need to first tell yourself internally before you start - rather than telling it when the time comes to communicate and sell the product. You need to answer the following questions before you start the business / product ...

What is your insight ? 

what makes you enter the market in the first place? I hope its is not because you have the money - or because of everybody is doing it - or because loans are available for the planned activity ! Ideally your insight should be based on any or all of the following four things

• MARKET : unfulfilled needs or partially fulfilled needs of customers
• COSTS : ways for reducing costs without diluting the benefits for existing players
• BUILD ASSETS EFFICIENTLY : efficient ways to acquire assets (financial - structural - relational - human) which will grow well with the passage of time.
• YOUR EXISTING COMPETENCIES : can be used in a better fashion than that by your competitors.       

Market Knowledge 

Without a clear visibility of the following, you will not know what "marketing mix" you must offer to them. This knowledge enables you to decide what value must be created, for whom and how it needs to be taken to them so that they can buy it. In order to take these decisions you need to acquire market knowledge about the following 7 things : 

1. TA PROFILE : Target Customers - who are they? how many? where are they ?
2. INWARD ACCESS : can they access you ? 
3. HOW DO THEY COME TO MARKET : current buying stages / behavior ?
4. CURRENT CHOICES MADE BY TA : what category, channels selling now?
5. TA SEARCH : to what extent are they searching for you? how ?
6. TA READINESS : how far away from budget, organization, intent ?
7. YOUR ACCESS  : how will your people recognize and access them?

What value will you offer and how is it better  

WHAT VALUE WILL YOU OFFER : You cannot craft your value proposition without clearly understanding and deciding "what matters to the customer" and how much of it will you give vis-a-vis the current choices made by the TA. It will be good to remember that what matters to the customer is not the product alone but its availability, terms and condition, price, delivery, installation, training, repair etc. There are many different models for thinking this through. I suggest you use two models : 8Ps and PFSR

1. 8Ps :Product, Packaging, Price, Place, Promotion, People, Processes, Physical Evidence.
2. PFSR model : value is driven by Product, Facility, Service and Reputation

HOW IS IT BETTER : It should be ideally better than the "current choices made by TA" and also be focused on the targeted needs of the customers. Example : your car is "better than SX4 in fuel efficiency" and "meets the need of boot space for a family of 5 going for a week long trip"

How feasible is it to create and sell such an offer

1. Can you adjust the price to handle the costs you have planned?
2. Can you adjust the costs to handle the pricing you have planned ?
3. Do you have the competence to create what you have planned ?
4. Do you have the resources for what you have planned?

Vital Few Profit Improvement Techniques

Most CEOs unleash too many profit-improvement initiatives. I recommend a simple exercise to gain perspective and create a sharper focus. Look at your current P&L and classify costs into the following four costs.

1. Costs embedded in the materials - Material cost as % of sales ( Techniques : waste reduction, vendor development, negotiations, value engineering and segmentation ) ( Segmentation is probably the best technique as it enables you to incur only those costs that are valued by the target customer and hence possible to become compensated by better prices ).
2. Time costs - Fixed Costs of facilities (1) rents and running costs of  offices /spaces (2) depreciation and running of the cost of the equipment for facilities ( Techniques : productivity improvement, scheduling, more throughput, peak-weak demand adjustment )
3. Fixed Costs of people : salaries, perks and travel ( Techniques : Motivation, Aligning, Competency development, organization roles and structure planning, selection, recruitment and on-boarding, career path planning, compensation, incentives, PMS, continuous education etc)
4. Interest costs on your working capital (inventories and debtors)( Techniques : Supply chain management, range planning, channel management)