chapter 02

CHAPTER 2: RELATIONSHIP MARKETING

SUHAILY 15 PPM223/PMK2033

2.0 RELATIONSHIP MARKETING: WHERE PERSONAL SELLING FITS

2.1 CUSTOMER ORIENTATION’S EVOLUTION

A. The Production Concept. (Pre-Great Depression, 1930)

The job of salesperson was to take customers’ order and inform them of the

availability of the product (order taker)

The statement that describe this era –

“If you build a better mouse trap,

the world will beat a path to

your door.”

B. The Selling Concept. (Early 1940’s through WW2)

Order taker shifted to being order getter – “Let be sure we sell all we

make”

The salespersons face the challenge of persuading buyers to purchase a

specific brand among a variety of competing brand.

Salespeople was viewed as individual who “high pressured” customer into

buying

Products were produced without regard for customer needs.

This era also shows the beginning of the use in advertising and personal selling

which emphasized product knowledge.

C. The Marketing Concept. (1950’s)

The idea was to discover customers’ needs first and then develop a product to

fill those needs - “Let be sure we make only what we can sell”

The emphasis changed from talking a prospective buyer into making a

purchase to finding out what the prospect’s problems were.



Three fundamental beliefs:

- Customer oriented planning and operations.

- The company’s goal should be profitable sales volume.

- Organizationally coordinated marketing.

Customer’s want and satisfaction is the center of sales

The Difference between Selling and Marketing Concept

Selling Concept Marketing Concept

1. Emphasis is on the product. 1. Emphasis is on customers’ wants.

2. Company first makes the product

and then figures out how to sell it.

2. Company first determines customers’

wants and then figures out how to make

and deliver a product to satisfy those

wants.

3. Management is sales-volume

oriented.

3. Management is profit oriented.

4. Planning is short run. 4. Planning is long run

5. Stresses needs of seller. 5. Stresses wants of buyers.

2.2 THE RELATIONSHIP BETWEEN SELLING AND MARKETING MIX

The diagram shows how personal selling fits into marketing mix. To satisfy buyer

needs and make a profit for their companies, marketing managers must recognize

opportunities and develop marketing strategies. Two basic considerations they

should be concerned with are target market and marketing mix

MARKETING MIX

PRODUCT PRICE PROMOTION

ADVERTISINGPERSONAL

SELLING

PUBLIC

RELATION

SALES

PROMOTION

PLACE



PRODUCT PRICE PLACE PROMOTION

Brand name

Features

Image

Packaging

Quality level

Returns

Services

Sizes

Warranties

Credit terms

Discounts

List price

Promotional allowances

Business partners

Channels

Distributors

Inventory

Locations

Retailers

Transportation

wholesalers

Advertising

Coupons

Customer service

Direct mail

Internet

Public relations

Telemarketing

Telesales

Trade shows

A. Selling and Product

Product planning is concerned with developing the right product for the right target

market. This may include decision about package design, branding, trademarks,

warranties, service and product lines. Amount and kind of selling needed vary for

different products.

B. Selling and Pricing

Pricing strategy deals with methods of determining prices that will be both attractive

to the target market and profitable for the company. If price of company’s product

is relatively high, quality and service should be highlighted to offset price

disadvantage. Some salespeople use offers of price reductions in their sales

presentation to entice customer to buy large quantities of product.

C. Selling and Distribution

Distribution/place strategy involves choosing the channels of distribution through

which goods and services reach the customer. Any sequence of marketing

institutions from producer to final user, including any number of middlemen, is

called a channel of distribution. It may include retailers, wholesalers, and

institutional middlemen. Salesperson must know company’s distribution system to

avoid problems such as out of stock and late deliveries. Personal selling is more

important when the channels are relatively short.



D. Selling and Promotion

Promotion’s task is to communicate to the target market in the most effective way

possible. The components of the promotional mix are personal selling and non-

personal selling (including advertising, sales promotion and public relations.).

Variable Conditions that favor

personal selling

Conditions that favor

advertising

Consumer Consumers are geographically

concentrated

There are few customers

Customers are geographically

dispersed

There are many customers

Product The product has a high value

It is a custom-made product

The product is technically

complex

The product has a low value

It is a standardized product

The product is simple to

understand

Price The price is relatively high The price is relatively low

Distribution Channel is relatively short Channel is relatively long

Examples Insurance policies, computer Soap, magazines, t-shirts

Personal

selling

Personal communication of information to unselfishly persuade a

prospective customer to buy something – a good and service, idea –

that satisfies an individual needs

Advertising Nonpersonal communication of information paid for by an identified

sponsor such individual or an organization. Modes of advertising

include television, radio, direct mail, catalogs, newspaper, and outdoor

advertising such as billboards

Public

relation

Communication is used to maintain a positive image and educate the

public about company’s goal and objectives, introduce new product

and help support the sales effort.

