chapter 18 personal selling and sales promotion part eight promotion decisions
TRANSCRIPT
Chapter 18
Personal Selling and Sales Promotion
Part Eight PromotionDecisions
Copyright © Houghton Mifflin Company. All rights reserved. 18 | 2
Chapter Learning Objectives
1. To define personal selling and understand its purpose
2. To describe the basic steps in the personal selling process
3. To identify the types of sales force personnel4. To understand sales management decisions
and activities5. To explain what sales promotion activities are
and how they are used6. To recognize specific consumer and trade sales
promotion methods
Copyright © Houghton Mifflin Company. All rights reserved. 18 | 3
Chapter Outline
• What Is Personal Selling?• The Personal Selling Process
– Prospecting for Customers– Evaluating Prospects– Approaching the Customer– Making the Presentation– Overcoming Objections– Closing the Sale– Following Up
• Types of Salespeople– Order Getters– Order Takers– Support Personnel
• Types of Selling
Copyright © Houghton Mifflin Company. All rights reserved. 18 | 4
Chapter Outline (cont’d)
• Managing the Sales Force– Establishing Sales Force Objectives– Determining Sales Force Size– Recruiting and Selecting Salespeople– Training Sales Personnel– Compensating Sales Personnel– Motivating Sales Personnel– Managing Sales Territories– Controlling and Evaluating Sales Force Performance
• The Nature of Sales Promotion– Consumer Sales Promotion Methods– Trade Sales Promotion Methods
Copyright © Houghton Mifflin Company. All rights reserved. 18 | 5
What Is 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
Copyright © Houghton Mifflin Company. All rights reserved. 18 | 6
Figure 18.1: General Steps in thePersonal Selling Process
Copyright © Houghton Mifflin Company. All rights reserved. 18 | 7
Prospecting for Customers
• 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
Copyright © Houghton Mifflin Company. All rights reserved. 18 | 8
Evaluating Prospects
• Preapproach (before contacting the customer)– 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
Copyright © Houghton Mifflin Company. All rights reserved. 18 | 9
Approaching the Customer
• 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 canvass” call without prior introduction to the
customer
Copyright © Houghton Mifflin Company. All rights reserved. 18 | 10
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.
Copyright © Houghton Mifflin Company. All rights reserved. 18 | 11
Overcoming Objections
• Anticipate objections and counter them during the presentation
• Generally, best to handle objections as they arise
Copyright © Houghton Mifflin Company. All rights reserved. 18 | 12
Closing the Sale
• Closing – 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
Copyright © Houghton Mifflin Company. All rights reserved. 18 | 13
Following Up
• Determining if the delivery and setup of order was completed to the customer’s satisfaction
• Ascertaining the customer’s future product needs
Copyright © Houghton Mifflin Company. All rights reserved. 18 | 14
Types of Salespeople
• Order Getters– Sell to new customers and increases sales to current
ones– Employ creative selling
• Current-customer sales• New-business sales
• Order Takers– Primarily seek repeat sales
• Inside order takers• Field order takers
Copyright © Houghton Mifflin Company. All rights reserved. 18 | 15
Types of Salespeople (cont’d)
• Support personnel facilitate selling but usually are not involved solely with making sales
– Missionary salespeople• Assist the producer’s customers in selling to their own
customers
– Trade salespeople• Primarily involved in helping a producer’s customers
promote a product
– Technical salespeople• Give technical assistance to a firm’s current customers
Copyright © Houghton Mifflin Company. All rights reserved. 18 | 16
Selected Types of Selling
• Team selling– The use of a team of experts from all functional
areas of a firm, led by a salesperson, to conduct the personal-selling process
• Relationship selling– The building of mutually beneficial long-term
associations with a customer through regular communications over prolonged periods of time
Copyright © Houghton Mifflin Company. All rights reserved. 18 | 17
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)
• Objectives 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
Copyright © Houghton Mifflin Company. All rights reserved. 18 | 18
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– Divide the number of sales calls necessary to serve
customers by the number of sales calls a salesperson makes annually
– Add additional salespersons until the cost of adding one more salespersons equals the additional sales that would be generated by that person
Copyright © Houghton Mifflin Company. All rights reserved. 18 | 19
Recruiting and Selecting Salespeople
• Recruiting– Developing a list of qualified applicants 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– Employment agencies– Job ad respondents
– Other firms– Educational institutions– Employee referrals
Copyright © Houghton Mifflin Company. All rights reserved. 18 | 20
Training Sales Personnel
• What to teach?– The company, its products, or selling methods
• Who 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
• How to train?– Videos, tests, online materials, manuals, and cases– Lectures, demonstrations, simulation exercises, and
on-the-job training
Copyright © Houghton Mifflin Company. All rights reserved. 18 | 21
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
Copyright © Houghton Mifflin Company. All rights reserved. 18 | 22
Compensating Salespeople (cont’d)
• Compensation Plans– Straight salary
• Paying salespeople a specific amount per period of time
– Straight commission• Paying salespeople according
to the amount of their sales in a given time period
– Combination compensation• Paying salespeople a fixed salary
plus a commission on sales volume
Copyright © Houghton Mifflin Company. All rights reserved. 18 | 23
Figure 18.2: Average Salaries for Sales Representatives and Executives
Source: From Christine Galea, “Average Salary for Sales Staffers in 2005,” Sales and Marketing Management, May 2006, p. 30. ©2004 VNU Business Media, Inc. Reprinted with permission from Sales and Marketing Management
Copyright © Houghton Mifflin Company. All rights reserved. 18 | 24
Source: Charles Futrell, Sales Management (Fort Worth, TX: Dryden Press), 2001, pp. 307-316.
