Ebc.ie.nthu.edu.tw



LEARNING OBJECTIVES

After reading this chapter, students should:

❑ Know how companies can use integrated direct marketing for competitive advantage

❑ Know how companies can do effective e-marketing

❑ Know what decisions companies face in designing a sales force

❑ Know how companies can manage a sales force efficiently

❑ Know how salespeople can improve selling, negotiating, and relationship marketing skills

CHAPTER SUMMARY

Direct marketing is an interactive marketing system that uses one of more media to effect a measurable response or transaction at any location. Direct marketing, especially electronic marketing is showing explosive growth.

Direct marketers plan campaigns by deciding on objectives, target markets and prospects, offers, and prices. This is followed by testing and establishing measures to determine the campaign’s success.

Major channels for direct marketing include face-to-face selling, direct mail, catalog marketing, telemarketing, interactive TV, kiosks, Web sites, and mobile devices.

Interactive marketing provides marketers with opportunities for much greater interaction and individualization through well-designed Web sites as well as online ads and promotions.

Sales personnel serve as a company’s link to its customers. The sales rep is the company to many of its customers, and it is the rep who brings back to the company much-needed information about the customer.

Designing the sales force requires decisions regarding objectives, strategy, structure, size, and compensation. Objectives may include prospecting, targeting, communicating, selling, servicing, information gathering, and allocating. Determining strategy requires choosing the most effective mix of selling approaches. Choosing the sales-force structure entails dividing territories by geography, product, or market (or some combination of these). Estimating how large the sales force needs to be involves estimating the total workload and how many sales hours (and hence salespeople) will be needed. Compensating the sales force entails determining what types of salaries, commissions, bonuses, expense accounts, and benefits to give, and how much weight customer satisfaction should have in determining total compensation.

There are five steps involved in managing the sales force: (1) recruiting and selecting sales representatives; (2) training the representatives in sales techniques and in the company’s’ products, policies, and customer-satisfaction orientations; (3) supervising the sales force and helping reps to use their time efficiently; (4) motivating the sales force, balancing quota, monetary rewards, and supplementary motivators; and (5) evaluating individual and group sales performance.

Effective salespeople are trained in the methods of analysis and customer managements, as well as the art of sales professionalism. No approach works best in all circumstances, but most trainers agree that selling is a seven-step process: prospecting and qualifying customers, preapproach, approach, presentation and demonstration, overcoming objectives, closing, and follow-up and maintenance.

OPENING THOUGHT

Students should be very familiar with the marketing systems described in this chapter, especially Internet shopping. The challenge to the instructor in this chapter is ensuring that the students understand that Internet marketing (e-marketing) is just one of the many different avenues available to marketers trying to reach their target markets. Students may be predisposed to believe that “all” marketing or the “future” of marketing is via the electronic channels. The instructor should encourage in-class discussions on this position and he/she is encouraged to take the “defensive” position to help the students understand the many varied levels of business and consumer marketing.

For those students who are not currently sales people, or are not interested in a career in sales, their opinions, and views of salesmanship (derived from personal experiences, TV, and other forms of communication) can be an interesting source of discussion. Some students will believe that “all salesmen lie.” The section of this chapter concerning the sales force may present a challenge to the instructor in disproving or refuting these, common assumptions about salespeople long enough to communicate the material. The instructor is encouraged to spend sufficient time on this section to show/demonstrate to the students the role that the sales force plays in the overall marketing communications mix for many firms. Inviting sales managers and their sales people in the class as guest speakers will help communicate the professionalism and difficulty of this profession.

TEACHING STRATEGY AND CLASS ORGANIZATION

PROJECTS

1. At this point in the semester-long project, students who have decided to market their product/service through direct market channels should submit their proposals. All other groups must decide at this point if they will use a direct sales force and if so to outline the specifics (including financials) for this option.

2. Market demassification has resulted in an ever-increasing number of market niches and the use of direct marketing to reach these niches is growing. In small groups (five students suggested as the maximum), have students collect as many direct marketing advertising pieces of information sent to them over the course of a month during the semester. After collecting the catalogs, credit card offers, e-mail notices, and other forms, students are to evaluate the effectiveness of these techniques in causing them to purchase. Which one(s) of these direct market techniques do they feel is the most successful (caused a purchase) or least effective (caused irritation to them) and, why? What can astute marketers do to increase the effectiveness of the direct marketing?

3. Sonic PDA Marketing Plan Many marketers have to consider sales force management in their marketing plans. The high cost of maintaining a direct sales force and the need to establish multiple channels of distribution have led some companies to include online, mail, and telephone sales for some of their personal selling efforts. In your marketing role at Sonic, you are planning a sales strategy for the new PDA. After reviewing your decisions about other marketing mix activities, answer these questions about personal selling:

• Does Sonic need a direct sales force, or can it sell through agents and outside representatives?

• Toward whom should Sonic’s selling activities be focused?

• What kinds of sales objectives should Sonic set for its sales personnel?

• What role should e-marketing play in the new PDA launch?

