1 Lamb, Hair, McDaniel CHAPTER 18 Sales Promotion and Personal Selling

2 LO 1 Define and state the objectives of sales promotion LO 2 Discuss the most common forms of consumer sales promotion LO 3 List the most common forms of trade sales promotion LO 4 Describe personal selling Learning Outcomes

3 LO 5 Discuss the key differences between relationship selling and traditional selling LO 6 List the steps in the selling process Learning Outcomes

4 Define and state the objectives of sales promotion Sales Promotion LO 1

5 Sales Promotion Marketing communication activities, other than advertising, personal selling, and public relations, in which a short-term incentive motivates a purchase. Sales Promotion LO 1

6 Sales Promotion AdvertisingReason to buy Sales PromotionIncentive to buy LO 1

7 Objectives of Sales Promotion Type of Buyer Loyal Customers Competitor’s Customers Brand Switchers Price Buyers Desired Results Reinforce behavior Increase consumption Change purchase timing Break loyalty Persuade to switch Persuade to buy your brand more often Appeal with low prices Supply added value Sales Promotion Examples Loyalty marketing Bonus packs Sampling Sweepstakes, contests, premiums Price-lowering promotion Trade deals Coupons, price-off packages, refunds Trade deals LO 1

8 REVIEW LEARNING OUTCOME The Objectives of Sales Promotion LO 1

9 Discuss the most common forms of consumer sales promotion Tools for Consumer Sales Promotion LO 2

10 Tools for Consumer Sales Promotion Coupons and Rebates Premiums Loyalty Marketing Programs Contests & Sweepstakes Sampling Point-of-Purchase Promotion LO 2

11 Tools for Consumer Sales Promotion Coupon Rebate Premium A certificate that entitles consumers to an immediate price reduction. A cash refund given for the purchase of a product during a specific period. A cash refund given for the purchase of a product during a specific period. An extra item offered to the consumer, usually in exchange for some proof of purchase. LO 2

12 Economic Hard Times = Coupon Use SOURCE: “In Economic Downturn, 67% Plan More Coupon Use,” With coupon use, a family can save more than an economic stimulus check (avg. $300-$1,200 in May 2008). Possible grocery savings/household (2 adults + 2 children) using coupons = 25 percent/year, without cutting purchases. That means, if a family spends $800/month on groceries, they can save $2,400 annually by using coupons. LO 2

13 Tools for Consumer Sales Promotion Loyalty Marketing Program Loyalty Marketing Program A promotional program designed to build long-term, mutually beneficial relationships between a company and key customers. A promotional program designed to build long-term, mutually beneficial relationships between a company and key customers. Frequent Buyer Program Frequent Buyer Program A loyalty program in which loyal consumers are rewarded for making multiple purchases. A loyalty program in which loyal consumers are rewarded for making multiple purchases. LO 2

14 Tools for Consumer Sales Promotion Contests Promotions that require skill or ability to compete for prizes. Sweepstakes Promotions that depend on chance or luck, with free participation. LO 2

15 Tools for Consumer Sales Promotion Sampling A promotional program that allows the consumer the opportunity to try a product or service for free. LO 2

16 Methods of Sampling Direct mail Door-to-door delivery Packaging with another product Retail store demonstration LO 2

17 Point-of-Purchase Promotion  Build traffic  Advertise the product  Induce impulse buying LO 2

18 Online Sales Promotion Effective Types of Online Sales Promotion  Free merchandise  Sweepstakes  Free shipping with purchases  Coupons LO 2

19 SOURCE: Chang, Rita. “Verizon Spending $100 Million on its Droid Ad Campaign,” thebusinessinsider.com, November 9, 2009; Wimberly, Taylor. “Drod Does Times Square,” androidandme.com, November 6, Verizon Wireless launched the largest integrated marketing campaign in the company’s history, receiving $100 million in support for pushing the Droid. Beginning in late October, Verizon launched ads in magazines and television that position their newest smartphone as the antidote to the iPhone’s shortfalls. As part of the demonstration of the Droid’s capabilities, Verizon launched the Droid Does Times Square campaign. This allows users to call a toll-free number and use billboards on Times Square to search for anything using voice commands. And the results show up on times square. For those not on Times Square, Verizon’s website streams video of times square. TV, Print, Times Square, Oh My! LO 2

20 List the most common forms of trade sales promotion Tools for Trade Sales Promotion LO 3

21 Trade Sales Promotion Trade Allowances Push Money Training Free Merchandise Store Demonstration Conventions & Trade Shows LO 3

