I n t e r n a t i o n a l M a r k e t i n g Personal Selling and Sales Management Chapter t h E d i t i o n P h i l i p R. C a t e o r a M a r y C. G i l l y J o h n L. G r a h a m McGraw-Hill/Irwin International Marketing 14/e Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

17-2 What Should You Learn?  The role of interpersonal selling in international marketing  The considerations in designing an international sales force  The steps to recruiting three types of international sales people  Selection criteria for international sales and marketing positions

17-3 What Should You Learn?  The special training needs of international personnel  Motivation techniques for international sales representatives  How to design compensation systems for an international sales force  How to prepare Americans for foreign assignments  The changing profile of the global sales and marketing manager

17-4 Case Study International Assignments are Glamorous, Right?  What problems does an International salesperson may encounter?  Will these experiences helpful in their career?  What can they do in order to overcome those problems?

17-5 Global Perspective International Assignments are Glamorous, Right?  Job security  Readjustment upon return to U.S.  Adjustment to other cultures  Will an international assignment really help your career?

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17-8 Introduction  “The salesperson is the company”  The sales representative is the final link in the culmination （高潮） of a company’s marketing and sales effort  Advances in information technology are allowing coordination across advertising, marketing research, and personal selling efforts  In this dynamic international environment, the tasks of designing, building, training, motivating, and compensating an international sales group is important  This chapter discusses the alternatives and problems of managing sales and marketing personnel in foreign countries

17-9 Personal Selling  Definition  Personal selling is the process of communicating with a potential buyer (or buyers) face-to-face with the purpose of selling a product or service.  The main thing that sets personal selling apart from other methods of selling is that the salesperson conducts business with the customer in person.  Personal selling is one part of a company's promotion mix, along with advertising, sales promotion, and public relations.

17-10 Personal Selling  Advantage  personal selling allows the salesperson to target the message specifically to the audience and receive immediate feedback.  personal selling can be an important source of marketing information.  Disadvantage  personal selling cannot reach as many potential customers as advertising, plus the cost of each contact is much higher.

17-11 Personal Selling  Results  If the sales force is well trained—acting as problem solvers and advisors for customers rather than using hard-sell tactics—personal selling may help a small business build loyal, long-term relationships with customers.

17-12 Personal Selling  WHEN TO USE PERSONAL SELLING  In general, if a product has a high unit value and requires a demonstration of its benefits, it is well suited for personal sales. ► Highly technical products, such as computers and copiers, are also primarily sold through personal sales methods.  A company that cannot afford a mass-advertising campaign might consider personal selling as an alternative to advertising.  Personal Selling with Advertising

17-13 Personal Selling  Selling Agents  Selling agents are independent salespeople who work under contract with one or more companies and are usually paid a straight commission on sales.  Hiring a selling agent allows a small business to save the time and money it would have to invest in recruiting and training an in-house sales force.  An agent with experience in selling similar products may provide readymade customers and quick entry into a sales territory.

17-14 Designing the Sales Force  The hard sell that may work in some countries can be inappropriate in others  Automobiles have been sold door to door in Japan for years where “Personal selling as a rule has to be localized for even the most global of corporations and industries” (Johanson and Nonaka 1997)  The first step in managing a sales force is its design, which encompasses deciding how many expatriates, local nationals, or third-country nationals a particular market requires As described in previous chapters, distribution strategies will often vary from country to country Some markets may require a direct sales force, whereas others may not As described in previous chapters, distribution strategies will often vary from country to country Some markets may require a direct sales force, whereas others may not

17-15 Recruiting Marketing and Sales Personnel  The largest personnel requirement abroad for most companies is the sales force  Expatriates  Numbers are declining  Important for highly technical or involved products  High cost  Cultural and legal barriers  Limited number of high-ability personnel willing to live abroad  Virtual expatriates  Manage operations in other countries but don’t live there

17-16 Recruiting Marketing and Sales Personnel  Local nationals  Transcend both cultural and legal barriers  Familiar with distribution systems and referral networks  Headquarters personnel may ignore their advice  Lack of availability  Sales positions viewed negatively  Third-country nationals  Expatriates working for a foreign company  Host-country nationals  Work restrictions

