Segmentation-Targeting-Positioning (Part 2- Sales)

Welcome to the 2^nd part of STP……please read my previous article“STP is only in Marketing-Part-1”, as this article is a continuation of the same.

In the previous article, we have discussed in detail about Segmentation-Targeting- Positioning in Marketing……in this article we would deep-dive into the other function where STP as a construct is applied.

The other function where STP is used very frequently is SALES..😲👏

STP in Sales

To have a better understanding of how the STP in Marketing moves vis-s-vis STP in sales, we will divide businesses into 3 types namely:

•   Distribution based business (offline & online)
•   B2B business (offline & online)
•   B2C business (offline & online)

Distribution based business (offline & online)

For STP in marketing for Distribution based business, plz refer to the article-- “STP is only in Marketing-Part-1”

We will first discuss the offline model--distribution based business and then move to the online model-distribution based business.

In the offline distribution model, to keep it simple & short we take 2 channel layer….the distributor & the retailer……first layer is the distributor (company bills to the distributor)….2^nd layer is the retailer (distributor bills it to the retailer).

One of the key role of the sales team in those type of business is to appoint & manage the distributors. Ask any one from the sales team, they will say it’s one of the most important job.  Do the sales team follow any STP for distributor appointment…..is it the same as the one done by the marketing team of the same company……the answer is NO….it’s not the same..😱wait a second….are we trying to say…the same company….selling the same product……has different STP  done by marketing…..&…..different one done by Sales…😲😲……Yes…

Segmentation-Targeting-Positioning in Offline Sales

The STP done by the marketing team & STP done by the sales team is different for the same company in distribution based offline business…😱😨...But why…I mean……doesn’t that have adverse effect on the business……NO..…it doesn’t have…

Watch the summary snapshot

3 Factor Framework

Main reason for different STP--

• Customers are different — The primary customers for marketing are end -consumers whereas the primary customers for Sales are Trade/Channel partners.
• Customer’s objective of Using the product are different --- The end consumer—Marketing’s primary customer uses the product for personal use, whereas the Trade/Channel partners—Sales’s primary customer uses the product for his/her business generation
• Channel---For Marketing its through traditional media & digital by which it connects with its customers, for sales it’s primarily face-to-face interaction with its customers. There are certain exceptions like exhibitions/seminars/meets where both the Marketing & Sales team connect  together with the customer/consumer, but those are limited numbers compared to day-to-day interactions.

This 3 Factor Framework will work in maximum of the cases to answer this riddle of how the STP in Marketing & STP in sales will move vis-à-vis each other...👍

The obvious question is…..How is the STP done in Sales….!!..

Primary Channel - Segmentation

Segmentation for the primary channel (the channel partner whom the company bills directly...in this case the distributor)

3 parameters of Segmentation for a Primary Channel

Segmentation is done primarily based on generally 3 parameters:

1. Is he from the same industry
2. Is he from related industry
3. Is he willing to grow or have funds to invest….the industry experience has less importance here (it’s a more recent phenomena)

Say for example , if its lubricant industry…the segments will be in 3 buckets…1^st is he from lubricant industry…2^nd..allied industry…which primarily means auto-ancillary in this case like tires, battery, spare-part, automobile etc.…3^rd from any industry like paint, cement etc. till the time he is willing to grow & have funds to invest.

Primary Channel - Targeting

Targeting for the primary channel (the channel partner whom the company bills directly...in this case the distributor

Targeting for a Primary Channel

Once the prospective distributors are identified based on the segmentation, targeting is primarily based on demographics , behavioral , psycho graphic, business parameters and self-evaluation parameter like:

• Demographic—Income (including credit in market & investment), Education, Age etc.
• Psycho graphic—Type of personality he/she has as a business owner (like is he open to experiment, does he frequently get into the comfort zone etc.), value-system he has etc.
• Behavioral---Loyalty status (how loyal he has been with the other business/brands he has been operating with, benefit desired (what is the type of benefit, primarily non-commercial he is looking for etc.)
• Business Parameter- Current network strength (His customers- Dealers—Types, Numbers, Relationship with them etc.…etc.), Other businesses he/she is in, Reputation in the market etc, commercial terms etc.
• Self-Evaluation—This is probably one of the most important parameter…here the overall understanding of the sales person😜 & his corresponding rating of the all the previous points discussed earlier comes into practice (be rest assured the data required for the points discussed above like demographic, behavioral etc. is always not there & even if its there is always not available)

