Chapter 17 Chapter 17

Personal Selling Personal Selling and and

Sales PromotionSales Promotion

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Chapter ObjectivesChapter Objectives

1. Outline the marketplace conditions that make personal selling a primary component of a firm’s promotional mix.

2. Describe the four sales channels.

3. Describe the major trends in personal selling.

4. Identify and briefly describe the three basic sales tasks.

5. Outline the seven steps in the sales process.

6. Identify the seven basic functions of a sales manager.

7. Explain the role of ethical behavior in personal selling.

8. Describe the role of sales promotion in the promotional mix.

9. Identify the different types of consumer-oriented and trade-oriented sales promotions.

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Personal sellingPersonal 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)

The Evolution of Personal SellingThe Evolution of Personal Selling

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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

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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

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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 requirementsTransactions frequently involve trade-ins

Geographically dispersed

Relatively high numbers

Inexpensive

Simple to understand

StandardizedNo special handling requirementsTransactions seldom involve trade-ins

Price Relatively high Relatively low

Channels Relatively short Relatively long

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NetJets NetJets Executive Executive JetJetA Product

Requiring Personal Selling

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The Four Sales ChannelsThe Four Sales Channels

Personal selling occurs through several types of communication channels including these four: Over-the-CounterField SellingTelemarketingInside Selling

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Over-the-CounterOver-the-Counter: personal selling conducted in retail and some wholesale locations in which customers come to the seller’ place of businessTrue Value

Salespeople Engage in Over-the-Counter Selling

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Field sellingField selling: sales presentations made at prospective customers’ homes or businesses on a face-to-face basisBetter Homes

and Gardens Real Estate Service: A Type of Field Sales

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Cost of a Sales Call by Industry

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TelemarketingTelemarketing: 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 ordersThe Telemarketing

CompanyTelemarketing: A

Popular Selling Technique

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Inside SellingInside 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

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Trends in Personal SellingTrends in Personal Selling

Relationship sellingRelationship selling: regular contacts over an extended period to establish a sustained seller-buyer relationship

Consultative sellingConsultative 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

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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

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Team SellingTeam Selling: combination of salespeople with specialists from other functional areas to promote a productVirtual sales teamTeam Selling at

CDW Computer Centers

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Sales Force Sales Force AutomationAutomation (SFA): applications of computer and other technologies to make the sales function more efficient and competitiveBenefits include

improved effectiveness due to improved access to information, lower costs, improved product launches, and attentive customer service

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Sales TasksSales Tasks

Three basic sales tasks can be identified:Order ProcessingCreative SellingMissionary sales

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Order ProcessingOrder Processing: selling, mostly at the wholesale and retail levels, that involves identifying customer needs, pointing them out to customers, and completing orders

Creative SellingCreative 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 salesMissionary sales: indirect type of selling in which specialized salespeople promote the firm’s goodwill among indirect customers, often by assisting customers in product use

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The Sales ProcessThe Sales Process

The AIDA Concept and the Personal Selling Process

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ProspectingProspecting: personal-selling function of identifying potential customers

QualifyingQualifying: determining that a prospect has the needs, income, and purchase authority necessary for being a potential customer

OreckUsing advertising to

identify prospective customers

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ApproachApproach: 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

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PresentationPresentation: describing a product’s major features and relating them to a customer’s problems or needsExpoStar

Displays & Graphics

Support Tools Increase the Effectiveness of Presentations

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DemonstrationDemonstration allows the customer to experience a good or serviceEven ads as well

done as this Oldsmobile ad, can not substitute for an effective demonstration ride in a new automobile

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Handling ObjectionsHandling Objections: expressions of sales resistance by the prospectExample: 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

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ClosingClosing: stages of personal selling where the salesperson asks the customer to make a purchase decision

Follow-upFollow-up: post-sales activities that often determine whether an individual who has made a recent purchase will become a repeat customerHelps build mutually beneficial long-term

relationships

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Managing the Sales EffortManaging the Sales Effort

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

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How salespeople and sales managers spend their time

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Recruitment and SelectionRecruitment and SelectionOne of the sales manager’s greatest

challengesCareful selection is important for two

reasons:Substantial costs involvedMistakes are costly and detrimental to

customer relations and sales-force performance

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TrainingTrainingPrincipal 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

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OrganizationOrganizationGeneral 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

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Basic approaches to organizing the sales force

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SupervisionSupervisionSpan 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

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MotivationMotivationEfforts 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

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CompensationCompensationCommission: incentive compensation

directly related to the sales or profits achieved by a salesperson

Salary: fixed compensation payments made periodically to an employee

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Figure 17.11Figure 17.11Average Annual Pay for Sales Representatives

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Evaluation and ControlEvaluation and ControlSales 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 abilityProcess, or sequence of work flowGoal, or end results (output) of sales

performance

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Ethical Issues in SalesEthical 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

themOpen communication exists between

employees and managersManagement leads by exampleEmployees are proud of and loyal to their

organization

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Sales PromotionSales 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 effortsConsumer-Oriented PromotionsConsumer-Oriented PromotionsTrade-Oriented PromotionsTrade-Oriented Promotions

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Figure 17.12Figure 17.12Current Spending by

Companies for Different Sales Promotion

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Table 17.3Table 17.3Seven Most Frequently Used Consumer

Promotion Techniques

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Consumer-Oriented Promotions Consumer-Oriented Promotions Coupons and RefundsCoupons and Refunds

Coupons offer discounts on the purchase price. Nearly $5 billion redeemed annuallyFree-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

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Taco BellAdvertisement

Uses Coupons in Free Standing Insert to Promote New Food Line

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Samples, Bonus Packs, and PremiumsSamples, Bonus Packs, and PremiumsSampling 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

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Contests and Contests and SweepstakesSweepstakesContests 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

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Specialty Advertising Specialty Advertising [“Trinkets and Trash”][“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

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Trade-Oriented PromotionsTrade-Oriented PromotionsSales promotion that appeals to marketing intermediaries rather than to consumersTrade allowancesTrade allowances: deals offered to

wholesalers and retailers for purchasing or promoting specific products

Point-of-purchase (POP) Point-of-purchase (POP) advertisingadvertising: a display or other promotion located near the site of the actual buying decision

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Trade showsTrade 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 Dealer incentives, contest, and training programsprograms 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

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Measuring Sales Promotion EffectivenessMeasuring Sales Promotion EffectivenessSince 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

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Ethics in Sales PromotionEthics in Sales PromotionSales 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

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End of Chapter SeventeenEnd of Chapter Seventeen