Preparation and Process Chapter 2 Personal Selling: Preparation and Process

Learning Objectives To understand psychology in selling, buying decision process and buying situations To learn communication skills, sales knowledge, and sales related marketing policies To understand personal selling process To learn about negotiation

Psychology in Selling Stimulus (Sales Presentation) Buyer’s decision making process Response (buy or no buy) If a sales person makes a presentation, the prospect may or may not buy The above “buyer behaviour model” does not tell us the reasons of buying or not buying To understand the psychological aspects of selling or buying, salespeople should study consumer or buyer behaviour, including buying process and situations

Buyer Decision Process Need recognition Information search Evaluation of alternatives Purchase decision Postpurchase behavior

Need Recognition & Information Search The need can be triggered by internal stimuli when one of the person’s normal needs – hunger, thirst. A need can also be triggered by external stimuli. e.g. word-of-mouth, advertisements. The consumer can obtain information from any of several sources. These include personal sources, commercial sources, public sources Commercial sources normally inform the buyer, but personal sources evaluate products for the buyer.

Evaluation of Alternatives & Purchase Decision The consumer arrives at attitudes toward different brands through some evaluation procedure. How consumer go about evaluating purchase alternatives depends on the individual consumer and the specific buying situation. In some cases, consumers use careful calculations and logical thinking. At other times, the same consumers do little or no evaluating; instead they buy on impulse and rely on intuition. Two factors that affects the consumer’s purchase decision. Attitudes of others. Unexpected situational factors.

Post purchase Behavior The answer to whether the buyer is satisfied or dissatisfied with a purchase lies in the relationship between the consumer’s expectations and the product’s perceived performance. Almost all major purchases result in cognitive dissonance, or discomfort caused by post purchase conflict. A satisfied customer tell 3 people about a good product experience, a dissatisfied customer gripes to 11 people. Some 96 percent of unhappy customers never tell the company about their problem.

Buying Process of Consumers and Business Buyers Five – stage model for household customers Eight – stage model for business buyers Problem / need recognition Characteristics and quantity determination Specification development Information search / collection Low involvement High involvement Supplier search and qualification Obtain and analyse supplier proposals Evaluate alternatives Evaluation and selection of suppliers Purchase decision Attitude of others Unanticipated situational Selection of purchase order routine Post – purchase behaviour Performance feedback and post-purchase evaluation

Buying Situations Faced By Household customers Business Buyers Routine decision-making New task / New purchase Limited decision-making Modified rebuy / change in supplier Extensive decision-making Straight rebuy / Repeat purchase Buying process and situations differ for household consumers and business buyers. Consumers / Buyers may skip or reverse some stages in buying process. E.G. A consumer buying toothpaste

Knowledge of Sales and Sales-related Marketing Policies Sales Knowledge Marketing Policies Company knowledge Pricing and Payment policies Product knowledge Product policies Customer knowledge Distribution policies Competitor knowledge Promotional policies Major reasons for giving above information / knowledge through training programmes to salespeople are: increase their self-confidence Meet customers’ expectations Increase sales Overcome competition

The Sales Process As a part of selling activities, if salespeople follow the steps or phases shown below, their chances of success are far better. Prospecting & Qualifying Preapproach / Precall planning Approach Presentation & Demonstration Follow-up & Service Trail close / Closing the sale Overcoming Objections The sequence of above steps may change to meet the sales situation in hand.

Selling Process Prospecting: Identifying likely new customers Leads Developing lists of Potential Customers Pre-approach (Qualifying) Finding and analyzing information about prospects Evaluating a prospect’s potential

Prospecting Qualifying It is identifying or finding prospects i.e. prospective or potential customers. Methods of prospecting or sales lead generation are: (1) referrals from existing customers, (2) company sources (website, ads., tradeshow)(3) external sources (suppliers, intermediaries, trade associations), (4) salespersons’ networking, (5) industrial directories, (6) cold canvassing Qualifying Companies qualify sales leads by contacting them by mail or phone to find their interests (or needs) and financial capacity. Leads are categorized as: Hot, Warm, and Cool

Approaching The Prospect HOW DO WE MAKE THE INITIAL CONTACT & BUILD RAPPORT There is only one time to make a first impression Copyright © 2000 by Houghton Mifflin Company. All rights reserved. 19-8

