copyright © 2005 pearson education canada inc. personal selling and direct marketing chapter 17...
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Personal Selling and Direct Marketing
•Chapter 17
•Powerpoint slides
•Extendit! version
•Instructor name
•Course name
•School name
•Date
Principles of Marketing: 6th Canadian Edition
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Learning Objectives
• After studying this chapter, you should be able to:– Discuss the role of a company’s salespeople in creating value
for customers and building customer relationships– Identify and explain the six major
sales force management steps Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing
– Define direct marketing and discuss its benefits to customers and companies
– Identify and discuss the major forms of direct marketing
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Opening Vignette: Lear Corporation
• Supplier of automotive interiors; seats, instrument panels, electronics
• Sales of $18 billion per year, 300 facilities in 33 countries
• Sell to most of the leading automotive manufacturers, which are limited in number; focus on relationship building
• Has 30% share of North American interior components market
– Strong customer orientation; company motto, “Consumer driven. Customer focused.”
– Commitment to continuous improvement, teamwork, and customer value
– Sales force ranked first by Sales & Marketing Management Magazine
• Act as account managers, rather than salespeople
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Personal Selling
• Salesperson: an individual acting for a company by performing one or more of the following activities:
– Prospecting for new business
– Communicating with prospective/existing customers
– Servicing existing customers
– Information gathering
• Characteristics of personal selling:– Direct contact with buyer
– Two-way communication
– Flexible message content
– Immediate feedback
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The Role of the Sales Force
• Personal selling is the interpersonal arm of the promotion mix:
– Represent the company to customers
– Represent the customer to the company
– Produce customer satisfaction and company profit• Boundary position between the
company and the customer; potential for conflict exists (rigidity of administration and flexibility required by the customer)
• Nature of sales positions will vary:– Some focus on order taking, – Others focus on order getting,– Some require creative selling, while – Others demand relationship
management to be successful
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Sales Force Management
• Sales force management: the analysis, planning, implementation, and control of sales force activities
• Sales force structure: how the sales force is organized will depend on their role, the nature of the product and how the customer buys it
– Territorial sales force structure is the simplest form, using geographic boundaries to assign responsibility for customers; accountability is improved, cost-efficient, and salespeople sell all products within their territories (pharmaceutical representatives)
Figure 17.1
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Sales Force Structure (continued)
– Product sales force structure: salespeople specialize in a group of products to become experts and provide higher levels of service; customers; useful when products are complex but not cost efficient, customers may be receive calls from multiple sales people
– Customer sales force structure: salespeople are assigned specific types of customers and sell all products to only that group; useful to eliminate customer confusion and provide for relationship management; can be more expensive to use (banking)
– Complex sales force structure: combining several different structures to provide better service; requires managing
Figure 17.1
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Sales Force Structure (continued)
• Other structural issues:– Outside sales force: salespeople who travel to meet
customers at their place of business; very expensive on a per-call basis
– Inside sales force: work from an office to contact customers (outbound) or receive calls (inbound); can be used to support outside sales force, provide customer service or as separate effort
– Team selling: using teams of specialists to sell/service a complex account; more capability but expensive with accountability issues (relationship selling)
Figure 17.1
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Sales Force Management (continued)
• Recruiting: finding a pool of qualified applicants from which to make a selection decision
– Sources: internal, competitors, suppliers, educational institutions, employment agencies, classified advertisements, websites, walk-ins, and co-op placements
• Selection: choosing the candidate with the highest probability of success in the position
– Methods: intelligence/personality testing, interviews, role play exercises, references, and background checks
Figure 17.1
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Sales Force Management (continued)
• Training: investing in the human capital of the company, helping sales people to become more productive employees
– Objectives of training can be to learn:
• Company history and culture
• Products and their application; need to know for confidence and credibility with customers
• Selling skills such as prospecting, questioning, closing, and time and territory management
Figure 17.1
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Sales Force Compensation
• Compensation can be used to direct activities and motivate salespeople
• Will consist of fixed amount (salary), variable amount (bonus or incentives), expenses, and fringe benefits
Table 17.1
Strategic GoalGain market Solidify market Maximizeshare rapidly leadership profitability
Ideal An independent self-starter A competitive problem solver A team player
salesperson: A relationship manager
Sales focus: Deal making Consultative selling Account penetration
Sustained high effort
Compensation To capture accounts To reward new and existing To manage the product mix
role: To reward high performance account sales To encourage team selling
To reward account management
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Supervising Salespeople
• Supervision is used to direct and motivate salespeople
• Companies will vary in how closely they supervise their salespeople; will vary depending on the skill level and maturity of the sales force, and type of selling
• Tools used:– Call reports and plans– Time-and-duty analysis– Sales force automation systems
• Motivating salespeople:– Organizational climate (very
important)– Sales quotas (depends on product)– Sales meetings (very important)– Reward systems
Figure 17.2
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Evaluating Salespeople
• Measuring performance and providing feedback• Information collected and used for evaluation purposes:
– Sales reports
– Expense reports
– Call reports
• Territory reviews may be conducted to discuss performance
• Standards of performance need to be clearly articulated to salespeople
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The Personal Selling Process
• The goal of the personal selling process is to find new customers and sell them something