• What training will sales representatives need to sell the Sonic 1000?

Summarize your answers in a written marketing plan or type them into the Marketing Mix, Marketing Organization, and Sales Forecast sections of Marketing Plan Pro.

ASSIGNMENTS

Small Group Assignments

1. The direct market offering, according to the text, consists of five elements—the product, offer, medium, distribution method, and creative strategy. Have the students collect direct marketing offerings (sent to them, their families, and close friends). On a scale of 1-5 (1 being does not work, 5 being works very well), rank each of these offerings in terms of these five elements. What is the group’s consensus as to which offers works the best (and worse) and why?

2. Most managers agree that to increase the motivation of their salespeople they have to reinforce the intrinsic and extrinsic rewards offered. However, this is not a universally accepted opinion. Many managers use one type of reward almost exclusively in their motivation techniques. Students should interview three sales managers and ask them if they emphasize intrinsic or extrinsic rewards in their salesperson’s motivation? Which method do they personally feel is the most effective and why? Which method do they wish they did a better job in and why? From this research, can the students form a casual relationship between the industry, competitive nature of the industry, and the motivation techniques used?

Individual Assignments

1. The Marketing Memo entitled, The Public and Ethical Issues in Direct Marketing, illustrates some of the darker techniques of direct marketing. In a research paper, students are to comb the Federal Trade Commission’s Web site, Consumers Report, and other appropriate Internet sites, and document, which industries and industry practices are consumers complaining the most about, and students should speculate why direct marketers continue these practices.

2. Dell ® Computers has begun setting up kiosks demonstrating their products in regional malls across the country in hopes of attracting consumers to their brand by allowing them to “try before they buy.” Consumers are then directed to the company’s Web site to place an order. How effective do you believe this type of direct marketing will have/is having on Dell’s business? Can this strategy work for other “direct marketers”? And if so, for whom?

Think-Pair-Share

1. In the Marketing Insight, entitled, Principles of Customer-Orientated Selling, the authors have developed a method that he calls SPIN selling. Using this method, divide the group into sets of buyers and sellers for a series of “mock” role-plays. The product is an advanced form of computer software called “NOW!” that increases customer relationship management to a new level.

Students are to assume the role of a salesperson calling on Jones Inc., which is a firm employing 50 salespeople, but currently does not use any customer relationship software. Students are to “sell” the “buyer” on the advantages of “NOW!” by demonstrating situation, problem, implication, and need-payoff questions. Students should reverse roles at appropriate time intervals so that each student has the opportunity to “play” buyer and seller.

Questions for the class: How effective did you find the SPIN method to be in your “selling situation”? How difficult is it to frame questions in terms of situation, problem, implication, and need-payoff? Do you believe that the SPIN method works?

2. Infomercials can be found selling almost everything possible! As a group, have the student’s videotape three different infomercials and critically evaluate the effectiveness of these commercials in light of the five elements of the direct market offering. Which ones (one) do the students believe is the most (least) effective and why?

MARKETING TODAY—CLASS DISCUSSION TOPICS

Your company sells computer-related equipment to the home and small business market primarily through independent sales representatives. Your annual sales are approaching $2 million, however, recently you have become dissatisfied with the performance of the independent representatives. Your customers are broken down as follows: 1,000 customers nationwide—500 “A” customers, 200 “B” customers, and 300 “C” level customers, selling $500/sales call at a commission rate of 10 percent.

You feel that your sales might increase if you developed your own internal sales force.

In your calculations, you estimate that each one of your sales representative would be able to call on four customers/day/4 days per week and sell an average of $700 per call.

Using the information from this chapter, define the following:

a. Selecting the sales force—what selection criteria do you need?

b. How much training would you provide your sales force?

c. Define the “role” of the proposed sales representative from the six options given in the chapter.

d. What should the sales-force objectives and strategies be? What size of sales force is needed—using the workload approach method is this realistic?

e. Choose a sales force compensation method—fixed or variable and can you do it for the same rate that you are paying the independent representatives?

f. Managing the sales force—What is the number of managers needed?

g. Should you just stick with your independent sales representatives and devise increased bonus opportunities instead? What are some of the other non-financial considerations that should enter into your decision?

END-OF-CHAPTER SUPPORT

MARKETING DEBATE—Are Great Salespeople Born or Made?

One difference of opinion with respect to sales concerns the potential impact of training versus selection in developing an effective sales force. Some observers maintain that the best salespeople are “born” that way and are effective due to their personalities and all the interpersonal skills they have developed over a lifetime. Others contend that application of leading-edge sales techniques can make virtually anyone a sales star.

Take a position: The key to developing an effective sales force is selection versus the key to developing an effective sales force is training.

Pro: Selection is definitely the number one consideration in choosing salespeople in today's business. There is an old adage: “hire for personality, train for skill.” Salespeople occupy a role in the marketing mix called the “boundary spanner” that is they are the link between the company and the customer. In these roles, the salesperson is subjected to enormous amount stress to please both the customer and be fair to the company. In addition, salespeople must endure absence from family, travel difficulties, and time management issues. Selecting a person based upon their ability to handle these stresses, and have the personality skills of likability, resourcefulness, listening, and problem handling/decision-making/solution providing included can only be accomplished by selecting the right person from the start.