Sales

promotion

Marketing activities that stimulates immediate (short term) increase in

buying the product



Relationship between advertising and selling

The most crucial promotional decision facing the marketing manager is to decide the

proper mix between personal selling and advertising. Advertising and personal selling

are generally planned to complement one another Advertising is often used to pave

the way for salespeople by introducing a company and its products before a

salesperson calls on the potential customer. For example OSIM concentrates on

media advertising but maintains a field sales person to follow up on the advertising.

Relationship between sales promotion and selling

Sales promotion helps gain interest of prospective customers. Samples give firsthand

exposure of product to prospects while contest and gift attract prospects to buy

product. For example buying an OSIM chair will entitle the purchaser to get another

massage chair for free.

2.3 RELATIONSHIP MARKETING

TERM: Relationship marketing: The creation of customer loyalty

Relationship selling: When the seller contacts the customer after

the purchase to determine if the customer is satisfied and has future

needs.

Relationship marketing is the creation of customer’s loyalty throughout the life of the

product or service with the emphasis on service and value added activities. The

emphasis is shifting from selling customers today to creating customers for tomorrow.

The longer the customers are retained by

a company, the more profitable they

become because of increased purchases,

reduced operating costs, referrals, price

premiums and reduced customer

acquisition costs.

Personal selling is an important element

to build relationship. They generate

revenue and provide service to help make customer satisfied with their purchase.

Salespeople are responsible for making those products available for customers. Since

personal selling involved person to person discussions, salespeople can customize

their sales presentation to the individual needs of specific people and organizations.



Level of relationship marketing

A. Transaction selling: customers are sold to and not contacted again

B. Relationship selling: the seller contacts customers after the purchase to

determine if they are satisfied and have future needs.

C. Partnering: the seller works continually to improve its customers’ operation,

sales, and profits.

2.4 PARTNERING WITH CUSTOMERS

Partnering is a strategically developed, high quality, long-term relationship that

focuses on solving the customer's buying problem. The criteria which encourage

buyers and sellers to share information are:

A. Individual Excellence - both partners add value, and their motives are positive

rather than negative.

B. Importance - both partners want the relationship to work because it helps them

meet long-term strategic objectives.

C. Interdependence - the partners need each other to reach their goal.

D. Investment - the partners devote financial and other resources to the

relationship.

E. Information - the partners communicate openly about goals, technical data,

problems and changing situations.

F. Integration - the partners develop shared ways of operating; they teach each

other and learn from each other.

G. Institutionalization - the relationship has formal status with clear

responsibilities.

H. Integrity - both partners are trustworthy and honorable.



2.5 THE NEW CONSULTATIVE SELLING

A. Consultative Selling

Consultative Selling - the process of helping the customer achieve strategic

short and long-term goals through the use of the seller’s good and/or service.

A highly interactive dialogue between a salesperson and a customer

A balanced exchange of information

It focuses on the salesperson’s ability to provide customer satisfaction by

adding value to the sales transaction.

B. Three Roles of Consultative Selling:

i. Team leaders

Salesperson coordinates information, resources, and activities needed to

support customers before, during, and after the sale.

ii. Business Consultants

Salesperson gives advice and service; and uses internal and external

resources to gain an understanding of the customer’s business and

marketplace.

iii. Long-term allies

Salesperson creates a “win-win” situation

The ability of a salesperson to fulfill the role of long term ally is a pivotal

factor in determining whether a sales transaction is just a transaction or

the beginning of a relationship.

The Customer-Seller Relationship Gaps may occur after the sale.

During post sale activity the salesperson’s interest in the customer declines

while the customer’s interest increases after purchase. This is one reason

why service after the sales is so important.



EXERCISES

MULTIPLE CHOICE QUESTIONS

1. Before the Great Depression of the 1930s, companies were typically:

A. production oriented

B. consultative oriented

C. sales oriented

D. marketing oriented

2. The headline of an advertisement for a 1930s automobile manufacturer read, “We

know what our customers want! They want our new luxury Sedan!” You can infer

from reading this headline that the manufacturer had a _____ orientation.

