Personal Selling and Sales Promotion Chapter 17 Personal Selling and Sales Promotion

Chapter Objectives Outline the marketplace conditions that make personal selling a primary component of a firm’s promotional mix. Describe the four sales channels. Describe the major trends in personal selling. Identify and briefly describe the three basic sales tasks. Outline the seven steps in the sales process. Identify the seven basic functions of a sales manager. Explain the role of ethical behavior in personal selling. Describe the role of sales promotion in the promotional mix. Identify the different types of consumer-oriented and trade-oriented sales promotions.

The Evolution of Personal Selling Personal selling: interpersonal influence process involving a seller’s promotional presentation conducted on a person-to-person basis with the buyer “A salesman is someone who sells goods that won’t come back to customers who will.” (Anonymous)

Has been a standard business activity for thousands of years Early peddlers sold goods they manufactured or imported . . . viewed selling as a secondary activity In 18th century America, peddlers sold directly to farmers and settlers in the West In the 19th century, drummers sold to both consumers and intermediaries sometimes using questionable practices and built negative stereotypes which persist today

Today’s salesperson is usually a highly-trained professional Sales professionals take a customer-oriented approach employing truthful, nonmanipulative tactics in order to satisfy the long-term needs of both the customer and the selling firm Today’s professional salespeople are problem solvers who seek to develop long-term relationships with customers

Factor affecting the importance of personal selling in the promotional mix Variable Conditions That Favor Personal Selling Conditions That Favor Advertising Consumer Product Geographically concentrated Relatively low numbers Expensive Technically complex Custom made Special handling requirements Transactions frequently involve trade-ins Geographically dispersed Relatively high numbers Inexpensive Simple to understand Standardized No special handling requirements Transactions seldom involve trade-ins Price Relatively high Relatively low Channels Relatively short Relatively long

NetJets Executive Jet A Product Requiring Personal Selling

The Four Sales Channels Personal selling occurs through several types of communication channels including these four: Over-the-Counter Field Selling Telemarketing Inside Selling

Over-the-Counter: personal selling conducted in retail and some wholesale locations in which customers come to the seller’ place of business True Value Salespeople Engage in Over-the-Counter Selling

Field selling: sales presentations made at prospective customers’ homes or businesses on a face-to-face basis Better Homes and Gardens Real Estate Service: A Type of Field Sales

Cost of a Sales Call by Industry

Telemarketing: promotional presentation involving the use of the telephone on an outbound basis by salespeople or on an inbound basis by customers who initiate calls to obtain information and place orders The Telemarketing Company Telemarketing: A Popular Selling Technique

Inside Selling: performing the functions of field selling but avoiding travel-related expenses by relying on phone, mail, and electronic commerce to provide sales and product service for customers on a continuing basis

Trends in Personal Selling Relationship selling: regular contacts over an extended period to establish a sustained seller-buyer relationship Consultative selling: meeting customer needs by listing to them, understanding -- and caring about -- their problems, paying attention to details, and following through after the sale Cross-selling: offer multiple goods and services to the same customer

Buyers prefer to do business with salespeople who: Orchestrate events and bring to bear whatever resources are necessary to satisfy the customer Provide counseling to the customer based on in-depth knowledge of the product, the market, and the customer’s needs Solve problems extremely proficiently to ensure satisfactory customer service over extended time periods Demonstrate high ethical standards and communicate honestly at all times Willingly advocate the customer’s cause within the selling organization Create imaginative arrangements to meet buyers’ needs Arrive well-prepared for sales calls

Team Selling: combination of salespeople with specialists from other functional areas to promote a product Virtual sales team Team Selling at CDW Computer Centers

Sales Force Automation (SFA): applications of computer and other technologies to make the sales function more efficient and competitive Benefits include improved effectiveness due to improved access to information, lower costs, improved product launches, and attentive customer service

Sales Tasks Three basic sales tasks can be identified: Order Processing Creative Selling Missionary sales

Order Processing: selling, mostly at the wholesale and retail levels, that involves identifying customer needs, pointing them out to customers, and completing orders Creative Selling: personal selling involving situations in which a considerable degree of analytical decision making on the buyer’s part results in the need for skillful proposals of solutions for the customer’s needs Missionary sales: indirect type of selling in which specialized salespeople promote the firm’s goodwill among indirect customers, often by assisting customers in product use

The Sales Process The AIDA Concept and the Personal Selling Process

Prospecting: personal-selling function of identifying potential customers Qualifying: determining that a prospect has the needs, income, and purchase authority necessary for being a potential customer Oreck Using advertising to identify prospective customers

Approach: salesperson’s initial contact with a prospective customer Pre-call Planning: use of information collected during the prospecting and qualifying stages of the sales process and during previous contacts with the prospect to tailor the approach and presentation to match the customer’s needs

Presentation: describing a product’s major features and relating them to a customer’s problems or needs ExpoStar Displays & Graphics Support Tools Increase the Effectiveness of Presentations

Demonstration allows the customer to experience a good or service Even ads as well done as this Oldsmobile ad, can not substitute for an effective demonstration ride in a new automobile

