2. Relationship Marketing: Where Personal Selling Fits2
Chapter
Relationship Marketing: Where Personal Selling Fits
McGraw-Hill/Irwin
Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved.

3. 2
2-3
Chapter

4. 2 Main Topics Chapter What Is the Purpose of Business?
2-4
Chapter
Main Topics
What Is the Purpose of Business?
What Is Marketing?
Customer Orientation’s Evolution
Marketing’s Importance in the Firm
Essentials of a Firm’s Marketing Effort
Relationship Marketing
Relationship Marketing and the Sales Force
Levels of Relationship Marketing

5. 2 Main Topics Chapter Partnering with Customers
2-5
Chapter
Main Topics
Partnering with Customers
The New Consultative Selling
E-Selling: Technology and Information Build Relationships
What’s a Salesperson Worth?
The Key to Success

6. In Chapter 2 We Will See What is Meant by the Terms...
Business
Marketing
Product, Price, Place, Promotion
Personal Selling

7. The Purpose of Business is to:
Increase the general well being of humankind through the sales of goods and services

8. This Requires
Making a profit in order to operate the business and to provide beneficial products to the marketplace

9. Profit is a Means to an End
Profit is needed to serve humankind
Profit is needed to operate the business
Profit is needed to provide products to the marketplace

10. The Two Basic Functions of Business
Production of goods or creation of services
Marketing those goods and services

11. What is Marketing? Marketing is a process of planning:
The conception, pricing, promotion, and distribution of goods, services, and ideas
To create exchanges that satisfy individual and organizational objectives

12. Customer Orientation’s Evolution
The production concept
The selling concept
The marketing concept

13. The Production Concept
Companies were production oriented
We know what people want – they want our product.

14. The Selling Concept
Characterized by product demonstrations and unsophisticated sales techniques
Emphasis on the product
Product created and then sold
Management is sales-volume oriented
Stresses needs of the seller

15. The Marketing Concept Emphasis is on customer’s wants
Customer’s wants drive production
Management is profit-oriented
Planning is long-term
Stresses wants of buyers

16. Exhibit 2-1: The Difference Between Selling and Marketing Concepts

17. Marketing’s Importance in the Firm
Marketers have four main objectives:
Maximize the sales for existing products in existing markets
Develop and sell new products
Develop new markets for existing or new products
Provide quality service to ensure repeat business

18. Exhibit 2-2: The Marketing Group is the Link Between Customers and the Organization

19. Product: It’s More Than You Think
A good is a physical object that can be purchased
A service is an action or activity performed for a fee
Value-added refers to benefits received that are not included in the purchase price of a good or service

20. Exhibit 2-3: Four Elements of the Marketing Mix and Four Promotion Activities

21. Exhibit 2-4: Examples of Business-To-Business Value-Adding
Help customer reduce process costs
Improve yields
Reduce waste (through recycling, etc.)
Reduce rework
Reduce direct labor
Reduce indirect labor (inspection, handling)
Reduce energy costs

22. Exhibit 2-4: Examples of Business-To-Business Value-Adding
Help customer reduce inventory
Consignment
Just-in-time delivery
Reduced cycle time

23. Exhibit 2-4: Examples of Business-To-Business Value-Adding
Help customer reduce administrative costs
Simplify billing
Improve tractability
Use electronic data interchange

24. Exhibit 2-4: Examples of Business-To-Business Value-Adding
Improve safety for customer and his employees
Reduce price to the customer
Substitute certain product components
Improve company processes and supplier processes

25. What is Meant by the Term “Product?”
A product is a bundle of tangible and intangible attributes, including package, color, and brand, plus the services and even the reputation of the seller

26. The Term “Product” May Refer to a Good or Service
Examples
Goods - a physical object for sale
Automobile
Cell phone
Prescription medicine
Services - an action or activity done for others for a fee
Automobile repair
Wireless phone plan
Health insurance

