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20 Personal Selling and Sales Promotion. Copyright © Houghton Mifflin Company. All rights reserved.20 | 2 Agenda The Nature of Personal Selling Elements.

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Presentation on theme: "20 Personal Selling and Sales Promotion. Copyright © Houghton Mifflin Company. All rights reserved.20 | 2 Agenda The Nature of Personal Selling Elements."— Presentation transcript:

1 20 Personal Selling and Sales Promotion

2 Copyright © Houghton Mifflin Company. All rights reserved.20 | 2 Agenda The Nature of Personal Selling Elements of the Personal Selling Process Types of Salespeople Managing the Sales Force The Nature of Sales Promotion

3 Copyright © Houghton Mifflin Company. All rights reserved.20 | 3 The Nature of Personal Selling Personal Selling –Paid personal communication that informs customers and persuades them to buy products. Most adjustable to customer information needs Most precise (targeted) form of promotion methods Most expensive element in promotion mix –Personal selling as a career The potential for high income A great deal of freedom A high level of training A high level of job satisfaction

4 Copyright © Houghton Mifflin Company. All rights reserved.20 | 4 General Steps in the Personal Selling Process FIGURE 20.1

5 Copyright © Houghton Mifflin Company. All rights reserved.20 | 5 Elements of the Personal Selling Process Prospecting –Developing a list of potential customers Sales records, trade shows, commercial databases, newspaper announcements, public records, telephone directories, trade association directories Reponses to advertisements with information request forms Referrals—recommendations from current customers Need good CRM to manage list

6 Copyright © Houghton Mifflin Company. All rights reserved.20 | 6 Elements of the Personal Selling Process (cont’d) Preapproach –Finding and analyzing information about the prospect Specific product needs Current use of brands Feelings about available brands Personal characteristics –Additional research Identifying key decision makers Reviewing account histories and problems Contacting other clients for information Assessing credit histories and problems Preparing sales presentations Identifying product needs

7 Copyright © Houghton Mifflin Company. All rights reserved.20 | 7 Elements of the Personal Selling Process (cont’d) Approach –The manner in which a salesperson contacts a potential customer Purpose is to gather information about the buyer’s needs and objectives Important to create a favorable first impression and build rapport with prospective customer –Typical approaches Referral by another customer to a prospective customer “Cold” call without prior introduction to the customer Repeat contact based on prior meeting(s) with the potential customer

8 Copyright © Houghton Mifflin Company. All rights reserved.20 | 8 Elements of the Personal Selling Process (cont’d) Making the Presentation –During the presentation: Attract and hold the prospect’s attention. Stimulate interest in the product. Spark a desire for the product. Listen and respond to the prospect questions and comments. –Ways to enhance the presentation’s effects Have the prospect touch, hold, or use the product. Use audiovisual technology to heighten the impact of the presentation.

9 Copyright © Houghton Mifflin Company. All rights reserved.20 | 9 Elements of the Personal Selling Process (cont’d) Overcoming objections –Anticipate objections and counter them during the presentation –Generally, best to handle objections as they arise

10 Copyright © Houghton Mifflin Company. All rights reserved.20 | 10 Elements of the Personal Selling Process (cont’d) Closing the sale –Closing is the stage in the selling process when the salesperson asks the prospect to buy the product. –Closing strategies: “Trial” closing: asking questions (what, how, or why) that assume the customer will buy the product Asking for a tryout order: low-risk way for customer to try out the product

11 Copyright © Houghton Mifflin Company. All rights reserved.20 | 11 Elements of the Personal Selling Process (cont’d) Following up –Determining if the delivery and setup of order was completed to the customer’s satisfaction –Ascertaining the customer’s future product needs

12 Copyright © Houghton Mifflin Company. All rights reserved.20 | 12 Exercise Explain how you can use the seven steps of personal selling in an activity such as getting a job. PROSPECTING: The salesperson must develop a list of customers. PREAPPROACH: The salesperson must find and analyze information about each prospect’s specific product needs, current use of brands, feelings about available brands, and personal characteristics.

13 Copyright © Houghton Mifflin Company. All rights reserved.20 | 13 Exercise (cont’d) APPROACH: The salesperson adopts a certain manner in contacting a potential customer. The first contact is generally to assess the buyer’s needs and objectives. The prospect’s first impression is usually a lasting one. MAKING THE PRESENTATION: The salesperson must attract and hold the prospect’s attention to stimulate interest. Product demonstrations, listening to comments, and observing responses are important.