A. customer

B. selling

C. marketing

D. production

3. Businesses that have a selling orientation:

A. emphasize the product over all other marketing mix elements

B. train their salespeople by providing them extensive customer, industry, and

product knowledge

C. emphasize long-term planning

D. assume the wants of their customers is as important as the satisfaction of

those customers

4. The major thrust of the marketing concept is to:

A. sell the product at a low cost to a customer

B. satisfy the customer, no matter what the costs

C. determine and satisfy customer wants, while still making a profit

D. distribute products more equitably

5. A marketing-oriented firm:

A. emphasizes the needs of the seller

B. first makes the product, then figures out how to sell it

C. has a profit-oriented management

D. uses short-term planning

6. The elements of the marketing mix are:

A. promotion, price, place, and product

B. product, presentation, place, and promotion

C. price, production, presentation, and place

D. production, price, product, and promotion



7. The development of package design, brands, and service policies is associated

with the ______ element of the marketing mix.

A. product

B. price

C. place

D. promotion

8. _____ purchase products and then sell to organizations and/or individuals.

A. Transactional intermediaries

B. Resellers

C. Manufacturers

D. Ultimate consumers

9. The appearance of actress Sharifah Amani in commercial for perfume “Hope” , is

an example of the use of _____ element of the marketing mix.

A. price

B. product

C. promotion

D. place

10. The activities that a firm can use when promoting its products are:

A. advertising, production, pricing, and distribution

B. personal selling, pricing, public relations, publicity, direct marketing, and sales

promotion

C. personal selling, advertising, branding, discounts, billboards, rebates, and

service warranties

D. personal selling, advertising, publicity, and sales promotion

11. ______ involves activities or materials (including samples, contests, and displays)

to create sales for goods and services.

A. Personal selling

B. Publicity

C. Sales promotion

D. Advertising

12. Which of the following statements about personal selling is true?

A. It falls under the marketing mix category of promotional activities.

B. It is a good example of nonpersonal communication.

C. It is often listed under the broad category of sales promotion in a company's

marketing mix.

D. It is the communication of information that is not paid for by the firm.

13. Relationship marketing:

A. creates social responsibility

B. eliminates cognitive dissonance

C. creates customer loyalty

D. only occurs with transaction

selling



14. Relationship marketing is based on the idea that:

A. important customers need continuous attention

B. a salesperson can never really know too many people

C. the burden of quality rests with the seller of the product

D. your buyer's competitors may be your best prospects

15. Two main functions of personal selling are to:

A. support advertising and collect past due accounts

B. plan and control all marketing activities

C. provide service and generate income

D. meet quota and maintain customer records

16. Which of the following is NOT one of the general levels of relationships with

customers?

A. Transaction selling

B. Benefit selling

C. Relationship selling

D. Partnering

17. With ___ customers are sold to and not contacted again.

A. Benefit selling

B. Relationship marketing

C. Partnering

D. Transaction selling

18. When you visit a gift shop when on vacation, your purchase of a t-shirt is an

example of _____ selling.

A. benefit

B. relationship

C. partnership

D. transaction

19. A seller who works continually to improve its customers’ operations, sales, and

profits is practicing:

A. Sequential selling

B. Relationship selling

C. Partnering

D. Transaction selling

20. With ____, the seller contacts customers after the purchase to determine if they

are satisfied and have future needs.

A. benefit selling

B. relationship selling

C. partnering

D. transaction marketing

21. Kelley Pritchett sells cars. After she makes the sale, she contacts her customers

regularly to determine if they are satisfied and if they have any other automotive

needs. This is an example of _____ selling.

A. benefit

B. relationship

C. partnership

D. transaction



22. Which of the following is NOT a criterion for building partnerships between a buyer

and a seller?

A. Independence

B. Integration

C. Integrity

D. Investment

23. _____ is the process of helping the customer achieve strategic short- and long-

term goals through use of the seller's good and/or service.

A. Consultative selling

B. Transformational selling

C. Strategic bundling

D. Service quality optimization

24. Which of the following skills is the consultative salesperson expected to have?

A. the ability to work in teams

B. strategic problem-solving skills

C. ability to demonstrate how solutions meet strategic objectives

D. all of the above

25. In the role of _____, the consultative salesperson is expected to coordinates all of

the information, resources, and activities needed to support customers before,

during, and after the sale.

A. business ally B. service provider

C. business consultant D. team leader

ESSAYS QUESTIONS

1. Explain the difference between the production concept and selling concept

2. Differentiate marketing concept and selling concept.

3. Under what situation do marketers use personal selling as their promotional tools.

4. Under what situation do marketers use advertising as their promotional tools

5. How does selling related to advertising?

6. How does selling related to sales promotion?

7. To what extent is advertising involved in selling a product?

8. Explain briefly the component of marketing mix.

9. Describe the three level of relationship marketing.

10. Describe the evolution of partnership in selling.

11. Describe the evolution of consultative selling.


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chapter 02

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