Chapter 18 Sales Promotion and Personal Selling Marketing 333 Chapter 18 Sales Promotion and Personal Selling

Sales Promotion Sales Promotion Chapter 16 Sales Promotion and Personal Selling Sales Promotion Marketing communication activities, other than advertising, personal selling, and public relations, in which a short-term incentive motivates a purchase. Sales Promotion Notes: In addition to advertising, public relations, and personal selling, sales promotion is utilized to increase the effectiveness of other promotional efforts. Sales promotion provides an incentive for consumers to purchase a good or service immediately, either by lowering the price or by adding value.

Consumer Sales Promotion Chapter 16 Sales Promotion and Personal Selling Sales Promotion Consumer Sales Promotion Trade Sales Promotion Consumer market Marketing channel Drive immediate purchase Influence behavior Goal Notes: Sales promotion is targeted toward either of two different markets: to consumers or to members of the marketing channel (“trade”), such as wholesalers and retailers. Sales promotion expenditures have increased over the last several years as a result of increased competition, an expanding array of media choices, the demand for more deals from manufacturers, and the reliance on accountable and measurable marketing strategies. Promotion marketing in the U.S. exceeds $300 billion a year. Even power companies and restaurants have discovered the power of sales promotion.

Tools for Consumer Sales Promotion Chapter 16 Sales Promotion and Personal Selling Tools for Consumer Sales Promotion Coupons and Rebates Premiums Loyalty Marketing Programs Contests & Sweepstakes Sampling Point-of-Purchase Promotion Notes: The tools selected for sales promotion must suit the objectives to ensure success of the overall promotion plan. Popular tools are shown here, and described on the following slides.

Sales Promotion toward Consumers Product sampling: samples given to consumers to try the product. Coupons: reduction in price given in the form of a certificate.

Sales Promotion toward Consumers Rebates: portion of the price is returned to the purchaser. Contests and Sweepstakes: Contests: consumer must perform Sweepstakes: lottery

Sales Promotion toward Consumers Premiums: product offered free or at reduced charge if another product is purchased. Multiple Purchase Offers: two-for-one or other multiple purchase tied to lower price or other promotion.

Tools for Consumer Sales Promotion Chapter 16 Sales Promotion and Personal Selling Tools for Consumer Sales Promotion Loyalty Marketing Program A promotional program designed to build long-term, mutually beneficial relationships between a company and key customers. Frequent Buyer A loyalty program in which loyal consumers are rewarded for making multiple purchases. Notes: Loyalty marketing programs reward consumers for making multiple purchases. These programs enable companies to invest sales promotion dollars in activities designed to capture greater profits from customers already loyal to the product/company. The objective of loyalty marketing is to build long-term, mutually-beneficial relationships. Studies show that frequent shopper programs require something more than just discounts to build loyalty. Furthermore, customers are “loyal” to more than one store, and participate in multiple programs. Discussion/Team Activity: Identify several companies that offer these programs. Discuss the benefits offered by some of the more popular loyalty marketing and frequent buyer programs.

Point-of-Purchase Promotion Chapter 16 Sales Promotion and Personal Selling Point-of-Purchase Promotion Build traffic Advertise the product Induce impulse buying Notes: Point-of-purchase promotions (P-O-Ps) include shelf “talkers”, shelf extenders, ads on carts and bags, end-aisle and floor-stand displays,TV monitors and in-store messages, and audiovisual displays. P-O-Ps offer manufacturers a captive audience in retail stores, and can boost sales by as much as 65 percent because between 70 and 80 percent of all retail purchase decisions are made in-store.

Sales Promotion toward Consumers Product placements: conveying a noncommercial message by having a product appear in a movie or TV show. Tie-ins: collaborative effort between two or more organizations in a promotional effort.

Conventions & Trade Shows Trade Sales Promotion Chapter 16 Sales Promotion and Personal Selling Trade Allowances Push Money Training Free Merchandise Store Demonstration Conventions & Trade Shows Notes: While consumer promotions pull a product through the channel by creating demand, trade promotions push a product through the distribution channel in an attempt to influence supply. Consumer promotion tools are used when selling to members of the distribution channel, as well as tools that are unique to manufacturers and intermediaries, shown on this slide.

Trade Promotions Trade Allowance Chapter 16 Sales Promotion and Personal Selling Trade Promotions Trade Allowance A price reduction offered by manufacturers to intermediaries, such as wholesalers and retailers.

Trade Promotions Push Money Chapter 16 Sales Promotion and Personal Selling Trade Promotions 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.