Primary Channel - Positioning

Positioning for the primary channel (the channel partner whom the company bills directly...in this case the distributor)

Positioning for a Primary Channel

This is predominantly the sales skill 👍….the sales guy positions the company to the prospect based on the requirement of the prospect…(although the sales person may/mayn’t have a formal corporate presentation with him/her) he/she highlights those benefits (within the company defined benefits) which are more relevant to the prospect….for example…for a prospect located in remote area the benefit highlighted can be service (delivered load—product delivered directly to distributors’ warehouse from company (plant/depo)….whereas for a distributor based in metro city the benefit can be added margin which will take care of the higher operating cost @ metro’s….its a real showdown of the sales-skill of the salesperson👏😊

The frequency @ which STP is done @ the primary level is continuous but moderate as companies don’t generally make major changes to the primary network frequently

Now lets have a quick look @ the STP done @ secondary level (retailer/dealer who is billed by the distributor)

Secondary Channel - Segmentation

Segmentation for the secondary channel (retailer/dealer who is billed by the distributor)

Segmentation for a Secondary Channel

This is done generally both by the company sales team and the distributor/distributor sales team. The segmentation is done primarily keeping in mind the profile of business the retailer is in…for example…taking the same example of the lubricant business….the segments will be lubricant retailers…&…allied industry retailers like tires, batteries, spare-parts etc. One recent development has been to reach out to retailers who cater to the same consumer profile….say in case of lubricant business….reach out to those retailers who has some offering for the vehicle….so the list now enlarges to car accessory retailers, car paint shops etc.

Secondary Channel- Targeting

Targeting for the secondary channel (retailer/dealer who is billed by the distributor)

This is the most exhaustive exercise which the sales team does/supposed to do😉 to ensure higher success rate

Targeting for a Secondary Channel

Although, its dependent on the business type & market, but broadly the elements discussed here remains the same. The targeting parameters are enlisted below for a quick glimpse: (it’s generally an excel sheet/software)

1. Potential of the retailer (overall business he does- Your product+ competition product put together)
2. Knowledge of competition product—(Brand wise)- (Product-wise)-(SKU-wise) in terms of:

• Volume & Value
• Price (buying price & selling price)
• Schemes
• Average credit (days & value) Campaigns
• Any other service/offering which is important for retailer’s business

Secondary Channel- Positioning

Positioning for the secondary channel (retailer/dealer who is billed by the distributor)

Positioning for a Secondary Channel

The positioning is decided along with targeting…but generally the sales pitch for the same is made by the distributor sales representative (DSR). Given the background of the DSR, its highly imperative that the sales team does the entire targeting & positioning part religiously, in fact it’s probably one of the key difference between higher sales & lower sales of the same brand in nearby markets…😊👍

The key points covered in it are:

• Retailer wise plan for increasing share of your business/crack new retailer
• Brand wise)- (Product-wise)-(SKU-wise) price you want to offer
• Target volume/value of business with that price
• Proposed scheme
• Campaign/branding you want to offer to the retailer 
• Any other service which needs mention

Once this is done, the rest is primarily based on 2 factors:

• Business relationship of the sales person with the retailer
• The sales skill of the sales-person

The frequency @ which STP is done @ the secondary level is continuous but high as market dynamics keeps on changing & even a new scheme may change retailer buying behavior

Its time now to have a quick snapshot of the online business of distribution-based industries. We again go back to the 3 Factor Framework to identify how the STP in Marketing will move as compared to STP in sales:

• Customer: They are same, as both marketing & selling is done both online.
• Customer’s Objective: It’s also same as the customer remains the same person.
• Channel: In maximum cases it’s the same, although there are examples when there are offline-sales team to connect face-to-face to the consumer. In majority of the cases, the actual sale (transaction) still happens online & the one ground sales person is responsible for the sales pitch.