17-17 The 20 Most Expensive Cities to Live on the Planet (in order) Exhibit 17.1

17-18 Selecting Sales and Marketing Personnel  Management must define precisely what is expected of people  Prime requisites  Maturity  Emotional stability  Breadth of knowledge  Positive outlook  Flexibility  Cultural empathy  Energetic and enjoy travel  Mistakes can be costly  A manager’s culture affects personnel decisions

17-19 Training for International Marketing  Selection mistakes are costly, so sales training is important  Training for the expatriates focuses on the customs and the special foreign sales problems that will be encountered  Expatriates are also captives （俘虏） of their own habits and patterns. Before any training can be effective, open-minded attitudes must be established  Training of local personnel require greater emphasis on the company, its products, technical information, and selling methods

17-20 Personal Selling Tips from Brussels to Bangkok Exhibit 17.2

17-21 Motivating Sales Personnel Motivation is especially complicated because the firm is dealing with different cultures, different sources, and different philosophies The social and competitive contexts still require different motivational systems. Individual incentives that work effectively in the United States can fail in other cultures For example, with Japan’s emphasis on paternalism( 家长式作风 ) and collectivism and its system of lifetime employment and seniority, employees seem to derive the greatest satisfaction from being members of a group; so an offer of an individual financial reward for outstanding individual effort may not work Compensation in Eastern European countries typically involve a greater emphasis on base pay than in the United States, and performance-based incentives have been found to be less effective

17-22 Salespeople’s Distribution of 100 Points among Rewards in Terms of Their Importance Exhibit 17.3

17-23 Designing Compensation Systems for Expatriates  Fringe benefits( 附带福利 )  Compensations comparisons between the home office and abroad  Short-term assignment compensation  Using a compensation program to recruit, develop, motivate, or retain personnel

17-24 Global Similarity to U.S. Compensations Plans Exhibit 17.4

17-25 A Compensation Blueprint How IBM Pays 140,000 Sales Executives Worldwide Exhibit 17.5

17-26 Designing Compensation Systems The following global sales compensation list of “do’s and don’ts” is based on IBM’s practices: Do involve representatives from key countries Do allow local managers to decide the mix between base and incentive pay Do use consistent performance measures (results paid for) and emphasis on each measure Do allow local countries flexibility in implementations Do use consistent communication and training themes worldwide

17-27 Designing Compensation Systems  Don’t design the plan centrally and dictate to local offices  Don’t create a similar framework for jobs with different responsibilities  Don’t require consistency on every performance measure within the incentive plan  Don’t assume cultural differences can be managed through the incentive plan  Don’t proceed without the support of senior sales executives worldwide The following global sales compensation list of “do’s and don’ts” is based on IBM’s practices:

17-28 Evaluating and Controlling Sales Representatives  However, in many countries the evaluation problem is more complex, particularly in relationship-oriented cultures, where teamwork is favored over individual effort.  Corporate culture and frequent interactions with peers and supervisors are the means of motivation and control of sales representatives in the relationship-oriented cultures like Japan  Evaluation and control of sales representatives in the U.S. is a relatively simple task.  Emphasis is placed on individual performance, which can easily be measured by sales revenues generated.  Evaluation and control of sales representatives in the U.S. is a relatively simple task.  Emphasis is placed on individual performance, which can easily be measured by sales revenues generated.

17-29 Preparing U.S. Personnel for Foreign Assignments 1.Proper selection, training, compensation, and career development policies 2.Overcoming Reluctance to Accept a Foreign Assignment 3.Reducing the Rate of Early Returns Annual costs estimates of sending and supporting a manager in a foreign assignment range from $300,000 to $600,000 Several steps can be taken to successfully prepare U.S. personnel for international assignments: Annual costs estimates of sending and supporting a manager in a foreign assignment range from $300,000 to $600,000 Several steps can be taken to successfully prepare U.S. personnel for international assignments:

17-30 Preparing U.S. Personnel for Foreign Assignments  Foreign assignments typically cost from percent of the annual base salary  This cost increases if the expatriate returns home before completing the scheduled assignment  The planning process must begin prior to the selection of those going abroad and extend to their specific assignments after returning home 1. Proper selection, training, compensation, and career development policies

17-31 Preparing U.S. Personnel for Foreign Assignments  Concerns for career:  An absence will adversely affect opportunities for advancement  Concerns for family:  Education of the children  Isolation from family and friends  Proper health care  The potential for violence 2. Overcoming Reluctance to Accept a Foreign Assignment

17-32 Preparing U.S. Personnel for Foreign Assignments  Evaluation of an employee ’ s family  75 percent of families sent abroad experience adjustment problems with children or marital discord  Cross-cultural training for families as well as the employee  Local ombudsmen( 当地调研员 )  Someone experience in the country who can offer immediate help 3. Reducing the Rate of Early Returns

17-33 Successful Expatriate Repatriation Five steps can be taken to successfully repatriate an employee back to the home office: Commit to reassigning expatriates to meaningful positions Create a mentor program, who can act as liaison between the expatriate and various headquarters departments Offer a written job guarantee stating what the company is obligated to do for the expatriate on return Keep the expatriate in touch with headquarters through periodic briefings and headquarters visits Prepare the expatriate and family for repatriation once a return date is set

17-34 Developing Cultural Awareness 1.Communicate respect and convey verbally and nonverbally a positive regard and sincere interest in people and their culture. 2.Tolerate ambiguity and cope with cultural differences and the frustration that frequently develops when things are different and circumstances change 3.Display empathy by understanding other people’s needs and differences from their point of view Cultural skills can be learned just as social skills can be learned People with cultural skills should be able to: Cultural skills can be learned just as social skills can be learned People with cultural skills should be able to:

17-35 Developing Cultural Awareness (continued) 4. Remain nonjudgmental about the behavior of others, particularly with reference to their own value standards 5. Recognize and control the SRC, that is, recognize their own culture and values as an influence on their perceptions, evaluations, and judgment in a situation 6. Laugh things off—a good sense of humor helps when frustration levels rise and things do not work as planned Cultural skills can be learned just as social skills can be learned People with cultural skills should be able to: Cultural skills can be learned just as social skills can be learned People with cultural skills should be able to:

17-36 The Changing Profile of the Global Manager  Fewer companies today limit their search for senior- lever executive talent to their home countries.  Some companies believes that it is important to have international assignments early in a person’s career, and international training is an integral part of their entry-level development programs  Surveys of chief executives consistently reported that more than three-quarters had finance, manufacturing, or marketing backgrounds.  In the new millennium increasing international competition, the globalization of companies, technology, demographic shifts, and the speed of overall change will govern the choice of managers.  Surveys of chief executives consistently reported that more than three-quarters had finance, manufacturing, or marketing backgrounds.  In the new millennium increasing international competition, the globalization of companies, technology, demographic shifts, and the speed of overall change will govern the choice of managers.

17-37 Foreign Language Skills  Many companies are making stronger efforts to recruit people who are bilingual or multilingual.  If you want to be a major player in international business in the future, learn to speak other languages or you might not make it.  The importance of a second language for a career in international business.  Learning a language improves cultural understand and business relationships.  The importance of a second language for a career in international business.  Learning a language improves cultural understand and business relationships.

17-38 Summary  The company’s sales force is on the front line of a marketing organization  The role of marketers in both domestic and foreign markets along with the composition of international managerial and sales forces is rapidly changing  The recent emphasis on using local personnel operating in their own lands has highlighted the importance of adapting U.S. managerial techniques to local needs

17-39 Summary  The development of an effective marketing organization calls for careful recruiting, selecting, training, motivating, and compensating of expatriate personnel and their families  The most practical method of maintaining an efficient international sales and marketing force is careful, concerted planning at all stages of career development

17-40 Questions  What does it mean by “Personal Selling”?  What are some of differences between personal selling and direct selling?  What are some of the characteristics of internal personal salespersons?  Discuss Compensation System in China and in America. (probably can be a Short Essay)