1. Personal Selling and Sales Promotion Copyright © Houghton Mifflin Company. All rights reserved. PowerPoint Presentation by Charlie Cook 19 Part Five Promotion Decisions

2. Copyright © Houghton Mifflin Company. All rights reserved. 19–2 Chapter Learning Objectives To understand the major purposes of personal selling To describe the basic steps in the personal selling process To identify the types of sales force personnel To understand sales management decisions and activities To explain what sales promotion activities are and how they are used To explore specific consumer and trade sales promotion methods

3. Copyright © Houghton Mifflin Company. All rights reserved. 19–3 Chapter Outline The Nature of Personal Selling Elements of the Personal Selling Process Types of Salespeople Management of the Sales Force The Nature of Sales Promotion Sales Promotion Opportunities and Limitations Sales Promotion Methods

4. Copyright © Houghton Mifflin Company. All rights reserved. 19–4 The Nature of Personal Selling Personal Selling –Paid personal communication that informs customers and persuades them to buy products. Most adjustable to customer information needs Most precise (targeted) form of promotion methods Most expensive element in promotion mix –Personal selling as a career The potential for high income A great deal of freedom A high level of training A high level of job satisfaction

5. Copyright © Houghton Mifflin Company. All rights reserved. 19–5 General Steps in the Personal Selling Process FIGURE 19.1

6. Copyright © Houghton Mifflin Company. All rights reserved. 19–6 Elements of the Personal Selling Process Prospecting –Developing a list of potential customers Sales records, trade shows, commercial databases, newspaper announcements, public records, telephone directories, trade association directories Reponses to advertisements with information request forms Referrals—recommendations from current customers

7. Copyright © Houghton Mifflin Company. All rights reserved. 19–7 Elements of the Personal Selling Process (cont’d) Preapproach (before contacting the customer) –Finding and analyzing information about the prospect Specific product needs Current use of brands Feelings about available brands Personal characteristics –Additional research Identifying key decision makers Reviewing account histories and problems Contacting other clients for information Assessing credit histories and problems Preparing sales presentations Identifying product needs

8. Copyright © Houghton Mifflin Company. All rights reserved. 19–8 Elements of the Personal Selling Process (cont’d) Approach –The manner in which a salesperson contacts a potential customer Purpose is to gather information about the buyer’s needs and objectives Important to create a favorable first impression and build rapport with prospective customer –Typical approaches Referral by another customer to a prospective customer “Cold canvass” call without prior introduction to the customer Repeat contact based on prior meeting(s) with the potential customer

9. Copyright © Houghton Mifflin Company. All rights reserved. 19–9 Elements of the Personal Selling Process (cont’d) Making the Presentation –During the presentation: Attract and hold the prospect’s attention. Stimulate interest in the product. Spark a desire for the product. Listen and respond to the prospect questions and comments. –Ways to enhance the presentation’s effects Have the prospect touch, hold, or use the product. Use audiovisual technology to heighten the impact of the presentation.

10. Copyright © Houghton Mifflin Company. All rights reserved. 19–10 Elements of the Personal Selling Process (cont’d) Overcoming objections –Anticipate objections and counter them during the presentation –Generally, best to handle objections as they arise Closing the sale –Closing is the stage in the selling process when the salesperson asks the prospect to buy the product.

11. Copyright © Houghton Mifflin Company. All rights reserved. 19–11 Elements of the Personal Selling Process (cont’d) Closing strategies –“Trial” closing: asking questions (what, how, or why) that assume the customer will buy the product –Asking for a tryout order: low-risk way for customer to try out the product Following up –Determining if the delivery and setup of order was completed to the customer’s satisfaction –Ascertaining the customer’s future product needs

12. Copyright © Houghton Mifflin Company. All rights reserved. 19–12 Types of Salespeople Order Getters –The salesperson who sells to new customers and increases sales to current ones –Creative selling Current-customer sales New-business sales Order Takers –The salesperson who primarily seeks repeat sales Inside order takers Field order takers

13. Copyright © Houghton Mifflin Company. All rights reserved. 19–13 Types of Salespeople (cont’d) Support Personnel: sales staff members who facilitate selling but usually are not involved solely with making sales –Missionary salespeople Support salespersons who assist the producer’s customers in selling to their own customers –Trade salespeople Salespersons involved mainly in helping a producer’s customers promote a product –Technical salespeople Support salespersons who give technical assistance to a firm’s current customers

14. Copyright © Houghton Mifflin Company. All rights reserved. 19–14 Management of the Sales Force Establishing Sales Force Objectives –Objectives tell salespeople what they are to accomplish during a specified time period. –Objectives for the total sales force Sales volume: total units or dollars of product sold for a period of time Market share: unit or dollar percentage share of the total market for a product Profit: dollars or percentage of return on investment (ROI) –Objective for individual salespersons Quotas: dollars or units sold, or average order size, average number of calls, or ratio of orders to calls by an individual salesperson

