Personal Selling and Direct Marketing Chapter 17

17- 1 Objectives Understand the role of a company’s salespeople in creating value for customers and building customers relationships. Know the six major sales force management steps.

17- 2 Objectives Understand the personal selling process, and how to distinguish between transaction-oriented marketing and relationship marketing. Learn about direct marketing and its benefits to customers and companies. Know the major forms of direct marketing.

17- 3 Record-breaking earnings and sales growth Outstanding sales force; rated as one of America’s best. Sales force focuses on customer success Sales force is organized into separate divisions dedicated to specific customers Division platform teams work with customers and are linked to customer operations c Lear

17- 4 Definition Salesperson  An individual acting for a company by performing one or more of the following activities: prospecting, communicating, servicing, and information gathering.

17- 5 Personal Selling Salespeople Have Many Names Agents Sales consultants Sales Representatives Account Executives Sales Engineers District Managers Marketing Representatives Account Development Representatives

17- 6 The Role of the Sales Force  Two-way personal communication  More effective than advertising in complex selling situations  The sales force plays a major role in most companies  The sales force works to produce customer satisfaction and company profit Personal Selling

17- 7 Definition Sales Force Management  The analysis, planning, implementation, and control of sales force activities. It includes setting and designing sales force strategy; and recruiting, selecting, training, supervising, compensating, and evaluating the firm’s salespeople.

17- 8 Figure 17-1: Major Steps in Sales Force Management

17- 9 Sales Force Strategy and Structure Managing the Sales Force  Sales Force Structure  Territorial sales force structure  Product sales force structure  Customer sales force structure  Complex sales force structure

Sales Force Strategy and Structure  Sales Force Size  Many companies use the workload approach to set sales force size Managing the Sales Force

Sales Force Strategy and Structure  Outside and inside sales forces  Team selling Managing the Sales Force

Recruiting and Selecting Salespeople  Careful recruiting can:  Increase overall sales force performance  Reduce turnover  Reduce recruiting and training costs Managing the Sales Force

Managing the Sales Force Traits of Successful Salespeople EnthusiasmPatienceInitiativeSelf-Confidence Job Commitment Customer Orientation Independent Self- Motivated Excellent Listeners FriendlyPersistentAttentiveHonest Internally Motivated Relationship Oriented DisciplinedHardworking Team Players

Recruiting & Selecting Salespeople  Recruiting involves:  Soliciting applications  Screening candidates Interviews Interviews Sales aptitude, personality, analytical and/or organizational tests Sales aptitude, personality, analytical and/or organizational tests References, work history, etc. References, work history, etc. Managing the Sales Force

Training Salespeople  Average training period is 4 months  Training is expensive, but yields strong returns  Training programs have many goals  Many companies are adding Web-based sales training programs Managing the Sales Force

U.S. companies spend more that $7 billion annually on training salespeople and devote more than 22 hours per year to the average salesperson.

Compensating Salespeople  Compensation elements: salary, bonuses, commissions, expenses, and fringe benefits  Basic compensation plans:  Straight salary  Straight commission  Salary plus bonus  Salary plus commission Managing the Sales Force

Compensating Salespeople  Compensation plans should direct the sales force toward activities that are consistent with overall marketing objectives.  Gain market share  Solidify market leadership  Maximize profitability Managing the Sales Force

Supervising Salespeople  Effective supervisors provide direction to the sales force  Annual call plans and time-and-duty analysis can help provide direction  Sales force automation systems assist in creating more efficient sales force operations  The Internet is the fastest-growing sales technology tool Managing the Sales Force

Figure 17-2: How Salespeople Spend Their Time

Supervising Salespeople  Effective supervisors also motivate the sales force  Organizational climate  Sales quotas  Positive incentives Sales meetings, sales contests, honors, etc. Sales meetings, sales contests, honors, etc. Managing the Sales Force

American Express targets companies in need of sales force incentives. The Persona Select cards are prepaid reward cards that allow recipients to buy whatever they most want.

Evaluating Salespeople  Sales reports  Call reports  Expense reports Managing the Sales Force

Figure 17-3: The Personal Selling Process

Prospecting and Qualifying  Prospecting: identifying potential customers  Qualifying: Screening leads The Personal Selling Process

“Cold calling” by salespeople – visiting offices without an appointment – was mentioned in the text as one method of identifying potential prospects. Discuss the pros and cons of cold calling. Is it more appropriate for certain industries or product types than others? Discuss the pros and cons of cold calling. Is it more appropriate for certain industries or product types than others? Discussion Question

MarketSoft Video Clip Trade shows are often an excellent source of sales leads. BusinessNow Click the picture above to play video

Preapproach  Learning as much as possible about a prospective customer prior to making a sales call The Personal Selling Process

Approach  Stage of the selling process where the salesperson meets the customer for the first time The Personal Selling Process

 Benefits of the product are presented or demonstrated  Understanding prospect needs is key The Personal Selling Process Presentation & Demonstration

Virtual reality is being used by Johnson & Johnson’s sales representatives to help prospects learn about STERRAD.