Trade Promotions Trade show: meeting or convention of members of a particular industry. Contest: offering bonuses or prizes for sales performance in order to motivate a sales force.

Trade Promotions Point-of-purchase: Promotional items which attract attention at the places where products are purchased. Cooperative advertising: paid for jointly by supplier and retailer.

Personal Selling Personal Selling is more important if... Chapter 16 Sales Promotion and Personal Selling Personal Selling is more important if... Advertising & Sales Promotion are more important if... Customers are concentrated. Product is technically complex. There are few customers. Product is custom made. Product has a high value. geographically dispersed. Product is simple to understand. There are many customers. Product is standardized. Product has a low value. Notes: Exhibit 16.2 compares the effectiveness of personal selling and advertising/sales promotion based on certain customer and product characteristics. Personal selling is more important as the number of potential customers decrease, as the complexity of the product increases, and as the value of the product grows.

Traditional Selling and Relationship Selling Chapter 16 Sales Promotion and Personal Selling Traditional Selling and Relationship Selling Sell advice, assistance, counsel Sell products Traditional Personal Selling 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 Notes: The end result of relationship selling tends to be loyal customers who purchase from the company time after time. Relationship selling promotes a win-win situation for both buyer and seller. Exhibit 16.3 lists the key differences between traditional personal selling and relationship selling.

Steps in the Selling Process Chapter 16 Sales Promotion and Personal Selling Steps in the Selling Process Generate Leads Qualify Leads Probe Customer Needs Develop Solutions Handle Objections Close the Sale Follow Up Notes: Completing a sale requires several steps. It can be unique for each product or service, depending on the features of the product, characteristics of customer segments, and internal processes within the firm, such as how sales leads are generated. There are seven basic steps in the personal selling process. These steps of selling follow the AIDA concept discussed in Chapter 14.

Sources of Leads Advertising Publicity Direct Mail/ Telemarketing Chapter 16 Sales Promotion and Personal Selling Sources of Leads Advertising Publicity Direct Mail/ Telemarketing Cold Calling Internet Web Site Referrals Trade Shows/ Conventions Networking Company Records Online Linkedin Ryze Online networking groups are growing in popularity. Check out the sites for Linkedin and Ryze to read more about how these groups work. Do they sound like something you would join? How could they benefit your career? Notes: Lead generation, or prospecting, is the identification of those most likely to buy the seller’s offerings. Sales leads can be secured in several different ways, such as those sources shown on this slide.

Receptivity and accessibility Chapter 16 Sales Promotion and Personal Selling Qualifying Leads Recognized need Buying power Receptivity and accessibility Notes: When a prospect shows interest in having more information about a product, the salesperson has the opportunity to qualify the lead. Lead qualification consists of determining whether the prospect has three things: * A recognized need * The authority to make the purchase decision and access to funds to pay for it * Receptivity and accessibility to the salesperson The Web site offers a way of qualifying online leads by getting visitors to register for more information.

Developing and Proposing Solutions Chapter 16 Sales Promotion and Personal Selling Developing and Proposing Solutions Sales Proposal Sales Presentation Notes: After compiling information about the client’s needs and wants, the salesperson develops a solution in which the salesperson’s product or service solves the client’s problem or need. These solutions are typically presented as a sales proposal during a formal sales presentation. Usually, there is only one opportunity to present solutions, and salespeople must be able to present the proposal and handle any customer objections confidently and professionally.

Handling Objections View objections as requests for information Chapter 16 Sales Promotion and Personal Selling 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 Notes: The salesperson should not take objections personally as confrontations or insults. Instead, objections should be handled as requests for information, and could be used in a positive way to close the sale.

Look for customer signals Closing the Sale Chapter 16 Sales Promotion and Personal Selling Negotiate Keep an open mind Look for customer signals Tailor to each market Notes: Negotiation plays a key role in closing the sale. Negotiation is the process during which both the salesperson and the prospect offer special concessions in an attempt to arrive at a sales agreement. A salesperson should emphasize value to the customer, rendering price a nonissue. In foreign markets, the sales efforts should be tailored to the appropriate way of doing business for that culture. The goal of relationship selling is to motivate customers to purchase again by developing long-term relationships. Most businesses depend on repeat sales, and repeat sales depend on follow-up by the salesperson. Finding a new customer is far more expensive than retaining an existing customer. Furthermore, today’s customers are less loyal to brands and vendors. Therefore follow-up is critical in relationship building.