22 Trade Allowance A price reduction offered by manufacturers to intermediaries, such as wholesalers and retailers. LO 3

23 Push Money Money offered to channel intermediaries to encourage them to “push” products-- that is, to encourage other members of the channel to sell the products. LO 3

24 Benefits of Trade Promotions  Help manufacturers gain new distribution  Obtain wholesaler and retailer support for consumer sales promotions  Build or reduce dealer inventories  Improve trade relations LO 3

25 REVIEW LEARNING OUTCOME Forms of Trade Sales Promotion LO 3

26 Describe personal selling Personal Selling LO 4

27 Personal Selling Personal Selling is more important if... Customers are concentrated. Customers are concentrated. Product is technically complex. There are few customers. Product is custom made. Product has a high value. Customers are geographically dispersed. Customers are geographically dispersed. Product is simple to understand. There are many customers. Product is standardized. Product has a low value. Advertising & Sales Promotion are more important if... LO 4

28 REVIEW LEARNING OUTCOME R Detailed explanation or demonstration R Variable sales message R Directed to qualified prospects R Controllable adjustable selling costs R More effective than other promotion in obtaining sale and gaining customer satisfaction Personal Selling Advantages LO 4

29 Discuss the key differences between relationship selling and traditional selling Relationship Selling LO 5

30 Relationship Selling A sales practice that involves building, maintaining, and enhancing interactions with customers in order to develop long-term satisfaction through mutually beneficial partnerships. Relationship (Consultative) Selling LO 5

31 Traditional Selling and Relationship SellingTraditional Personal Selling LO 5 Sell advice, assistance, counsel Sell products Focus on closing sales Limited sales planning Discuss product Assess “product-specific” needs “Lone wolf” approach Pricing/product focus Short-term sales follow-up Focus on customer’s bottom line Sales planning is top priority Build problem-solving environment Conduct discovery in scope of operations Team approach Profit impact and strategic benefit focus Long-term sales follow-up Relationship Selling LO 5

32 REVIEW LEARNING OUTCOME Relationship Selling vs. Traditional Selling Initial Sales Repeat Sales Successive Sales Traditional Sales Relationship Sales Sales Increases Result From Creating Value LO 5

33 List the steps in the selling process Steps in the Selling Process LO 6

34 Steps in the Selling Process Generate Leads Qualify Leads Probe Customer Needs Develop Solutions Handle Objections Close the Sale Follow Up LO 6

35 Time Spent in Key Steps of Selling Process Key Selling Steps Traditional Selling Relationship Selling Generate LeadsHighLow Qualify LeadsLowHigh Probe NeedsLowHigh Develop SolutionsLowHigh Handle ObjectionsHighLow Close the saleHighLow Follow-upLowHigh LO 6

36 Generating Leads Advertising Publicity Direct Mail/ Telemarketing Direct Mail/ Telemarketing Cold Calling Internet Web Site Referrals Trade Shows/ Conventions Trade Shows/ Conventions Networking Company Records LO 6

37 Cold Calling A form of lead generation in which the salesperson approaches potential buyers without any prior knowledge of the prospects’ needs or financial status. Cold Calling LO 6

38 Qualifying Leads Receptivity and accessibility Buying power Recognized need LO 6

39 Needs Assessment A determination of the customer’s specific needs and wants and the range of options a customer has for satisfying them. Needs Assessment LO 6

40 The Consultative Salesperson Product or service Customers Competition Industry Salesperson must know everything about... Salesperson must know everything about... LO 6

41 Developing and Proposing Solutions Sales Proposal Sales Presentation LO 6

42 Powerful Presentations Be well prepared Use eye contact Ask open-ended questions Be poised Use hand gestures and voice inflection Focus on the customer needs Incorporate visual elements Know how to operate the A/V equipment Make sure the equipment works PRACTICE, PRACTICE, PRACTICE! LO 6

43 Handling Objections  View objections as requests for information  Anticipate specific objections  Investigate the objection with the customer  Be aware of competitors’ products  Stay calm  Use the objection to close the sale LO 6

44 Closing the Sale Negotiate Keep an open mind Look for customer signals Tailor to each market LO 6

45 The Impact of Technology on Personal Selling Cell phones Laptops Pagers Electronic organizers Internet LO 6

46 Steps in the Selling Process Qualifying Leads Approaching Customer Developing and proposing solutions Handling objections Closing the sale Generating Leads A Continuing Process LO 6

47 Making the Sale Now that you know the steps in the selling process, break down this video and Grover’s use of (or failure to use) the steps –Grover Sells Hair-CareGrover Sells Hair-Care What about this man? What are his sales tactics? –Vegetable Peeler SalesmanVegetable Peeler Salesman LO 6