14 Copyright © Houghton Mifflin Company. All rights reserved.20 | 14 Exercise (cont’d) OVERCOMING OBJECTIONS: One of the best ways is to anticipate and counter objections before the prospect has an opportunity to raise them. Otherwise, deal with objections when they occur. CLOSING: The salesperson asks the prospect to buy the product. Attempt a “trial close” by asking questions that assume the prospect will buy the product. A salesperson should try to close at several points during the presentation. FOLLOW-UP: The salesperson contacts the customer to learn what problems or questions have arisen. This may also be used to determine future needs.

15 Copyright © Houghton Mifflin Company. All rights reserved.20 | 15 Types of Salespeople Order Getters –The salesperson who sells to new customers and increases sales to current ones –Creative selling Current-customer sales New-business sales Order Takers –The salesperson who primarily seeks repeat sales Inside order takers Field order takers

16 Copyright © Houghton Mifflin Company. All rights reserved.20 | 16 Types of Salespeople (cont’d) Support Personnel: sales staff members who facilitate selling but usually are not involved solely with making sales –Missionary salespeople Support salespersons who assist the producer’s customers in selling to their own customers –Trade salespeople Salespersons involved mainly in helping a producer’s customers promote a product –Technical salespeople Support salespersons who give technical assistance to a firm’s current customers

17 Copyright © Houghton Mifflin Company. All rights reserved.20 | 17 Exercise Salespeople are typically classified as order getters, order takers, and support personnel. How would you classify the following salespeople? 1.Pharmaceutical salesperson selling to doctors 2.Car salesperson 3.Retail store salesperson 4.Telemarketer soliciting donations for a charity

18 Copyright © Houghton Mifflin Company. All rights reserved.20 | 18 Exercise (cont’d) 5.Real estate agent 6.Heavy equipment salesperson 7.Agent for a snack food distributor who only stocks shelves 8.Door-to-door cosmetics sales-person 9.Insurance salesperson 10.Agent for a snack food distributor who fills a retailer’s orders

19 Copyright © Houghton Mifflin Company. All rights reserved.20 | 19 Major Sales Management Decision Areas Major sales management decision areas Major sales management decision areas Establishing sales force objectives Establishing sales force objectives Determining sales force size Determining sales force size Recruiting and selecting salespeople Recruiting and selecting salespeople Training sales personnel Training sales personnel Compensating salespeople Compensating salespeople Motivating salespeople Motivating salespeople Managing sales territories Managing sales territories Controlling and evaluating sales force performance Controlling and evaluating sales force performance

20 Copyright © Houghton Mifflin Company. All rights reserved.20 | 20 Managing the Sales Force Establishing Sales Force Objectives –Objectives tell salespeople what they are to accomplish during a specified time period. –Objectives for the total sales force Sales volume: total units or dollars of product sold for a period of time Market share: unit or dollar percentage share of the total market for a product Profit: dollars or percentage of return on investment (ROI) –Objective for individual salespersons Quotas: dollars or units sold, or average order size, average number of calls, or ratio of orders to calls by an individual salesperson

21 Copyright © Houghton Mifflin Company. All rights reserved.20 | 21 Managing the Sales Force (cont’d) Determining Sales Force Size –Size of sales force affects compensation methods for salespersons. morale of salespersons. overall sales force management. –Methods for determining optimal sale force size: Dividing the number of sales calls necessary to serve customers by the number of sales calls a salesperson makes annually Adding additional salespersons until the cost of adding one more salespersons equals the additional sales that would be generated by that person

22 Copyright © Houghton Mifflin Company. All rights reserved.20 | 22 Managing the Sales Force (cont’d) Recruiting and Selecting Salespeople –Recruiting Developing a list of qualified applicants for sales positions –Establish a set of qualifications that best match the firm’s particular sales tasks Prepare a job description listing specific tasks Analyze successful salespeople among current employees –Sources of applicants Other departments in the company, other firms, employment agencies, educational institutions, job ad respondents, employee referrals

23 Copyright © Houghton Mifflin Company. All rights reserved.20 | 23 Managing the Sales Force (cont’d) Training Sales Personnel –What to teach? The company, its products, or selling methods –Whom to train? Newly hired or experienced salespeople, or both –When/where to train? In the field, at educational institutions, in company facilities Before or after initial field assignment Frequency, sequencing, and duration of periodic training