15. Copyright © Houghton Mifflin Company. All rights reserved. 19–15 Management of the Sales Force (cont’d) Determining Sales Force Size –Size of sales force affects compensation methods for salespersons. corale of salespersons. overall sales force management. –Methods for determining optimal sale force size: Dividing the number of sales calls necessary to serve customers by the number of sales calls a salesperson makes annually Adding additional salespersons until the cost of adding one more salespersons equals the additional sales that would be generated by that person

16. Copyright © Houghton Mifflin Company. All rights reserved. 19–16 Management of the Sales Force (cont’d) Recruiting and Selecting Salespeople –Recruiting Developing a list of qualified applicants for sales positions –Establish a set of qualifications that best match the firm’s particular sales tasks Prepare a job description listing specific tasks Analyze successful salespeople among current employees –Sources of applicants Other departments in the company Other firms Employment agencies Educational institutions Job ad respondents Employee referrals

17. Copyright © Houghton Mifflin Company. All rights reserved. 19–17 Management of the Sales Force (cont’d) Training Sales Personnel –What to teach? The company, its products, or selling methods –Whom to train? Newly hired or experienced salespeople, or both –When/where to train? In the field, at educational institutions, in company facilities Before or after initial field assignment Frequency, sequencing, and duration of periodic training –Who will train? Sales managers, technical personnel, outside consultants –How to train? Materials and instructional methods

18. Copyright © Houghton Mifflin Company. All rights reserved. 19–18 Management of the Sales Force (cont’d) Compensating Salespeople –Compensation objectives Attract, motivate, and retain effective salespeople Maintain the desired level of control Provide acceptable levels of income, freedom, and incentive Encourage proper treatment of customers

19. Copyright © Houghton Mifflin Company. All rights reserved. 19–19 Management of the Sales Force (cont’d) Compensation Plans –Straight salary Paying salespeople a specific amount per period of time –Straight commission Paying salespeople according to the amount of their sales in a given time period –Combination compensation Paying salespeople a fixed salary plus a commission on sales volume

20. Copyright © Houghton Mifflin Company. All rights reserved. 19–20

21. Copyright © Houghton Mifflin Company. All rights reserved. 19–21 Management of the Sales Force (cont’d) Motivating Salespeople –Motivation should be provided on a continuous basis. –Motivational incentives Enjoyable working conditions Power and authority Job security Opportunities to excel –Motivational methods Sales contests Recognition programs Awards (travel, merchandise, and cash)

22. Copyright © Houghton Mifflin Company. All rights reserved. 19–22 Management of the Sales Force (cont’d) Managing Sales Territories –Creating sales territories Based on similar sales potential or requiring about the same amount of work Setting differential commission rates to compensate for differences in the characteristics of territories (density and distribution of customers)

23. Copyright © Houghton Mifflin Company. All rights reserved. 19–23 Management of the Sales Force (cont’d) Managing Sales Territories (cont’d) –Routing and scheduling considerations Geographic size and shape of the territory Number and distribution of customers Sequence of customer calls Routes and distances traveled Minimizing salesperson’s travel and lodging costs

24. Copyright © Houghton Mifflin Company. All rights reserved. 19–24 Management of the Sales Force (cont’d) Controlling and Evaluating Sales Force Performance –Sales objectives, determined by the sales manager, stated in terms of Sales volume Average number of calls per day Average sales per customer Actual sales relative to sales potential Number of new customer orders Average cost per call Average gross profit per customer

25. Copyright © Houghton Mifflin Company. All rights reserved. 19–25 The Nature of Sales Promotion Sales Promotion –An activity and/or material that acts as a direct inducement to resellers or salespeople to sell a product or consumers to buy it –It encourages product trial and purchase by adding value to the product. –It is most effective when it facilitates or is facilitated by personal selling and advertising. –Its use has grown dramatically over the last 20 years at the expense of traditional advertising.

26. Copyright © Houghton Mifflin Company. All rights reserved. 19–26 Sales Promotion Opportunities and Limitations Can increase sales by providing extra purchasing incentives Excessive use may damage brand image

27. Copyright © Houghton Mifflin Company. All rights reserved. 19–27 Sales Promotion Methods Deciding Which Sales Promotion Method to Use –Product characteristics –Target market characteristics –Distribution channel(s) –Number and types of resellers –Competitive and legal environment

28. Copyright © Houghton Mifflin Company. All rights reserved. 19–28 Sales Promotion Methods (cont’d) Consumer Sales Promotion Methods –Ways of encouraging consumers to patronize specific stores or to try particular products –Coupons Written price reductions used to encourage consumers to buy a specific product Effective coupons are easily recognized and state the offer clearly. The nature of the product is the prime consideration in setting up a coupon promotion. Advantages: generate brand awareness and interest and reward brand loyalty Disadvantages: Fraud and misredemptions; consumer ill- will from stock-outs during promotions.