In addition, salespeople must communicate trust, be trustworthy, ethical, and honest because so much of their dealing with customers/clients depends upon these characteristics. One cannot be expected to “train” for honesty, nor can one be expected to train a person in his /her ethical behavior. These are traits formed from birth and can only be found during the selection process.

Con: This is an old position, perhaps true when salespeople had only one function—to sell and the selling process consisted mainly of convincing clients/customers of their products by the primary use of personality, persistence, and patience. Today, the role of the salesperson is much more complex and complicated. Selling skills today, involve problem identification, listening skills, and a host of other “trainable” skill sets, more than they consist of being the “likable fellow” or “best joke teller” of the past. All of the skills needed by successful salespeople can be taught, including persistence and patience.

In today’s complicated business environment with sales people assuming more and more of the role as consultant, and account manager the attributes for success in these roles requires a different combination of skills—skills that can be taught to anyone who is interested enough to learn and become competent in their execution.

MARKETING DISCUSSION

Pick a company and go to their Web site. How would you evaluate the Web site? How well does it score on the 7Cs design elements: context, content, community, customization, communication, connection, and commerce.

Student answers will differ depending upon their favorite web sites.

MARKETING SPOTLIGHT—Yahoo!

Discussion Questions:

1) What have been the key success factors for Yahoo!?

a. They have followed the 7Cs of Internet success: context, content, community, customization, communication, connection, and commerce.

2) Where is Yahoo! vulnerable?

a. Overexposure of their trademarked name leading to confusion among consumers of what the Yahoo! name really stands for.

b. Danger of the name becoming “common speech” (aspirin) thereby losing their competitive advantage in the naming.

c. Consumer’s dissatisfaction with e-marketing and e-commerce in its entirety (pop-ads, spam ,etc.).

3) What should Yahoo! watch out for?

a. Consumer backlash against the entire e-commerce industry reflected in loss of sales.

b. Laws and regulations for the industry imposed by the government.

c. Changes in technology.

d. Competition.

4) What recommendations would you make to senior marketing executives going forward?

a. First, do not rest on past successes.

b. Keep up technologically.

c. Be monitoring consumer habits, interests, changing attitudes about e-commerce and e-marketing in particular.

5) What should the company be sure to do with their marketing?

a. Continue to foster the 7Cs listed above.

b. Continue to personalize content without imposing on individual consumers rights to privacy—consumers have a tendency to backlash against unwanted intrusions into their personal lives.

DETAILED CHAPTER OUTLINE

[pic] Today, marketing communications are increasingly seen as an interactive dialogue between the company and its customers. Companies must ask not only, “How can we reach our customers?” but also, “How can our customers reach us?” Personalizing communications is critical: Saying and doing the right thing to the right person at the right time.

.

. DIRECT MARKETING

[pic] Direct marketing is the use of consumer-direct (CD) channels to reach and deliver goods and services to customers without using marketing middlemen.

A) These channels include:

1) Direct mail.

2) Catalogs.

3) Telemarketing.

4) Interactive TV.

5) Kiosks.

6) Web sites.

7) Mobile devices.

B) Direct marketers seek a measurable response, typically a customer order.

C) This is sometimes called direct-order marketing.

D) Today, many direct marketers use direct marketing to build a long-term relationship with the customer.

E) Direct marketing is one of the fastest growing avenues for serving customers.

F) More and more businesses have turned to direct mail and telemarketing in response to the high and increasing costs of reaching business markets through a sales force.

1) Companies are seeking to substitute mail- and phone-based selling units to reduce field sales expenses.

[pic] Figure 19.1 provides a breakdown of the various types of direct marketing.

The Benefits of Direct Marketing

[pic] The extraordinary growth of direct marketing is the result of many factors.

A) Market demassification has resulted in an ever-increasing number of market niches.

B) Societal changes and difficulties are encouraging at-home shopping.

C) Direct marketing benefits customers in many ways:

1) Home shopping can be fun, convenient, and hassle-free.

2) Saves time.

3) Introduces consumers to a larger selection of merchandise.

4) Ease of comparative shopping.

5) Can order goods for themselves and others.

6) Business customers can benefit by learning about available products and services..

D) Sellers benefit as well.

1) Direct marketers can buy a mailing list containing the names of almost any group.

2) They can customize and personalize messages.

3) Can build a continuous relationship with each customer.

4) Direct marketing can be timed to reach prospects at the right moment.

5) Can receive higher readership because it is sent to more interested prospects.

6) Permits the testing of alternative media and messages in a cost-effective approach.

7) Direct marketers can measure responses to their campaigns to decide which one has been more profitable.

E) Direct marketers can use a number of channels to reach individual prospects and customers:

1) Direct mail.

2) Catalog marketing.

3) Telemarketing.

4) TV and other direct-response media.

5) Kiosk marketing.