27. The Good and the Service:
Automobile - repair services
Cell phone - wireless phone plane
Prescription medicine - health insurance

28. We Will Use the Terms Follow-up and Service. What do They Mean?*
Follow-up refers to maintaining contact with a customer in order to evaluate the effectiveness of the product and the satisfaction of the customer (More on this in Chapter 14)

29. The Term “Service” May Refer to A:
Product, as insurance and advertise which is sold by someone
Service, as customer service which is an activity offered by a seller in conjunction with the purchase of a product, such as delivery, repair, credit cards accepted, 800 telephone number, web site, salesperson available to help customer (More on this in Chapter 14)

30. Customer Service by the Salesperson Include:
Salesperson goes to customer’s business to help:
Resell products
Customer use product
Handling complaints
Return damaged products
Provide samples
Suggest further business opportunities
(Above discussed in Chapter 1)

31. People Buy More Than the Product
People buy want-satisfaction as
Image of owning as a
Polo shirt vs. Wal-Mart shirt
Dodge Viper* vs. Volkswagen Vanagon*
What the product will do
Its quality
*products and associated images used for illustrative purposes only

32. There Are Two General Types of Products - Consumer and Industrial Products
What is a consumer product?
A consumer product is produced for, and purchased by, households or end consumers for their personal use
What is an example of a consumer product?
Toothpaste
Television
Clothes

33. There Are Two General Types of Products - Consumer and Industrial Products
What is industrial product?
An industrial product is sold primarily for use in producing other products. Industrial users are profit nonprofit organizations that buy good and services for one of three purposes*
To make other goods and services
To sell to consumer or other industrial users
To conduct the organization’s operations*

34. The Key Phrases That Differentiate Between Consumer and Industrial Products are:
Consumer product - personal use
Industrial product - producing other products
What is an example of an industrial product?
Airlines purchase airplanes
Boeing sells their airplanes to airlines
University buys computers

35. What Is Another Name for an Industrial Product?*
Business product
Organizational product

36. Price: It’s Important to Success
Price refers to the value or worth of a product that attracts the buyer to exchange money or something of value for the product

37. Distribution Moves Products to Customers
Three Customer Groups
A household refers to a decision-making unit that buys for personal use
A firm is an organization that produces goods and services
A government is an organization that has two functions:
The provision of goods and services to households and firms
The redistribution of income and wealth

38. Consumer and Industrial Products are Often Distributed Through Resellers
What are Resellers?
Resellers, such as wholesalers or retailers, purchase products and then sell to organizations and/or individuals

39. What Is a Wholesaler? The Wholesaler (May Be Referred to as a Distributor)
Primarily engaged in buying, taking title to, usually storing and physically handling goods in large quantities, and reselling the goods, usually in smaller quantities to
Retailers
Wholesalers
Manufacturers

40. Exhibit 2-5: Examples of Distribution Channels for Consumer and Industrial Products

41. Promotion Tells People
Promotion increases sales by communicating product information to potential customers
The four basic components of a firm’s promotional effort are: (PAPS)
Personal selling
Advertising
Publicity
Sales promotion

42. Exhibit 2-6: Promotion Activities
Personal Selling is…
personal communication of information to persuade
Advertising is…
non-personal communication of information paid for by an identified sponsor such as an individual or an organization (Methods include TV, newspapers, catalogs and the radio)

43. Exhibit 2-6: Promotion Activities
Publicity is…
non-personal communication of information that is not paid for by an individual organization. Information appears in media such as television, radio and newspapers
Sales promotion involves…
activities or materials used to create sales for goods or services

44. Exhibit 2-6

45. Exhibit 2-6: Promotion Activities
Two types of sales promotion
Consumer - includes free samples, coupons, contests, and demonstrations to consumers
Trade - encourages wholesalers and retailers to purchase and to sell aggressively using devices such as sales contests, displays, special purchase prices, and free merchandise

46. Exhibit 2-7: Examples of Each Marketing Mix Element

47. Relationship Marketing
Relationship marketing is the creation of customer loyalty
Targets a major customer that it wants to sell to now and in the future
Establishes a long-term collaborative relationship

48. Relationship Marketing and the Sales Force
Four basic questions used as guidelines in defining the role of the sales force:
How much selling effort is necessary to gain and hold customers?
Is the sales force the best marketing tool?
What type of sales activity will be necessary?
Can the firm gain strength relative to its competition with its sales force?