Preapproach Information gathering about the prospect. Sources of information: the Internet, industrial directories, government publications, intermediaries, etc. Precall planning Setting call objectives Tentative planning of sales strategy: which products, features and benefits may meet the customer needs

Approach Make an appointment to meet the prospect Make favourable first impression Select an approach technique: Introductory Customer benefit Product Question Praise The approach takes a few minutes of a call, but it can make or break a sale

Presentation and Demonstration There are four components: Understanding the buyer’s needs Knowing sales presentation methods / strategies Developing an effective presentation Using demonstration as a tool for selling

Understanding the buyer’s needs Firms and consumers buy products / services to satisfy needs To understand buyer’s needs, ask questions and listen In business situations, problem identification and impact questions are important E.G. Have you experienced any problems on quality and delivery from the existing supplies? What impact the quality and delivery problems will have on your costs and customer satisfaction?

Knowing Sales Presentation Methods/Strategies Firms have developed different methods / styles / strategies of sales presentation Stimulus response method / canned approach. It is a memorised sales talk or a prepared sales presentation. The sales person talks without knowing the prospect’s needs. E.G. Used by tele-marketing people Formula method / formulated approach. It is also based on stimulus response thinking that all prospects are similar. The salesperson uses a standard formula – AIDA (attention, interest, desire, and action). It is used if time is short and prospects are similar. Shortcomings are: prospects’ needs are not uncovered and uses same standard formula for different prospects.

Sales Presentation Methods (Continued) Need – satisfaction method Interactive sales presentation First find prospect’s needs, by asking questions and listening Use FAB approach: Features, Advantages, Benefits Effective method, as it focuses on customers Consultative selling method / Problem-solving approach Salespeople use cross-functional expertise Firms adopt team selling approach It is used by software / consulting firms

Developing an Effective Presentation Some of the guidelines are: Plan the sales call Adopt presentation to the situation and person Communicate the benefits of the purchase Present relevant and limited information at a time Use the prospect’s language Make the presentation convincing – give evidence Use technology like multi-media presentation

Using Demonstration Sales presentation can be improved by demonstration Demonstration is one of the important selling tools EGs: Test drive of cars; demonstration of industrial products in use Benefits of using demonstration for selling are: Buyers’ objections are cleared Improves the buyer’s purchasing interest Helps to find specific benefits of the prospect The prospect can experience the benefit

Selling Process Handling Objections Understand Concern Questions Reservations Understand Concern Counterarguments Acknowledge concern Clues to process

Overcoming Objections IF HE HADN’T TOLD ME WHAT HIS OBJECTION WAS, I NEVER WOULD HAVE BEEN ABLE TO HELP! Copyright © 2000 by Houghton Mifflin Company. All rights reserved. 19-10

Overcoming Sales Objections / Resistances Objections take place during presentations / when the order is asked Two types of sales objections: Psychological / hidden Logical (real or practical) Methods for handling and overcoming objections: (a) ask questions, (b) turn an objection into a benefit, (c) deny objections tactfully, (d) third-party certificate, (e) compensation

Selling Process Closing the Sale Closing signals Trial close Asking the prospect to buy

Trial close and Closing the sale Trial close checks the attitude or opinion of the prospect, before closing the sale (or asking for the order) If the response to trial close question is favourable, then the salesperson should close the sale Some of the techniques used for closing the sale are: (a) alternative-choice, (b) minor points, (c) assumptive, (d) summary-of-benefits, (e) T-account, (f) special-offer, (g) probability, and (h) negotiation

Selling Process Following Up Commitments met Shipment Performance Satisfied customers rebuy & recommend

Follow-up and Service Necessary for customer satisfaction Successful salespeople follow-up in different ways: For example, Check order details Follow through delivery schedule Visit when the product is delivered Build long-term relationship Arrange warranty service

Negotiation Salespeople, particularly in business to business selling, need negotiating skills When to negotiate? (a) When the buyer puts certain conditions for buying to the seller, (b) When agreement between the buyer and the seller is needed on several factors, (c) When the product is customised, (d) When the final price is to be decided How to prepare for negotiation? (a) planning, (b) building relationship, (c) purpose Styles of negotiation (a) I win, you lose, (b) Both of us win (or win-win style), (c) You win, I lose, and (d) Both of us lose