Handling Objections Closing  Asking for the order Follow-up  Helps ensure customer satisfaction The Personal Selling Process

Direct Marketing Benefits: Buyers  Convenient  Easy to use  Private  Access to a wealth of information  Immediate  Interactive Direct Marketing

Direct Marketing Benefits: Sellers  Powerful tool for building relationships  Allows for targeting of small groups or individuals with customized offers in a personalized fashion  Offers access to buyers that couldn’t be reached via other channels  Low-cost, effective alternative for reaching specific markets Direct Marketing

Dell’s success is due to their direct selling model

Customer Databases & Direct Marketing Databases  Databases include customer profile, purchase history, and other detailed information  Databases can be used to identify prospects, profile customers, and select customers to receive offers, and to build relationships Direct Marketing

Customer Databases & Direct Marketing  Database marketing requires substantial investment in hardware, software, and personnel Direct Marketing

Suppose that you work for a casino that has recently decided to develop a database in order to better target promotional offers to its clientele. What types of information would you collect or track in this database? List as many database fields as you feel are appropriate. What types of information would you collect or track in this database? List as many database fields as you feel are appropriate. Discussion Question

Figure 17-4: Forms of Direct Marketing

Telephone Marketing  Inbound toll-free 800 numbers are used to receive orders from print or TV ads  New legislation and technological advances threaten the future of telemarketing Direct Marketing

Direct-Mail Marketing  New trends include fax, mail, , and voice mail mail mail Catalog Marketing  Many cataloguers have migrated to the web Direct Marketing

Direct-Response Television Marketing  Direct-response advertising  Infomercials  Home shopping channels Kiosk Marketing Direct Marketing

The Increase in Infomercials In 2004 there was a reported 2,036 infomercials ran in the United States 714 were new infomercials Fortune 1,000 firms produce an estimated 20% of all new infomercials

Profit.... Only one out of every 60 infomercials turns a profit RoncoRonco brought in $50 million in the rotisserie ovens alone Ronco Tae-Bo brought in an estimated $300 million in its first year

“The Power of the Half-Hour” Viewer recall can be three times higher than the traditional 30-second spots The same amount of people that recognize the Nike brand, 92%, also recognize Nautilus Bowflex Bowflex

The Market The typical infomercial viewer:  Is between the ages of  Has some college education  Has an income of about $50,000 a year  Is 60% women

Most Importantly “Just by watching, they’ve raised their hands and said, ‘Yes, I’m interested in your product.” Timothy HawthorneTimothy Hawthorne

Only 30% of all TV viewers will buy something sold on the tube Just one out of every 100 will dial the phone number Viewers usually watch for minutes before calling

Infomercial Essentials Mass Appeal Demonstrability Good Hosts A Store Presence The Right Price

Mass Appeal Why: You’re trolling for mainstream consumers. For maximum sales volume, the product should solve a common-denominator problem Examples: Fitness and diet products, health and beauty accessories, kitchen appliances and business opportunities appliances

Demonstrability Why: Product pitches should tell a story, and the more you tell, the more you sell. Consumers love to watch before-and-after transformations. Show them. Then show them again. Example: The Little Giant Ladder. It folds up. It folds down. Giant

Good Hosts Why: Celebrities are attention grabbers, but unknown infomercial actors can be equally effective. Just make sure they appear credible given the product being offered. Example: Chuck Norris and the Total Gym. He’s Buff. You buy it. Total GymTotal Gym

A Store Presence Why: Only 30% of viewers will buy anything from TV. Yet infomercials also boost brand awareness and drive shoppers to retail stores. Build a two-channel sales strategy. Example: More than 85% of George Forman Grill sales were made at retailer locations.

The Right Price Why: The Ideal price range is $29.95 to $ If your product is relatively costly, an extended payment plan can make it seem cheaper-and encourage impulse buying. Example: The Black & Decker Handy Steamer, boils water, but can be all yours for just $39.99!

Figure 17-5: An Integrated Direct-Marketing Campaign

Integrated Direct Marketing Public Policy and Ethical Issues  Irritation, Unfairness, Deception, and Fraud  Invasion of Privacy Direct Marketing

The DMA recently developed its “Privacy Promise to American Consumers” DMA Privacy Policy