24 Copyright © Houghton Mifflin Company. All rights reserved.20 | 24 Managing the Sales Force (cont’d) Training Sales Personnel (cont’d) –Who will train? Sales managers, technical personnel, outside consultants –How to train? Materials and instructional methods

25 Copyright © Houghton Mifflin Company. All rights reserved.20 | 25 Managing the Sales Force (cont’d) Compensating Salespeople –Compensation objectives Attract, motivate, and retain effective salespeople Maintain the desired level of control Provide acceptable levels of income, freedom, and incentive Encourage proper treatment of customers

26 Copyright © Houghton Mifflin Company. All rights reserved.20 | 26 Major Types of Sales Force Compensation Methods Straight Commission Paying salespeople according to the amount of their sales in given time period Commission may be based on percentage of sales or on a sliding scale Requires highly aggressive selling and minimal nonselling tasks Provides salespeople with maximum incentive but little financial security Straight Salary Paying salespeople a specific amount per time period Most useful when compensating new salesperson, moving into new territories or customers, sales requiring many services for customers Salary remains the same until pay increase Provides salespeople with more security but less incentive Combination Paying salespeople a fixed salary plus a commission based on sales volume Most popular compensation method Provides level of security and some incentive Can require that salesperson exceeds a certain sales level before earning a commission

27 Copyright © Houghton Mifflin Company. All rights reserved.20 | 27 Average Salary for Sales and Marketing Executives, 2003 Source: Christine Galea,”The 2004 Compensation Survey,” Sales & Marketing Management, May 2004, p.29. Total Compensation Base SalaryBonus Plus Commissions Executive$144,643$95,170$49,483 Top Performer$153,417$87,342$66,075 Mid-Level Performer$92,337$58,546$33,791 Low-Level Performer$63,775$44,289$19,486 Average of all positions$111,135$70,588$50,547

28 Copyright © Houghton Mifflin Company. All rights reserved.20 | 28 Managing the Sales Force (cont’d) Motivating Salespeople –Motivation should be provided on a continuous basis. –Motivational incentives Enjoyable working conditions Power and authority Job security Opportunities to excel –Motivational methods Sales contests Recognition programs Awards (travel, merchandise, and cash)

29 Copyright © Houghton Mifflin Company. All rights reserved.20 | 29 An Example of a Sales Incentive Program Courtesy of SalesDriver.

30 Copyright © Houghton Mifflin Company. All rights reserved.20 | 30 Managing the Sales Force (cont’d) Managing Sales Territories –Creating sales territories Based on similar sales potential or requiring about the same amount of work Setting differential commission rates to compensate for differences in the characteristics of territories (density and distribution of customers)

31 Copyright © Houghton Mifflin Company. All rights reserved.20 | 31 Managing the Sales Force (cont’d) Managing Sales Territories (cont’d) –Routing and scheduling considerations Geographic size and shape of the territory Number and distribution of customers Sequence of customer calls Routes and distances traveled Minimizing salesperson’s travel and lodging costs

32 Copyright © Houghton Mifflin Company. All rights reserved.20 | 32 Managing the Sales Force (cont’d) Controlling and Evaluating Sales Force Performance –Sales objectives, determined by the sales manager, stated in terms of Sales volume Average number of calls per day Average sales per customer Actual sales relative to sales potential Number of new customer orders Average cost per call Average gross profit per customer

33 Copyright © Houghton Mifflin Company. All rights reserved.20 | 33 The Nature of Sales Promotion Sales Promotion –An activity and/or material that acts as a direct inducement to resellers or salespeople to sell a product or consumers to buy it –It encourages product trial and purchase by adding value to the product. –It is most effective when it facilitates or is facilitated by personal selling and advertising. –Its use has grown dramatically over the last 20 years at the expense of traditional advertising.

34 Copyright © Houghton Mifflin Company. All rights reserved.20 | 34 The Nature of Sales Promotion (cont’d) Deciding Which Sales Promotion Method to Use –Product characteristics –Target market characteristics –Distribution channel(s) –Number and types of resellers –Competitive and legal environment

35 Copyright © Houghton Mifflin Company. All rights reserved.20 | 35 Consumer Sales Promotion Methods Encourage or stimulate consumers to patronize specific stores or to try particular products

36 Copyright © Houghton Mifflin Company. All rights reserved.20 | 36 Sales Promotions Like This Provide Incentives to Customers Reprinted with permission of LORD’S & LADY’S Hair Salon, Inc.