29. Copyright © Houghton Mifflin Company. All rights reserved. 19–29 Sales Promotion Methods (cont’d) Consumer Sales Promotion Methods (cont’d) –Demonstrations Manufacturers use it temporarily to encourage trial use and purchase of a product or to show how a product works. Highly effective yet costly in practice –Frequent-user incentives Incentive programs that foster consumer loyalty by rewarding customers’ repeat (frequent) purchases –Point-of-purchase displays Signs, window displays, display racks, and similar means used to attract customers and to encourage immediate purchases

30. Copyright © Houghton Mifflin Company. All rights reserved. 19–30 Sales Promotion Methods (cont’d) Consumer Sales Promotion Methods (cont’d) –Free samples Samples of a product given out to encourage trial and purchase Used to increase sales volume and obtain desirable distribution for fast turnover products The most expensive form of sales promotion –Money refunds Offering consumers money when they mail in a proof of purchase, usually for multiple product purchases –Rebates Sending consumers a specific amount of money for making a single product purchase

31. Copyright © Houghton Mifflin Company. All rights reserved. 19–31 Sales Promotion Methods (cont’d) Consumer Sales Promotion Methods (cont’d) –Premiums Items offered free or at a minimal cost as a bonus for purchasing a product Premium must match both the target market and the brand’s image. Premiums must be easily recognizable and desirable. –Cents-off offers Promotions that let buyers pay less than the regular price to encourage purchase

32. Copyright © Houghton Mifflin Company. All rights reserved. 19–32 Sales Promotion Methods (cont’d) Consumer Sales Promotion Methods (cont’d) –Consumer contests and games Individuals compete for prizes based on analytical or creative skills. Competitions for prizes are used to generate retail traffic and to increase exposure to promotional messages. –Consumer sweepstakes A sales promotion in which entrants submit their names for inclusion in a drawing for prizes Used more than contests and attract more widespread interest

33. Copyright © Houghton Mifflin Company. All rights reserved. 19–33 Sales Promotion Methods (cont’d) Trade Sales Promotion Methods –Ways of persuading wholesalers and retailers to carry a producer’s products and to market them aggressively –Buy-back allowance A sum of money a producer gives a reseller for each additional unit bought after an initial promotion deal is over –Buying allowance A temporary price reduction to resellers for purchasing specified quantities of a product –Scan-back allowance A manufacturer’s reward to retailers based on the number of pieces scanned

34. Copyright © Houghton Mifflin Company. All rights reserved. 19–34 Sales Promotion Methods (cont’d) Trade Sales Promotion Methods (cont’d) –Count-and-recount A producer’s payment of a specific amount of money for each product unit moved from a reseller’s warehouse in a given period –Free merchandise A manufacturer’s reward given to resellers for purchasing a stated quantity of goods Usually takes the form of a reduced invoice –Merchandise allowances A manufacturer’s agreement to help reseller’s pay for special promotional efforts

35. Copyright © Houghton Mifflin Company. All rights reserved. 19–35 Sales Promotion Methods (cont’d) Trade Sales Promotion Methods (cont’d) –Cooperative advertising Sharing of media costs by manufacturer and retailer for advertising the manufacturer’s products –Dealer listings Ads promoting a product and identifying retailers that sell the product; influences retailers to carry the products, builds traffic at the retail level, and encourages consumers to shop at participating dealers –Premium (push) money Extra compensation to salespersons for pushing a line of products

36. Copyright © Houghton Mifflin Company. All rights reserved. 19–36 Sales Promotion Methods (cont’d) Trade Sales Promotion Methods (cont’d) –Sales contest A means of motivating distributors, retailers, and salespeople by recognizing outstanding achievements –Dealer loader A gift, often part of a display, offered to a retailer who purchases a specified quantity of merchandise

37. Copyright © Houghton Mifflin Company. All rights reserved. 19–37 After reviewing this chapter you should: Understand the major purposes of personal selling. Know the basic steps in the personal selling process. Be able to identify the types of sales force personnel. Have insight into sales management decisions and activities. Be aware of what sales promotion activities are and how they can be used. Be familiar with specific consumer and trade sales promotion methods.

38. Chapter 19 Supplemental Slides Copyright © Houghton Mifflin Company. All rights reserved. 19–38

39. Copyright © Houghton Mifflin Company. All rights reserved. 19–39 Key Terms and Concepts The following slides (a listing of terms and concepts) are intended for use at the instructor’s discretion. To rearrange the slide order or alter the content of the presentation –select “Slide Sorter” under View on the main menu. –left click on an individual slide to select it; hold and drag the slide to a new position in the slide show. –To delete an individual slide, click on the slide to select, and press the Delete key. –Select “Normal” under View on the main menu to return to normal view.