6) E-marketing .

[pic] Review Key Definitions here: direct marketing, direct-order marketing, and market demassification

F) Every brand contact delivers an impression that can strengthen or weaken a customer’s view of the company.

.

. Direct Mail

[pic] Direct-mail marketing involves sending an offer, announcement, reminder, or other item to a person.

A) Direct marketing is a popular medium because it:

1) Permits target market selectivity.

2) Can be personalized.

3) Is flexible.

4) Allows for early testing and response measurement.

B) Direct mail marketing has passed through a number of stages:

1) Carpet bombing.

2) Database marketing.

3) Interactive marketing.

4) Real-time personalized marketing.

5) Lifetime value marketing.

C) In constructing an effective direct-mail campaign, direct marketers must decide on their:

1) Objectives.

2) Target market.

3) Prospects.

4) Offer elements.

5) Means of testing the campaign.

6) Measures of campaign success.

[pic] Review Key Definitions here: carpet bombing, database marketing, interactive marketing, real-time personalized marketing, lifetime value marketing

.

. Objectives

[pic] Most direct marketers aim to receive an order from prospects.

A) A campaign’s success is judged by the response rate.

B) An order-response rate of 2 percent is normally considered good, although this number varies with product category and price.

C) Direct mail can achieve other communication objectives as well:

1) Producing prospect leads.

2) Strengthening customer relationships.

3) Informing and educating customers.

4) Reminding customers of offers.

5) Reinforcing recent customer purchase decisions.

Target Markets and Prospects

[pic] Direct marketers need to identify the characteristics of prospects and customers who are most able, willing, and ready to buy.

A) Most direct marketers apply the R-F-M formula (recency, frequency, monetary amount) for rating and selecting customers.

B) The company selects customers according to:

1) How much time as passed since their last purchase.

2) How many times they have purchased.

3) How much they have spent since becoming a customer.

C) Prospects can also be identified based on such variables as age, sex, income education, and previous mail-order purchases.

D) In B2B direct marketing, the prospect is the group of people or committee that includes decision makers and multiple decision influencers.

E) Once the target market is defined, the direct marketer needs to obtain specific names.

1) The company’s best prospects are customers who have bought its products in the past.

2) The direct marketer can also buy lists of names from list brokers.

Offer Elements

[pic] Nash sees the offer strategy as consisting of five elements:

A) The product.

B) The offer.

C) The medium.

D) The distribution method.

E) The creative strategy.

F) In addition to these elements, the direct-mail marketer has to decide on five components of the mailing itself:

1) The outside envelop.

2) Sales letter.

3) Circular.

4) Reply form.

5) Reply envelope.

G) Direct mail should be followed up by an e-mail.

Testing Elements

[pic] One of the great advantages of direct marketing is the ability to test, under real marketplace conditions, different elements of an offer strategy, such as products, product features, copy platform, mailer type, envelope, prices, or mailing lists.

A) Direct marketers must remember that response rates typically understate a campaign’s long-term impact.

B) To derive a more comprehensive estimate of the promotion’s impact, some companies are measuring direct marketing’s impact on:

1) Awareness.

2) Intention to buy.

3) Word of mouth.

Measuring Campaign Success: Lifetime Value

[pic] By adding up the planned campaign costs, the direct marketer can figure out in advance the needed break-even response rate.

A) By carefully analyzing past campaigns, direct marketers can steadily improve performance.

B) Even when a specific campaign fails to break-even in the short-run, it can still be profitable in the long run if customer lifetime is factored in.

Catalog Marketing

[pic] In catalog marketing, companies may send full-line merchandise catalogs, specialty consumer catalogs, and business catalogs.

A) Catalogs are huge business—71 percent of Americans shop from home using catalogs, by phone, mail, or the Internet.

B) The success of a catalog business depends on the company’s ability to manage its:

1) Customer lists.

2) Control inventory.

3) Offer quality merchandise so returns are low.

4) Project a distinctive image.

C) Global consumers in Asia and Europe are catching on to the catalog craze.

D) Business marketers are making inroads to global consumers as well.

Telemarketing

[pic] Telemarketing is the use of the telephone and call centers to attract prospects, sell to existing customers, and provide service by taking orders and answering questions.

A) Telemarketing helps companies increase revenue, reduce selling costs, and improve customer satisfaction.

B) Companies use calls centers for:

1) Inbound telemarketing.

2) Outbound telemarketing.

C) Companies carry out four types of telemarketing:

1) Telesales.

2) Telecoverage.

3) Teleprospecting.

4) Customer service and technical support.

D) October 2003, National Do Not Call Registry.

1) Only political organizations, charities, telephone surveyors, or companies with existing relationships with consumers were exempt.

E) Telemarketing is increasingly used in business as well as consumer marketing.

F) Telemarketing, as it improves, with the use of videophones, will increasingly replace, though never eliminate, more expensive field sales calls.

[pic] Review Key Definition here: telemarketing, inbound, outbound telemarketing, telesales, telecoverage, teleprospecting

Other Media for Direct-Response Marketing

[pic] Direct marketers use all the major media to make offers to potential buyers.