Copyright © Houghton Mifflin Company. All rights reserved. 18 | 25
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)
Copyright © Houghton Mifflin Company. All rights reserved. 18 | 26
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)
• 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
Copyright © Houghton Mifflin Company. All rights reserved. 18 | 27
Controlling and EvaluatingSales Force Performance
• Performance measures largely determined by sales objectives, 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
• Salespersons evaluated by comparing performance to
– Performance standards– Other employees– Past performance
Copyright © Houghton Mifflin Company. All rights reserved. 18 | 28
What Is 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
– Encourages product trial and purchase by adding value to the product
– Facilitates or is facilitated by personal selling and advertising
– Use has grown dramatically over the last 20 years at the expense of traditional advertising
Copyright © Houghton Mifflin Company. All rights reserved. 18 | 29
What Is 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
Copyright © Houghton Mifflin Company. All rights reserved. 18 | 30
Consumer Sales Promotion Methods
• Consumer sales promotion methods encourage consumers to patronize specific stores or to try particular products
• Coupons– Written price reductions used to encourage
consumers to buy a specific product– Effective coupons are easily recognized and state
the offer clearly– Advantages: generate brand awareness and interest
and reward brand loyalty– Disadvantages: Fraud and misredemptions;
consumer ill-will from stock-outs during promotions
Copyright © Houghton Mifflin Company. All rights reserved. 18 | 31
Figure 18.3: Sources of Coupons
Source: Enid Burns, “Coupons Converge Online,” ClickZ, Oct. 6, 2005, www.clickz.com/showPage.html?page=3554206.
Copyright © Houghton Mifflin Company. All rights reserved. 18 | 32
Source: Betsy Spethmann, “FSI Coupon Worth Reaches $300 Billion in 2006: MARX,” Promo, Jan. 4, 2007, http://promomagazine.com/othertactics/news/fsi_coupon_worth_300_billion_010407/ .
Copyright © Houghton Mifflin Company. All rights reserved. 18 | 33
Consumer SalesPromotion Methods (cont’d)
• Cents-Off Offers– Let buyers pay less than the regular price to
encourage purchase
• Money Refund– Offers consumers money when they mail in a proof
of purchase, usually for multiple product purchases
• Rebate– Sends consumers a specific amount of money for
making a single product purchase
Copyright © Houghton Mifflin Company. All rights reserved. 18 | 34
Consumer SalesPromotion Methods (cont’d)
• Frequent-User Incentives– Loyalty programs reward frequent buyers
• Point-of-Purchase Displays– Signs, window displays, display racks, and similar
means used to attract customers and to encourage immediate purchases
• Demonstrations– Used temporarily to encourage trial use and purchase
of a product or to show how a product works.– Highly effective yet costly in practice
Copyright © Houghton Mifflin Company. All rights reserved. 18 | 35
Consumer SalesPromotion Methods (cont’d)
• Free Samples– Free products 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.
Copyright © Houghton Mifflin Company. All rights reserved. 18 | 36
Consumer SalesPromotion Methods (cont’d)
• Consumer Contests, Games, and Sweepstakes– Used to generate retail traffic and to increase
exposure to promotional messages– Consumer Contests
• Individuals compete for prizes based on analytical or creative skills
– Consumer Games• Individuals compete for prizes based primarily on chance,
often by collecting game pieces
– 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
Copyright © Houghton Mifflin Company. All rights reserved. 18 | 37
Trade SalesPromotion Methods
• Trade sales promotion methods refer to ways of persuading wholesalers and retailers to carry a producer’s products and to market them aggressively
• 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
Copyright © Houghton Mifflin Company. All rights reserved. 18 | 38
Trade SalesPromotion Methods (cont’d)
• Scan-Back Allowance– A manufacturer’s reward to retailers based on the
number of pieces scanned
• Merchandise Allowance– A manufacturer’s agreement to help resellers pay for
special promotional efforts
• Cooperative Advertising– Sharing of media costs by manufacturer and retailer
for advertising the manufacturer’s products
Copyright © Houghton Mifflin Company. All rights reserved. 18 | 39
Trade SalesPromotion Methods (cont’d)
• 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
• 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
Copyright © Houghton Mifflin Company. All rights reserved. 18 | 40
Trade SalesPromotion Methods (cont’d)
• Premium (Push) Money– Extra compensation to salespersons for pushing a
line of products
• Sales Contest– A means of motivating distributors, retailers, and
salespeople by recognizing outstanding achievements
Copyright © Houghton Mifflin Company. All rights reserved. 18 | 41
After reviewing this chapter you should:
1. Be able to define personal selling and understand its importance.
2. Be able to describe the basic steps in the personal-selling process.
3. Be able to identify the types of sales force personnel.4. Have insight into sales management decisions and
activities.5. Be able to explain what sales promotion activities are
and how they can be used.6. Be familiar with specific consumer and trade sales
promotion methods.