40. Copyright © Houghton Mifflin Company. All rights reserved. 19–40 Important Terms Personal Selling –Paid personal communication that informs customers and persuades them to buy products. Prospecting –Developing a list of potential customers Approach –The manner in which a salesperson contacts a potential customer Closing –is the stage in the selling process when the salesperson asks the prospect to buy the product.

41. Copyright © Houghton Mifflin Company. All rights reserved. 19–41 Important Terms Order Getters –The salesperson who sells to new customers and increases sales to current ones Order Takers –The salesperson who primarily seeks repeat sales Missionary Salespeople –Support salespersons who assist the producer’s customers in selling to their own customers Trade Salespeople –Salespersons involved mainly in helping a producer’s customers promote a product

42. Copyright © Houghton Mifflin Company. All rights reserved. 19–42 Important Terms Technical Salespeople –Support salespersons who give technical assistance to a firm’s current customers Straight Salary –Paying salespeople a specific amount per period of time Straight Commission –Paying salespeople according to the amount of their sales in a given time period Combination Compensation –Paying salespeople a fixed salary plus a commission on sales volume

43. Copyright © Houghton Mifflin Company. All rights reserved. 19–43 Important Terms Sales Promotion –An activity and/or material that acts as a direct inducement to resellers or salespeople to sell a product or consumers to buy it Coupons –Written price reductions used to encourage consumers to buy a specific product Demonstrations –Manufacturers use them temporarily to encourage trial use and purchase of a product or to show how a product works.

44. Copyright © Houghton Mifflin Company. All rights reserved. 19–44 Important Terms Frequent-User Incentives –Incentive programs that foster consumer loyalty by rewarding customers’ repeat (frequent) purchases Point-of-Purchase Displays –Signs, window displays, display racks, and similar means used to attract customers and to encourage immediate purchases Free Samples –Samples of a product given out to encourage trial and purchase

45. Copyright © Houghton Mifflin Company. All rights reserved. 19–45 Important Terms Money Refunds –Offering consumers money when they mail in a proof of purchase, usually for multiple product purchases Rebates –Sending consumers a specific amount of money for making a single product purchase Premiums –Items offered free or at a minimal cost as a bonus for purchasing a product Cents-Off Offers –Promotions that let buyers pay less than the regular price to encourage purchase

46. Copyright © Houghton Mifflin Company. All rights reserved. 19–46 Important Terms Consumer Contests and Games –Individuals compete for prizes based on analytical or creative skills. Consumer Sweepstakes –A sales promotion in which entrants submit their names for inclusion in a drawing for prizes Buy-Back Allowance –A sum of money a producer gives a reseller for each additional unit bought after an initial promotion deal is over

47. Copyright © Houghton Mifflin Company. All rights reserved. 19–47 Important Terms Buying Allowance –A temporary price reduction to resellers for purchasing specified quantities of a product Scan-Back Allowance –A manufacturer’s reward to retailers based on the number of pieces scanned Count-and-Recount –A producer’s payment of a specific amount of money for each product unit moved from a reseller’s warehouse in a given period

48. Copyright © Houghton Mifflin Company. All rights reserved. 19–48 Important Terms Free Merchandise –A manufacturer’s reward given to resellers for purchasing a stated quantity of goods Merchandise Allowances –A manufacturer’s agreement to help reseller’s pay for special promotional efforts Cooperative Advertising –Sharing of media costs by manufacturer and retailer for advertising the manufacturer’s products

49. Copyright © Houghton Mifflin Company. All rights reserved. 19–49 Important Terms Dealer Listings –Ads promoting a product and identifying retailers that sell the product; influences retailers to carry the products, builds traffic at the retail level, and encourages consumers to shop at participating dealers Premium (Push) Money –Extra compensation to salespersons for pushing a line of products

50. Copyright © Houghton Mifflin Company. All rights reserved. 19–50 Important Terms Sales Contest –A means of motivating distributors, retailers, and salespeople by recognizing outstanding achievements Dealer Loader –A gift, often part of a display, offered to a retailer who purchases a specified quantity of merchandise

51. Copyright © Houghton Mifflin Company. All rights reserved. 19–51 Transparency Figure 19C Major Sales Management Decision Areas

52. Copyright © Houghton Mifflin Company. All rights reserved. 19–52 Transparency Figure 19D Major Types of Sales Force Compensation Methods

53. Copyright © Houghton Mifflin Company. All rights reserved. 19–53 Transparency Figure 19F Online Loyalty Programs Who are the most likely participants in online loyalty programs? Source: “Young Consumers Rack Up The Points,” American Demographics, May 2002, p. 37. Adapted with permission.