37 Copyright © Houghton Mifflin Company. All rights reserved.20 | 37 Consumer Sales Promotion Methods (cont’d) Coupons and Cents-Off Offers –Coupons Written price reductions used to encourage consumers to buy a specific product Effective coupons are easily recognized and state the offer clearly. The nature of the product is the prime consideration in setting up a coupon promotion. Advantages: generate brand awareness and interest and reward brand loyalty Disadvantages: Fraud and misredemptions; consumer ill-will from stock-outs during promotions

38 Copyright © Houghton Mifflin Company. All rights reserved.20 | 38 Consumer Sales Promotion Methods (cont’d) Coupons and Cents-Off Offers (cont’d) –Cents-off offers Promotions that let buyers pay less than the regular price to encourage purchase Refunds and Rebates –Money refunds Offering consumers money when they mail in a proof of purchase, usually for multiple product purchases –Rebates Sending consumers a specific amount of money for making a single product purchase

39 Copyright © Houghton Mifflin Company. All rights reserved.20 | 39 Consumer Sales Promotion Methods (cont’d) Frequent User Incentives –Frequent-user incentives Incentive programs that foster consumer loyalty by rewarding customers’ repeat (frequent) purchases Point-of-Purchase Materials –Point-of-purchase displays Signs, window displays, display racks, and similar means used to attract customers and to encourage immediate purchases –Demonstrations Manufacturers use it temporarily to encourage trial use and purchase of a product or to show how a product works. Highly effective yet costly in practice

40 Copyright © Houghton Mifflin Company. All rights reserved.20 | 40 Consumer Sales Promotion Methods (cont’d) Free Samples and Premiums –Free samples Samples of a product given out to encourage trial and purchase Used to increase sales volume and obtain desirable distribution for fast turnover products The most expensive form of sales promotion –Premiums Items offered free or at a minimal cost as a bonus for purchasing a product Premium must match both the target market and the brand’s image. Premiums must be easily recognizable and desirable.

41 Copyright © Houghton Mifflin Company. All rights reserved.20 | 41 Consumer Sales Promotion Methods (cont’d) Consumer Games, Contests, and Sweepstakes –Consumer contests and games Individuals compete for prizes based on analytical or creative skills. Competitions for prizes are used to generate retail traffic and to increase exposure to promotional messages. –Consumer sweepstakes A sales promotion in which entrants submit their names for inclusion in a drawing for prizes Used more than contests and attract more widespread interest

42 Copyright © Houghton Mifflin Company. All rights reserved.20 | 42 Debate Issue Do coupons make consumers more “brand loyal”?

43 Copyright © Houghton Mifflin Company. All rights reserved.20 | 43 Trade Sales Promotion Methods Ways of persuading wholesalers and retailers to carry a producer’s products and to market them aggressively

44 Copyright © Houghton Mifflin Company. All rights reserved.20 | 44 Trade Sales Promotion Methods (cont’d) Trade Allowances –Buying allowance A temporary price reduction to resellers for purchasing specified quantities of a product –Buy-back allowance A sum of money a producer gives a reseller for each additional unit bought after an initial promotion deal is over –Scan-back allowance A manufacturer’s reward to retailers based on the number of pieces scanned –Merchandise allowances A manufacturer’s agreement to help resellers pay for special promotional efforts

45 Copyright © Houghton Mifflin Company. All rights reserved.20 | 45 Trade Sales Promotion Methods (cont’d) Cooperative Advertising and Dealer Listings –Cooperative advertising Sharing of media costs by manufacturer and retailer for advertising the manufacturer’s products –Dealer listings Ads promoting a product and identifying retailers that sell the product; influences retailers to carry the products, builds traffic at the retail level, and encourages consumers to shop at participating dealers

46 Copyright © Houghton Mifflin Company. All rights reserved.20 | 46 Trade Sales Promotion Methods (cont’d) Free Merchandise and Gifts –Free merchandise A manufacturer’s reward given to resellers for purchasing a stated quantity of goods Usually takes the form of a reduced invoice –Dealer loader A gift, often part of a display, offered to a retailer who purchases a specified quantity of merchandise

47 Copyright © Houghton Mifflin Company. All rights reserved.20 | 47 Trade Sales Promotion Methods (cont’d) Premium (Push) Money –Extra compensation to salespersons for pushing a line of products Sales Contests –A means of motivating distributors, retailers, and salespeople by recognizing outstanding achievements


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