• Most salespeople spend their time maintaining existing accounts and building long-term customer relationships
• Not all steps required in every sale
Figure 17.3
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The Personal Selling Process (continued)
• Prospecting/qualifying:– Identifying customers that may have a need for the product or
service being sold
– Only a small number of prospects become customers
– Prospecting requires effort, time, and commitment
– Cold calling, networking, advertising-generated leads
– Not required for all sales positions
Figure 17.3
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The Personal Selling Process (continued)
• Preapproach:– Preparation to learn as much about the prospective customer
as possible, prior to approaching them to ask for a meeting– Major complaint about salespeople: lack of preparation
(extremely important)– Use all resources to learn before meeting– Setting call objectives is important to being productive and
not wasting the customer’s time
Figure 17.3
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The Personal Selling Process (continued)
• Approach:– Meeting and greeting the customer for the first time
– Objective is to get in the door, not sell over the telephone (visual contact is far better)
– Different methods to use; telephone, letter, in-person
– General benefit statements may help; need to give the prospective customer a reason to see you
Figure 17.3
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The Personal Selling Process (continued)
• Presentation and demonstration:– What happens during the sales call
– Purpose is to uncover needs and then attempt to satisfy them
– Questioning and listening skills are important
– Technology can help or get in the way
– Customers value empathy, honesty, punctuality, reliability, thoroughness, and follow through
Figure 17.3
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The Personal Selling Process (continued)
• Handling objections:– The salesperson seeks out, clarifies, and overcomes customer
objections to buying the product or service
– Customers object for different reasons: no need, lack of information, product limitation, or as a negotiating tactic
– Handling objections is important, but preventing them is more effective;
Figure 17.3
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The Personal Selling Process (continued)
• Closing the sale:– Asking the customer to buy (order) the product
– The only step that produces revenue; most important
– Fear of rejection makes this step the most difficult
– If all the previous steps done properly, should be seamless
– Keep it simple, honest, and direct (‘so we can sign the agreement now’)
Figure 17.3
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The Personal Selling Process (continued)
• Follow-up:– What takes place after the sale
– Salespeople want to follow up:
• To keep the deal closed
• To ensure customer satisfaction (especially if there are some other departments involved)
• To keep the door open for repeat business
• Ask for referrals (very useful)Figure 17.3
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Customer Relationship Management
• Most personal selling is transaction-oriented• Companies want to encourage repeat purchasing because it is
more efficient than trying to replace lost customers• It takes different skills to build relationships with customers• Mutually profitable relationships are built on creating value,
offering packaged solutions to problems, and improving products and processes
• Never let your competitor to establish a relationship with your customer
Figure 17.3
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Direct Marketing
• Direct marketing: direct communications with carefully targeted individual consumers to obtain an immediate response
– Can be a primary approach or as a supplement to other approaches
• Benefits to consumers:– Convenient, easy to use,
and private
– Personalized offers
– Ready access to wealth of products
– Immediate and interactive
• Benefits to sellers:– Powerful tool to build
customer relationships
– One-to-one marketing
– Low-cost, efficient alternative for reaching target markets
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Direct Marketing (continued)
• Customer database: organized collection of comprehensive data about individual customers or prospects, including geographic, demographic, psychographic, and behavioral data
– Datamining and infomatics are the new buzzwords in marketing; what can be done with the customer information captured/collected
– Used to identify prospects and generate sales leads
– Profile customers based on previous purchasing or response to offers
– Build customer loyalty by tailoring new offers to their specific interests
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How Dell Changed an Industry
• Dell computers revolutionized an industry• Previously, companies built computers for inventory, sold through
retail distribution network
• Biggest challenge: fast pace of technological change in computer components created obsolete inventory
• Dell’s big idea: only build computers to order, sell direct to customers, use just in time inventory management to eliminate obsolescence
• Selling direct lowers costs and prices
• The challenge: providing the levels of customer sales assistance and service that were previously given by retailers
• Result: Dell market share of PC market is now 31%; dominates the industry
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Forms of Direct Marketing
• Telephone marketing: outbound and inbound, suffers from consumer burnout, technology to block calls
• Direct mail marketing: flexible, personalized, but suffers from junk mail image
• Catalogue marketing: the big winners in the rise of the Internet; huge cost efficiencies by moving catalogue offering online
• Direct-response television marketing: infomercials work, despite a poor reputation
• Kiosk marketing: going where the customers are
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Integrated Direct Marketing
• Integrated direct marketing:– Direct marketing campaigns that use
coordinated, multiple promotional vehicles and multiple stages to improve response rates and profits
– Avoids confusing the customer– Generates leverage of monies spent
– Suits today’s media-obsessed consumer
Continuingcommunication
Paid ad with aresponse channel
Directmail
Outboundtelemarketing
Face-to-facesales call
Figure 17.5
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Public Policy and Ethical Issues
• Irritation, unfairness, deception, and fraud
• Invasion of privacy
• Personal Information Protection and Electronic Documents Act (2001):– Consumer consent
– Limitations
– Accuracy
– Right to access
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In Conclusion…
• The learning objectives for this chapter were:– Discuss the role of a company’s salespeople in creating value
for customers and building customer relationships
– Identify and explain the six major sales force management steps– Discuss the personal selling
process, distinguishing between transaction-oriented marketing and relationship marketing
– Define direct marketing and discuss its benefits to customers and companies
– Identify and discuss the major forms of direct marketing