Hence, in case of distribution based business—online,, the STP done by the marketing & STP done by sales team remains almost the same. (which is in-line with the STP for other-businesses we discussed in the article “STP is only in Marketing-Part-1”

B2B Business (offline & online)

We start with B2B Business-offline..👍

• Customer—Yes, they are same for both Marketing & Sales

• Customer’s objective of using the product—Yes, it’s the same

• Channel- Its not the same. For Marketing its through traditional media & digital by which it connects with its customers, for sales it’s primarily face-to-face interaction with its customers. There are certain exceptions like exhibitions/seminars/meets where both the Marketing & Sales team connect  together with the customer/consumer, but those are limited numbers compared to day-to-day interactions.

For STP in marketing for B2B business, plz refer to the article--“STP is only in Marketing-Part-1”

Is the Sales STP different from Marketing STP in this case also…😧😮😯…..Yes…it is…but the difference is not as big as the one in case of offline distribution based business….why so…..let’s look @ the 3 Factors Framework again to answer it

So, in case of B2B--Offline sales, the STP done by Marketing & Sales team is similar with certain differences

Segmentation-Targeting-Positioning for B2B Sales

Segmentation in B2B Sales

This generally involves identification of the industries in which the product of the company finds application….for example….if you have are an adhesive making company…your target segments in B2B space will include those industries where adhesives finds application…like…book making industries, wood making industries etc.…similarly if you are into hotel business…probably all industries may fall under your segment….as both Room-Nights & Banquets are required by all industries

Targeting in B2B Sales

Once the segmentation is done, targeting in B2B sales generally involves identifying customers in those segments and categorizing the customers into A/B/C sometimes D😆😇 generally based on:

• The potential

• Conversion status (which part of the conversion funnel is the customer in…for ex…initial- only one call made, or higher stage like few calls have been made along with demo, hot pursuit—in final stages of techno commercial discussion etc. etc.)

• Strategic importance (like in a current customer I have 90% SOB(Share-of-Business), but in a new project of the customer which will cater to only 2% of overall volume a tough competition of mine may make in-roads, I would take that 2% as serious as the current 90% as competition may slowly start getting into the 90% , once it gets into my customer with that 2% share because of the new project)

• Convenience (geography, presence of sales & service team of the company etc. etc.)

• Any other factor which may be of importance to the business for current/future requirements

Positioning in B2B Sales

There is certain overlap with targeting & few may like to call it more targeting than positioning, but nomenclature doesn’t change the action…😆😄😝…

This is the most important part where the B2B sales person spends the maximum time…its also called Sales plan in some cases…& its reviewed regularly..!!

Its generally done in excel/software, where the key points that are captured target wise i.e. (A/B/C customer group- wise) are:

• Customer Potential- (Volume/Value) of business along with competition share

• Pricing of competition (wherever available) along with product details

• Credit details of the competition

• Other details like billing mode, shipment type etc

• Company contact details—Contact person (name/ph number/email id), any other person who is involved in the buying process (decision making process)…his/her credentials

• Any upcoming project of the company

• Proposed product with proposed commercial terms

• What will the positioning--- what value will be shown to the customer (within the defined benefits as per the company policy)

• Remarks which captures the current status in the conversion funnel & future plan with timeline.

• Any other details which is relevant for conversion

The frequency @ which the targeting/positioning/sales plan is done by B2B sales team is very high as it continuous update based on the status development of the prospect in the conversion funnel

B2C business (offline & online)

For STP in marketing for B2C business, plz refer to the article--“STP is only in Marketing-Part-1”

This is a case of direct-to-consumer business…..one big example of this is majority of the start-ups that we see around….like food-tech, edu-tech, e-mobility etc are examples of this B2C online business model…😀👍.&…Insurance agents are a big example of B2C offline sales. Lets quickly jump to the 3 Factor Framework to identify how the STP in Marketing will move as compared to STP in sales

• Customer: They are same, as both marketing & selling is done both online

• Customer’s Objective: It’s also same as the customer remains the same person

• Channel: In maximum cases it’s the same, although there are examples when there are offline-sales team to connect face-to-face to the consumer. In case of B2C offline model, the actual sale (transaction) still happens offline & in case of B2C online model maximum of the cases, the sale happens online & the sale team on-ground is responsible for sales pitch & facilitation, in some cases

Hence, in case of B2C (online & offline) business, the STP done by the marketing & STP done by sales team remains almost the same

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