49. Relationship Marketing and the Sales Force
Personal selling builds relationships!
Two main functions of personal selling are to:
Generate revenue
Provide services to satisfy customers
Flexible in operation
Focused on prospective customers
Results in actual sales

50. Relationship Marketing and the Sales Force
implement relationship marketing
Salespeople

51. Summary of Relationship Marketing and the Sales Force
What is the role of the sales force in the marketing effort?
Personal selling builds relationships
Salespeople implement relationship marketing

52. Exhibit 2-8: Examples of Various Marketing and Sales Methods Used to Sell Mid-Sized Computers Business-To-Business

53. Three Levels of Relationship Marketing
Transaction selling
Relationship selling
Partnering

54. Three Levels of Relationship Marketing
Transaction selling: customers are sold to and not contacted again
Relationship selling: the seller contacts customers after the purchase to determine if they are satisfied and have future needs
Partnering: the seller works continually to improve its customers’ operations, sales, and profits

55. Exhibit 2-9: Dependence Increases as Relationships become More Important
High
Partnership
Relationship
Relationships
Transactional
Low
Low
Dependence
High

56. Partnering with Customers
Encourages both the buyer and seller to share information
Two companies work toward the same objective

57. Partnering, cont… Components of partnering include:
Individual excellence
Importance
Interdependence
Investment
Information
Integration
Institutionalization
Integrity

58. Exhibit 2-10

59. Consultative Selling
The process of helping the customer achieve strategic short and long-term goals through the use of the seller’s goods and/or services
A highly interactive dialogue between a salesperson and a customer
A balanced exchange of information

60. Three Consultative Selling Roles for the 21st Century

61. Three Roles of Consultative Selling
The Team Leader
Coordinates all of the information, resources, and activities needed to support customers before, during, and after the sale
The Business Consultant
Gives advice and service. Uses internal and external resources to gain an understanding of the customer’s business and marketplace

62. Three Roles of Consultative Selling
The Long-Term Ally
Creates a “win–win” situation. As the customer’s sales and profits grow, so do the salesperson’s
The ability of a salesperson to fulfill the role of long-term ally is a pivotal factor in determining whether a sales transaction is just a transaction or the beginning of a relationship

63. The Customer-Seller Relationship Gap
May occur when the salesperson’s interest in the customer declines
Usually after the sale
Yet the customer’s interest increases after the sale
This is one reason why service after the sales is so important

64. What’s a Salesperson Worth?
“Worth” is dependent upon at least three factors:
What the salesperson costs
How much he/she sells
The profit margin
Salespeople make a valuable contribution to the success of their employer
Selling closes deals and generates the revenue to keep the organization in business

65. The Key to Success
Knowing and satisfying target customers with competitively superior products and service
Marketing is the company function that defines customer targets and the best way to satisfy their needs and wants competitively and profitably
Marketing’s main customer contacts are salespeople

66. Exhibit 2-13: Marketing and Personal Selling Provide Service to Customers

67. Summary
Selling is only one part of the overall marketing activities of the firm
Marketing is an exchange process between buyers and sellers
The marketing concept is based upon a firm’s desire to increase sales while anticipating and satisfying consumer needs

68. Summary, cont… The marketing mix is comprised of four variables:
Product
Distribution
Promotion
The role of the salesperson is considered carefully in the firm’s determination of the promotional aspect of its marketing mix

69. Summary, cont…
Consultative selling focuses on the salesperson’s ability to provide customer satisfaction by adding value to the sales transaction