Prentice Hall, Copyright 2009 Communicating Customer Value: Personal Selling and Sales Promotion Chapter 13 Next Exit

Prentice Hall, Copyright 2009 Rest Stop: Previewing the Concepts 1. Discuss the role of a company’s salespeople in creating value for customers and building customer relationships. 2. Identify and explain the six major sales force management steps. 3. Discuss the personal selling process, distinguishing between transaction- oriented marketing and relationship marketing. 4. Explain how sales promotion campaigns are developed and implemented.

13-3Prentice Hall, Copyright 2009 Background Nation’s largest reseller of technology products and services to small and mid-size businesses. Since 2003, sales up 59% to $6.8 billion and profits have grown 52%. Success is due to customer devotion and “Circle of Service” philosophy. CDW – Relationship Building Success Case Study Personal Selling’s Role Salespeople build and manage relationships by being trusted advisors. Training is extensive: a six week orientation is followed by six months of training, and training never ends. Technology teams consisting of factory-trained specialists and A+ certified technicians support the sales staff.

Prentice Hall, Copyright 2009 Personal Selling Defined Personal presentation by the firm’s sales force for the purpose of making sales and building customer relationships.

13-5Prentice Hall, Copyright 2009  The majority of salespeople are well-educated, well-trained professionals who work to build and maintain long- term customer relationships. The Nature of Personal Selling

13-6Prentice Hall, Copyright 2009  Salespeople represent a company to customers by performing one or more of the following activities: –Prospecting –Communicating –Selling –Servicing –Information gathering –Relationship building The Nature of Personal Selling

13-7Prentice Hall, Copyright 2009  The term salesperson covers a wide range of positions: –Order taker: Department or other store clerk The bakery store clerk shown at right is an example of an order taker. –Order getter: Demands creative selling and relationship building The Nature of Personal Selling

13-8Prentice Hall, Copyright 2009 The Role of the Sales Force  Personal selling: –Involves interpersonal interactions between salespeople and individual customers which may occur: face-to-face by telephone through video or Web conferences or by other means –Personal selling is more effective than advertising in complex selling situations.

13-9Prentice Hall, Copyright 2009 The Role of the Sales Force  Sales force serves as critical link between company and its customers. –They represent the company to the customers. –They represent the customers to the company. –Goal = customer satisfaction and company profit.

13-10Prentice Hall, Copyright 2009 The Role of the Sales Force  Sales and other marketing functions should work together to jointly create value.  The marketing and sales functions can be brought closer together by: –Increasing communications, via joint meetings –Joint assignments –Joint objectives and reward systems –Chief revenue officer

Prentice Hall, Copyright 2009 Sales Force Management Defined The analysis, planning, implementation, and control of sales force activities.

Prentice Hall, Copyright Figure 13.1 Major Steps in Sales Force Management

13-13Prentice Hall, Copyright 2009 Managing the Sales Force  Territorial sales force structure: –Salesperson is assigned to an exclusive geographic territory in which that salesperson sells the company’s full line.  Product sales force structure: –Salespeople specialize in selling only a portion of the company’s products or lines.  Customer sales force structure: –Salespeople specialize in selling only to certain customers or industries.  Complex sales force structure: –Combination of several types of structures.

13-14 Prentice Hall, Copyright 2009 Sales Force Organization Automotive supplier Lear Corporation organizes its sales force around major customers, and often locates sales offices near customers’ facilities. Marketing in Action

13-15Prentice Hall, Copyright 2009 Managing the Sales Force  Sales force size: –May range in size from only a few salespeople to tens of thousands. –Increasing sales force size will increase both costs and sales. –Workload approach can be useful in setting sales force size. This requires: Grouping accounts by factors related to the effort required to maintain them. Determining the number of people needed to call on each class of accounts.

13-16Prentice Hall, Copyright 2009  Other sales force strategy and structure issues include deciding who will be involved in the selling effort and how sales support people will work together. Managing the Sales Force

13-17Prentice Hall, Copyright 2009 Managing the Sales Force  An outside sales force travels to call on customers in the field.  An inside sales force conducts business from their offices via telephone or visits from perspective buyers. –Includes: Technical support people Sales assistants Telemarketers

Fuel for Thought Prentice Hall, Copyright 2009 Inside sales forces use the phone or Internet to service and contact customers. For what types of products or services do you think that an inside sales force might be more effective than an outside sales force? Explain.