Handling Objections: expressions of sales resistance by the prospect Example: A customer’s “I don't like the color” is probably their way of asking what other colors are available Objections are reasonable and professional salespeople are prepared to handle them appropriately

Closing: stages of personal selling where the salesperson asks the customer to make a purchase decision Follow-up: post-sales activities that often determine whether an individual who has made a recent purchase will become a repeat customer Helps build mutually beneficial long-term relationships

Managing the Sales Effort Sales management: Activities of planning, organizing, staffing, motivating compensating, and evaluating and controlling a sales force to ensure its effectiveness

How salespeople and sales managers spend their time

Recruitment and Selection One of the sales manager’s greatest challenges Careful selection is important for two reasons: Substantial costs involved Mistakes are costly and detrimental to customer relations and sales-force performance

Training Principal methods used are on-the-job training, individual instruction, in-house classes, and external seminars Popular training techniques include instructional videotapes/DVDs, lectures, roll-playing exercises, slides, films, and interactive computer programs

Organization General organizational alignment may be based on geography, products, types of customers, or some combination of these factors National accounts organization: organizational arrangement that assigns sales teams to a firm’s largest accounts

Basic approaches to organizing the sales force

Supervision Span of control: the number of sales representatives who report to the first level of sales management Optimal span of control is affected by such factors as complexity work activities being performed, ability of the individual sales manager, degree of interdependence among individual salespersons, and the extent of training each salesperson receives

Motivation Efforts to motivate salespeople usually take the form of the briefings, information sharing, and both psychological and financial encouragement Psychological encouragement includes appeals to emotional needs, recognition, and peer acceptance Financial encouragement includes monetary rewards and fringe benefits such as club memberships and sales contest awards

Compensation Commission: incentive compensation directly related to the sales or profits achieved by a salesperson Salary: fixed compensation payments made periodically to an employee

Figure 17.11 Average Annual Pay for Sales Representatives

Evaluation and Control Sales quotas: level of expected sales for territory, product, customer, or salesperson against which actual results are compared Other measures such as customer satisfaction, profit contribution, share of product-category sales, and customer retention Another way to categorize a salesperson’s strong points: Task, or technical ability Process, or sequence of work flow Goal, or end results (output) of sales performance

Ethical Issues in Sales Promotional activities, including personal sales, raise many ethical questions Sales managers can foster a corporate culture for an ethical sales environment: Employees understand what is expected of them Open communication exists between employees and managers Management leads by example Employees are proud of and loyal to their organization

Sales Promotion Marketing activities other than personal selling, advertising, and publicity that stimulate consumer purchasing and dealer effectiveness; includes displays, trade shows and expositions, demonstrations and various nonrecurrent selling efforts Consumer-Oriented Promotions Trade-Oriented Promotions

Figure 17.12 Current Spending by Companies for Different Sales Promotion

Table 17.3 Seven Most Frequently Used Consumer Promotion Techniques

Consumer-Oriented Promotions Coupons and Refunds Coupons offer discounts on the purchase price. Nearly $5 billion redeemed annually Free-standing inserts (FSIs) in Sunday newspapers account for about 75 percent of all coupons Refunds offer cash back to consumers with proof of purchasing one or more products

Taco Bell Advertisement Uses Coupons in Free Standing Insert to Promote New Food Line

Samples, Bonus Packs, and Premiums Sampling refers to the free distribution of a product in an attempt to obtain future sales. “Try it, you'll like it.” A bonus pack is a specially packaged item that gives the purchaser a larger quantity at the regular price. Premiums are items given free or at a reduced cost with the purchases of other products

Contests and Sweepstakes Contests require entrants to solve problems or write essays -- they may also require proofs of purchase Sweepstakes select winners by chance -- no product purchase is necessary

Specialty Advertising [“Trinkets and Trash”] Sales promotion technique that places the advertiser's name, address, and advertising message on useful articles that are then distributed to target markets More than $8 billion worth of specialty advertising items are given out annually

Trade-Oriented Promotions Sales promotion that appeals to marketing intermediaries rather than to consumers Trade allowances: deals offered to wholesalers and retailers for purchasing or promoting specific products Point-of-purchase (POP) advertising: a display or other promotion located near the site of the actual buying decision

Trade shows: vendors’ displays and the demonstrations at sites often organized by industry trade associations, perhaps as part of these association’s annual meetings or conventions. Dealer incentives, contest, and training programs are run by the manufacturers to induce retailers and their salespeople to increase sales and to promote product Push money is an incentive that gives retail salespeople cash rewards for every unit of a product they sell

Measuring Sales Promotion Effectiveness Since many sales promotions result in direct consumer responses, marketers can relatively easily track their effectiveness As with other methods, marketers must weigh the cost against the benefits

Ethics in Sales Promotion Sales promotions provide opportunities for unscrupulous companies to take advantage of consumers Trade allowances, particularly slotting allowances, have been criticized for years as a form of bribery

End of Chapter Seventeen