Television

[pic] Television is used by direct marketers in several ways:

A) Direct-response advertising.

B) At-home shopping channels.

C) Videotext and interactive TV.

Kiosk Marketing

[pic] A kiosk is a small building or structure that might house a selling or information unit.

A) The name describes:

1) Newsstands.

2) Refreshment stands.

3) Free-standing carts.

4) Computer-linked vending machines.

5) “Customer-order-placing machines.”

INTERACTIVE MARKETING

[pic] The newest channels for direct marketers are electronic. The Internet provides marketers and consumers with opportunities for much greater interaction and individualization.

A) Today companies can send individualized content and consumers themselves can further individualize the content.

B) Companies can interact and dialogue with much larger groups than in the past.

C) The exchange process has become increasingly customer-initiated and customer-controlled.

1) Customers define the rules of engagement.

2) Define what information they need.

3) What offering they are interested in.

4) What prices they are willing to pay.

Benefits of Interactive Marketing

[pic] Interactive marketing offers many unique benefits. Messages delivered by attractive or popular sources can potentially achieve higher attention and recall.

A) It is highly accountable and its effects can be easily traced.

B) The Web offers the advantage of “contextual placements.”

C) Light consumers of other media can be reached.

D) The Web is especially effective at reaching people during the day.

E) Young, high income, high education consumer’s online media consumption exceeds that of TV.

Designing An Attractive Web Site

[pic] Clearly all companies need to consider and evaluate e-marketing and e-purchasing opportunities.

A) A key challenge is designing a site that is attractive on first viewing and interesting enough to encourage repeat visits.

B) Rayport and Jaworski have proposed that effective Web sites feature seven design elements that they call the 7Cs:

1) Context.

2) Content.

3) Community.

4) Customization.

5) Communication.

6) Connection.

7) Commerce.

C) To encourage repeat visit, companies need to pay special attention to context and content factors and embrace another “C”—constant change.

D) Visitors will judge a site’s performance on its ease of use and its physical attractiveness.

E) Ease of use breaks down into three attributes:

1) The Web site downloads quickly.

2) The first page is easy to understand.

3) The visitor finds it easy to navigate to other pages that open quickly.

F) Physical attractiveness is determined by the following factors:

1) The individual pages are clean looking and not overly crammed with content.

2) The typefaces and font sizes are very readable.

3) The site makes good use of color (and sound).

G) Retuning to a site depends on content.

1) Content must be:

a. Interesting.

b. Useful.

c. Continuously changing.

H) Certain types of content function will attract first-time visitors and bring them back again:

1) Deep information with links to related sites.

2) Changing news of interest.

3) Changing free offers to visitors.

4) Contests and sweepstakes.

5) Humor and jokes.

6) Games

Placing Ads and Promotion Online

[pic] A company has to decide which forms of Internet advertising will be most cost-effective in achieving advertising objectives.

A) Banner ads are small rectangular boxes containing text and perhaps a picture.

B) Companies pay to place banner ads on relevant Web sites.

C) Sponsorships are best placed in well-target sites where they can offer relevant information or service.

D) A microsite is a limited area on the Web managed and paid for by an external advertiser/company.

E) Interstitials are advertisements that pop up between changes on a Web site

F) The hottest growth area has been search-related ads.

G) A newer trend, content-target advertising links ads not keywords to the content of Web pages.

H) Companies can set up alliances and affiliate programs (when one Internet company works with another one, they end up advertising each other).

I) Web advertising is showing double-digit growth.

E-Marketing Guidelines

[pic] If a company does an e-mail campaign right, it cannot only build customer relationships, but also reap additional profits.

A) Here are some guidelines followed by pioneering e-mail marketers:

1) Give the customer a reason to respond.

2) Personalize the content of your e-mails.

3) Offer something the customer could not get via direct mail.

4) Make it easy for customers to “unsubscribe.”

B) Direct marketing must be integrated with other communications.

[pic] Review Key Definitions here: kiosk marketing, interactive marketing, banner ads, sponsorships, microsite, interstitials, search-related ads, content-target advertising, alliances, and affiliate programs

.

. DESIGNING THE SALES FORCE

[pic] The original and oldest form of direct marketing is the field sales call.

A) Today most industrial companies rely heavily on a professional sales force to:

1) Locate prospects.

2) Develop them into customers.

3) Grow the business.

B) U.S. firms spend over a trillion dollars annually on sales forces and sales-force materials—more than they spend on any other promotional method.

C) Nearly 12 percent of the total workforce work full time in sales occupations.

D) No one debates the importance of the sales force in marketing programs.

1) However, companies are sensitive to the high and rising costs of maintaining a sales force.

E) The term sales representative covers a broad range of positions.

F) Six can be distinguished, ranging from the least to the most creative types of selling:

1) Deliverer.

2) Order taker.

3) Missionary.

4) Technician.

5) Demand creator.

6) Solution vendor.

G) Sales personnel serve as the company’s personal link to the customers.

1) The sales representative is the company to many of its customers.

2) The sales representative brings back much needed information about the customer.

H) Therefore, the company needs to carefully consider issues in sales force design namely:

1) Development of sales force objectives.

2) Strategy.

3) Structure.

4) Size.

5) Compensation.

[pic] Figure 19.2 shows designing a sales force.

[pic] Review Key Definitions here: deliverer, order takers, missionary, technician, demand creator, and solution vendor

Sales-Force Objectives and Strategy

[pic] The days when all the sales force would do was “sell, sell, sell” are long gone. Today, sales reps need to know how to diagnose a customer’s problem and propose a solution. Salespeople show a customer-prospect how their company can help a customer improve profitability.

A) Companies need to define the specific objectives they want their sales force to achieve.

B) The specific allocation scheme depends on the kind of products and customers, but regardless salespeople will have one or more of the following specific tasks to perform:

1) Prospecting.

2) Targeting.

3) Communicating.

4) Selling.

5) Servicing.

6) Information gathering.

7) Allocating.

C) Because of the expense, most companies are moving to the concept of a leveraged sales force.

1) A leveraged sales force is where the sales force focuses on selling the company’s more complex and customized products to large accounts.

a. Low-end selling is done by inside salespeople and Web ordering.

b. Tasks such as lead generation, proposal writing, order fulfillment, and post-sale support are turned over to others.

c. As a result, salespeople handle fewer accounts, but are awarded for key account growth

D) Today’s sales representatives act as “account manager” who arrange fruitful contacts between various people in the buying and selling organizations.

E) Selling increasingly calls for teamwork requiring the support of other personnel such as :

1) Top management.

2) Technical people.

3) Customer service representatives.

4) Office staff.

F) To maintain a market focus, salespeople should know how to:

1) Analyze sales data.

2) Measure market potential.

3) Gather market intelligence.

4) Develop marketing strategies and plans.

G) Once the company decides on an approach, it can use a direct or a contractual sales force.

H) A direct (company) sales force consists of full- or part-time paid employees who work exclusively for the company.

I) A contractual sales force consists of manufacturers’ reps, sales agents, and brokers who are paid a commission based on sales.

[pic] Review Key Definitions here: prospecting, targeting, communicating, selling, servicing, information gathering, allocating, leveraged sales force, direct sales force, and contractual sales force

Sales-Force Structure

[pic] The sales-force strategy has implications for the sales-force structure. Established companies need to revise their sales-force structure as market and economic conditions change.

Sales-Force Size

[pic] Sales representatives are one of the company’s most productive and expensive assets. Increasing their number will increase both sales and costs.

A) Once the company establishes the number of customers it wants to reach, it can use a workload approach to establish sales-force size. This method consists of the following five steps:

1) Customers are grouped into size classes.

2) Desirable call frequencies.

3) The number of accounts in each size class is multiplied by the corresponding call frequency.

4) The average number of call per sales rep is determined.

5) The number of sales reps needed is determined.

[pic] Review Key Definition here: workload approach

Sales-Force Compensation

[pic] To attract top-quality sales reps, the company has to develop an attractive compensation package.

A) The company must determine the four components of sales-force compensation:

1) The fixed amount.

2) The variable amount .

3) Expense allowances .

4) Benefits.

B) Fixed compensation receives more emphasis in jobs with a high ratio of non-selling to selling duties and in jobs where the selling task is technically complex and involves teamwork.

C) Variable compensation receives more emphasis in jobs where sales are cyclical or depend on individual initiative.

D) Fixed and variable compensation give rise to three basis types of compensation plans:

1) Straight salary.

2) Straight commission.

3) Combination salary and commission.

E) Some companies see a new trend toward deemphasizing volume measures in favors of factors such as profitability, customer satisfaction, and customer retention.

F) Other companies are basing the rep’s reward partly on a sales team’s performance or even companywide performance.

[pic] Review Key Definitions here: fixed amount, variable amount, expense allowances, benefits, straight salary, straight commission, and combination salary and commission

. Managing the Sales Force

[pic] Once the company has established objectives, strategy, structure, size and compensation, it has to recruit, select, train, supervise, motivate, and evaluate sales representatives.

[pic] Figure 19.3 illustrates managing the sales force.

Recruiting and Selecting Representatives

[pic] At the heart of a successful sales force is the selection of effective representatives. One survey revealed that the top 27 percent of the sales force brought in over 52 percent of the sales.

A) Selecting sales reps would be simple if one knew what traits to look for.

1) One good starting point is to ask customers what traits they prefer.

2) Finding what traits will actually lead to sales success is challenging.

3) Numerous studies have shown little relationship between sales performance and background and experience variables.

B) Once management develops its selection criteria it must recruit.

Training and Supervising Sales Representatives

[pic] Today’s customers expect salespeople to have deep product knowledge, to add ideas to improve the customer’s operations, and to be efficient and reliable. Companies use sales-promotion tools to draw a stronger and quicker buyer response.

A) These demands have required companies to make a much higher investment in sales training.

B) New reps may spend a few weeks to several months in training.

C) Training time varies with the complexity of the selling task and the type of person recruited into the sales organization.

D) New methods of training are continually emerging.

E) Companies vary in how closely they supervise sales reps.

Sales Rep Productivity

[pic] Some research has suggested that today’s sales reps are spending too much time selling to smaller, less profitable accounts when they should be focusing more of their efforts on selling to larger, more profitable accounts.

Norms for Prospect Calls

[pic] Companies often specify how much time reps should spend prospecting for new accounts.

A) Companies set up prospecting standards for a number of reasons:

1) Left to their own devices, many reps will spend most of their time with current customers.

2) Some companies rely on a missionary sales force to open new accounts. The appeal of public relations and publicity is based on three distinctive qualities:

Using Sales Time Efficiently

[pic] Studies have shown that the best sales reps are those who manage their time effectively

A) One planning tool is time-and-duty analysis.

B) Companies are constantly seeking ways to improve sales-force productivity.

C) To cut costs, reduce time demands on their outside sales force, and take advantage of computer and telecommunications innovations, many companies have increased the size and responsibilities of their inside sales force.

D) Inside salespeople are of three types:

1) Technical support people.

2) Sales assistants.

3) Telemarketers.

E) The inside sales force frees the outside reps to spend more time selling to:

1) Major accounts.

2) Identifying and converting new major prospects.

3) Placing electronic ordering systems in customers’ facilities.

4) Obtaining more blanket orders and systems contracts.

F) Another dramatic breakthrough is the new high-tech equipment (PCs, etc.).

G) One of the most valuable electronic tools for the sales rep is the company Web site:

1) As a prospecting tool.

2) To help define the firm’s relationship with individual accounts.

3) Identify those whose business warrants a personal sales call.

4) Provides an introduction to self-identified potential customers.

H) Selling over the Internet supports relationship marketing by solving problems that do not require live intervention and thus allows more time to be spent on issues that are best addressed face-to-face.

Motivating Sales Representatives

[pic] The majority of sales representatives require encouragement and special incentives. Most marketers believe that the higher the salesperson’s motivation, the greater the effort and the resulting performance, rewards, and satisfaction, and thus further motivation

A) Such thinking is based on several assumptions:

1) Sales managers must be able to convince salespeople that they can sell more by working harder or by being trained to work smarter.

2) Sales manager must be able to convince salespeople that the rewards for better performance are worth the extra effort.

B) To increase motivation, marketers reinforce intrinsic and extrinsic rewards of all types.

C) One research study that measured the importance of different rewards found that the reward with the highest value was pay, followed by:

1) Promotion.

2) Personal growth.

3) Sense of accomplishment.

D) The least-value rewards were:

1) Liking and respect.

2) Security and recognition.

E) In other words, salespeople are highly motivated by pay and taking the chance to get ahead to satisfy their intrinsic needs, and less motivated by complements and security.

F) Most companies set annual sales quotas.

1) Quotas can be set on dollar sales:

a. Unit volume.

b. Margin.

c. Selling effort or activity.

d. Product type.

G) Compensation is often tied to degree of quota fulfillment.

H) Sales quotas are developed from the annual marketing plan.

I) Each area sales manager divides the area’s quota among the area’s sales reps.

1) One general view is that a salesperson’s quota should be at least equal to the person’s last year’s sales plus some fraction of the difference between territory sales potential and last year’s sales.

J) Conventional wisdom is that profits are maximized by sales reps focusing on the more important products and more profitable products.

K) Setting sales quotas creates problems:

1) If the company underestimates, it overpays its reps.

2) If the company overestimates salespeople, they will not make their quotas and feel frustrated or quit.

3) Another downside is that quotas can drive reps to get as much business as possible—possibly ignoring the service side of the business.

L) Some companies are dropping quotas altogether to focus on the service side of the business.

Evaluating Sales Representatives

[pic] We have been describing the feed-forward aspects of sales supervision—how management communicates what the sales rep should be doing and motivates them to do it. But good feed-forward requires good feedback, which means getting regular information from reps to evaluate performance.

Sources of Information

[pic] The most important source of information about reps is sales report.

A) Additional information comes through.

1) Personal observation.

2) Salesperson self-reports.

3) Customer letters and complaints.

4) Customer surveys.

5) Conversations with other sales representatives.

B) Sales reports are divided between:

1) Activity plans.

2) Write-ups or activity results.

C) Many companies require representatives to develop an annual territory marketing plan in which they outline their program for developing new accounts and increasing business from existing accounts.

D) Sales reps write up completed activities on call reports.

E) These reports provide raw data from which sales managers can extract key indications of sales performance:

1) Average number of sales calls per salesperson per day.

2) Average sales call time per account.

3) Average revenue per sales call.

4) Average cost per sales call.

5) Entertainment cost per sales call.

6) Percentage of orders per hundred sales calls.

7) Number of new customers per period.

8) Number of lost customers per period.

9) Sales-force cost as a percentage of total sales.

Formal Evaluation

[pic] The sales force’s reports along with other observations supply the raw materials for evaluation. There are several approaches to conduction evaluations.

[pic] Table 19.1 shows one example.

A) Evaluations can also assess the salesperson’s knowledge of:

1) Company.

2) Products.

3) Customers.

4) Competitors.

5) Territory.

6) Responsibilities.

B) Personal characteristics can be rated, such as:

1) General manner.

2) Appearance.

3) Speech.

4) Temperament.

C) The sales manager can review any problems in motivation or compliance.

PRINCIPLES OF PERSONAL SELLING

[pic] Effective salespersons have more than instinct, they are trained in methods of analysis and customer management.

A) Today’s companies spend hundreds of millions of dollars each year to train salespeople in the art of selling.

B) Sales-training approaches try to convert a salesperson from a passive order taker into an active order getter who engages in customer problem solving.

C) Most sales-training programs agree on the major steps involved in any effective sales process:

[pic] Figure 19.4 shows the major steps in effective selling.

The Six Steps

A) Step 1: Prospecting and Qualifying

1) The first step in selling is to identify and qualify prospects

2) More companies are taking responsibility for finding and qualifying leads

3) Leads can be categorized, with “hot” prospects turned over to the field sales force.

a. “Warm” prospects turned over to the telemarketing unit for follow-up

B) Step 2: Preapproach

1) The salesperson needs to learn as much as possible about the prospect company

2) The salesperson should set call objectives.

a. Or decide on the best contact approach.

(i) And an overall strategy for the account.

C) Step 3: Presentation and Demonstration

1) The salesperson now tells the product “story” to the buyer, following the AIDA formula:

a. Gaining attention.

b. Holding interest.

c. Arousing desire.

d. Obtaining action .

2) The salesperson uses:

a. Features.

b. Advantages.

c. Benefits.

d. Value approach (FABV).

D) Step 4: Overcoming Objections

1) Customers typically pose objections during the presentation or when asked for the order:

a. Psychological resistance.

b. Logical resistance.

2) To handle these objections, the salesperson maintains a:

a. Positive approach.

b. Asks the buyer to clarify the objection.

c. Questions the buyer in a way that the buyer has to answer his or her own objection.

d. Denies the validity of the objections.

e. Turns the objection into a reason for buying.

3) One potential problem is for salespeople to give in too often when customers demand a discount.

a. “Sell the price” versus “sell through price.”

b. Received training to recognize value-adding opportunities rather than price-cutting opportunities.

E) Step 5: Closing

1) Salespeople need to know how to recognize closing signs from the buyer:

a. Physical actions.

b. Statements or comments.

c. Questions.

2) There are several closing techniques:

a. Ask for the order.

b. Recapitulate the points of agreement.

c. Offer to help write up the order.

d. Ask whether the buyer wants A or B.

e. Get the buyer to make minor choices such as color and sizes.

f. Indicate what the buyer will lose if the order is not placed now.

F) Step 6: Follow-Up and Maintenance

1) Follow-up and maintenance are necessary if the salesperson wants to ensure customer satisfaction and repeat business.

2) Immediately after the closing, the salesperson should:

a. Cement any details on delivery time, purchase terms, and other matters important to the customer.

b. Schedule a follow-up call.

c. Develop a maintenance and growth plan for the account.

Negotiation

[pic] Marketing is concerned with exchange activities and the manner in which the terms of the exchange are established.

A) In routinized exchange, the terms are established by administered programs of pricing and distribution.

B) In negotiated exchange, price and other terms are set via bargaining behavior.

C) Although price is the most frequently negotiated issue, other issues include:

1) Contract completion time.

2) Quality of goods and services.

3) Purchase volume.

4) Responsibility for financing.

5) Risk taking.

6) Promotion.

7) Title.

8) Product safety.

D) Marketers who find themselves in bargaining situations need certain traits and skills to be effective.

[pic] Review Key Definitions here: prospecting and qualifying, preapproach, approach, presentation and demonstration, overcoming objections, closing, and follow-up and maintenance

Relationship Marketing

[pic] The principles of personal selling and negotiation we have described are largely transaction-orientated. But in many cases the company is not seeking an immediate sate, but rather to build up long-term supplier-customer relationship.

A) Today’s customer are large and often global.

C) They prefer suppliers who can:

1) Sell and deliver a coordinated set of products and services to many locations.

2) Who can quickly solve problems that arise in different locations.

3) Who can work closely with customer teams to improve products and processes.

C) Salespeople working with key customers must do more than call when they think the customers might be ready to place orders.

1) They should call or visit at other times.

2) Make useful suggestions about the business.

3) Monitor key accounts.

4) Know customers’ problems.

5) Be ready to serve them in a number of way.

D) When a relationship management program is properly implemented, the organization will begin to focus on managing its customers as it does on managing its products.

E) Ultimately, companies must judge which segments and which specific accounts will respond to relationship management.

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C H A P T E R

19

MANAGING PERSONAL COMMUNICATIONS: DIRECT MARKETING AND PERSONAL SELLING

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