13-19Prentice Hall, Copyright 2009 Managing the Sales Force  Team selling: –Used to service large, complex accounts. –Can find problems, solutions, and sales opportunities that no single salesperson could. –Can include experts from any area of selling firm.

13-20Prentice Hall, Copyright 2009 Managing the Sales Force  Pitfalls of team selling: –Salespeople are competitive and have typically been rewarded on the basis of individual performance. –Team selling can confuse or overwhelm customers. –Some people have trouble working in teams. –Difficult to evaluate individual contributions.

13-21Prentice Hall, Copyright 2009 Managing the Sales Force  Careful recruiting and selection of salespeople can greatly enhance overall sales force performance while minimizing costly turnover.  Key talents of successful salespeople: –Intrinsic motivation –Disciplined work style –Ability to close a sale –Ability to build relationships with customers

13-22Prentice Hall, Copyright 2009  Searching the Web  College placement services  Recruit from other companies  Recommendations from current sales force  Employment agencies  Classified ads Managing the Sales Force Managing the Sales Force Recruiting Sources

13-23Prentice Hall, Copyright 2009 Managing the Sales Force  Training program goals: –Learn about different types of customers and their needs, buying motives, and buying habits. –Learn how to make effective sales presentations. –Learn about and identify with the company, its products and its competitors.

13-24Prentice Hall, Copyright 2009 Managing the Sales Force  Sales training programs often include: –Seminars –Sales meetings –Web e-learning Becoming more common due to substantial cost savings it provides. –On-demand training for via the Internet, PDAs, cell phones, and video iPods Visit Salesforce.com to see the various types of on-demand training that is available.Salesforce.com

13-25 Prentice Hall, Copyright 2009 Sales Force Training International Rectifier created the online IR University to help keep its hundreds of global salespeople, internal sales staffers, and others trained on the constant stream of new products it introduces. Marketing in Action

13-26Prentice Hall, Copyright 2009 Managing the Sales Force  Compensating salespeople: –Fixed amount: Salary –Variable amount: Commissions or bonuses –Expenses: Repays for job-related expenditures –Fringe benefits: Vacations, sick leave, pension, etc.

13-27Prentice Hall, Copyright 2009 Managing the Sales Force  Goal of supervision is to encourage salespeople to “work smart.” –Help them identify customers and set call norms. –Specify time to be spent prospecting: Annual call plan Time-and-duty analysis –Sales force automation systems help salespeople to work more efficiently. Smart phones, wireless Internet, contact management software, videoconferencing

13-28 Prentice Hall, Copyright 2009 Web Selling Enhances Profits NEC uses Web selling to substantially cut sales costs, while increasing the number of customer contacts. Customers love Web conferences because it provides a clear demonstration of product features without having to host an NEC sales team on-site. Marketing in Action

Prentice Hall, Copyright Figure 13.2 How Salespeople Spend Their Time

13-30Prentice Hall, Copyright 2009 Managing the Sales Force  Goal of motivating the sales force is to encourage salespeople to “work hard.”  Management can boost sales force morale and performance via: –Organizational climate –Sales quotas –Positive incentives

13-31Prentice Hall, Copyright 2009 Managing the Sales Force  Evaluating salespeople and sales force performance requires: –Regular information from salespeople via sales reports, call reports, and expense reports –Clear standards for judging performance –Constructive feedback to the sales people that can motivate them to perform well  Return on sales investment should be assessed for the entire sales force.

Prentice Hall, Copyright Figure 13.3 Major Steps in Personal Selling Process

13-33Prentice Hall, Copyright 2009 The Personal Selling Process  Prospecting and qualifying: –The salesperson identifies qualified potential customers.  Preapproach: –The salesperson learns as much as possible about a prospective customer before making a sales call.  Approach: –The salesperson meets the customer for the first time.

13-34Prentice Hall, Copyright 2009 The Personal Selling Process  Presentation: –The salesperson tells the “value story” to the buyer, showing how the firm’s offer solves problems.

13-35Prentice Hall, Copyright 2009 The Personal Selling Process  Handling objections: –The salesperson seeks out, clarifies, and overcomes customer objections to buying.  Closing: –The salesperson asks the customer for an order.  Follow up: –The salesperson follows up after the sale to ensure customer satisfaction and repeat business.

13-36Prentice Hall, Copyright 2009 The Personal Selling Process  The selling process is transaction oriented. –The selling process helps salespeople to close a specific sale with a customer.

13-37Prentice Hall, Copyright 2009 The Personal Selling Process  Building profitable relationships is a key goal for most firms. –Large customers favor suppliers who can: Deliver a coordinated set of products and services. Work closely with customer teams to improve products and processes. –Building relationships requires: Listening to customers, understanding their needs, and carefully coordinating the whole firm’s efforts to create value.

Prentice Hall, Copyright 2009 Sales Promotion Defined Short-term incentives to encourage the purchase or sale of a product or service. Sales promotions can be targeted toward consumers, businesses, channel members, or members of the firms’ own sales force.

13-39Prentice Hall, Copyright 2009 Sales Promotion  Several factors have contributed to the rapid growth of sales promotion: –Product managers are facing more pressure to increase their current sales. –Companies face more competition from less differentiated brands. –Advertising efficiency has declined. –Consumers have become more deal oriented.

13-40Prentice Hall, Copyright 2009  Objectives of consumer promotions: –Urge short-term sales or attempt to enhance customer brand involvement.  Objectives of trade promotions: –Attempt to get retailers to carry new items and more inventory, to buy ahead, to promote the firm’s brand and to give the company more shelf space.  Objectives or promotions targeting the sales force: –Attempt to get more sales force support for current or new products, or to generate new accounts. Sales Promotion

13-41 Prentice Hall, Copyright 2009 Integrating Promotions Sales promotions should be integrated with and supported by other elements of the marketing mix. In the example at left, the coupons are integrated within a print magazine advertisement. Marketing in Action

13-42 Prentice Hall, Copyright 2009 Building Relationships Some sales promotions, such as loyalty cards and frequency marketing programs, can help to build relationships. The PostPoints program shown above targets customers and advertisers.PostPoints program Marketing in Action

13-43Prentice Hall, Copyright 2009 Sales Promotion  Point-of-purchase displays  Contests  Sweepstakes  Games  Event sponsorship marketing  Samples  Coupons  Cash refunds  Price packs  Premiums  Advertising specialties Consumer Sales Promotion Tools

13-44 Prentice Hall, Copyright 2009 New Couponing Forms Cellfire distributes digital coupons to the cell phones of consumers who sign up for its free service. Marketing in Action

13-45Prentice Hall, Copyright 2009  Trade promotions: –More sales promotion dollars are directed toward retailers and wholesalers than to the final consumers. –Several trade promotion tools exist: Discounts Allowances Free goods Push money Specialty advertising items Sales Promotion

13-46Prentice Hall, Copyright 2009 Sales Promotion  Business promotion objectives: –Generate business leads –Stimulate purchases –Reward customers –Motivate salespeople  Business promotion tools: –Conventions, trade shows, sales contests, and many of the same tools used for consumer or trade promotions

13-47 Prentice Hall, Copyright 2009 Trade Shows Many trade shows are huge. The International Consumer Electronics show hosted over 2,500 exhibitors and more than 150,000 visitors. Marketing in Action

13-48Prentice Hall, Copyright 2009 Sales Promotion  Developing the sales promotion program: –Decide on the size of the incentive –Set conditions for participation –Decide how to promote and distribute the promotion program –Decide the length of the program –Evaluate the program

Prentice Hall, Copyright 2009 Rest Stop: Reviewing the Concepts 1. Discuss the role of a company’s salespeople in creating value for customers and building customer relationships. 2. Identify and explain the six major sales force management steps. 3. Discuss the personal selling process, distinguishing between transaction- oriented marketing and relationship marketing. 4. Explain how sales promotion campaigns are developed and implemented.

Prentice Hall, Copyright 2009 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2009 Pearson Education, Inc. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall