BEHAVIOURAL EQUATION THEORY
J A Howard formulated the theory
four essential elements of learning process in stimulus-respo...
A)    Product cues: external stimuli received from the product directly. (Package, weight,
          price)

    B)    Inf...
CONTD…
   the relation among the variable is multiplicative. thus, if
   any independent variable has zero value, b will a...
salesperson’s role in reducing buyer’s dissonance: four
   types of cases involving the salesperson’s role.
1. an establis...
FORMULATION OF PERSONAL SELLING STRATEGIES

Pure competition
     No single buyer/seller is so large that affects the pr...
 Oligopolistic competition
  – Few & large competitors
  – Entry barriers
  – Changing of marketing strategy of one compe...
DETERMINING THE KIND OF SALES PERSONNEL
1.       Product market analysis
           A) Product specialist
           B)  M...
DETERMINING THE KIND OF SALES PERSONNEL CONTD…


C) Technical selling
    Sales person deals with company’s established a...
DETERMINING THE SIZE OF SALES FORCE
1. The workload method: all sales persons should
   share equal workload

  i.     Cla...
Contd…
2.       The sales potential method

           Performance of the set of activities contained in the job
        ...
Contd…
3. Incremental method
   Best approach to determine sales force size

   Based on proposition: net profits will i...
STEPS IN PERSONAL SELLING




                                         Presentation
                                      ...
PROSPECTING
•    the planning work which is essential in eliminating non-buyers


•    steps in prospecting

    1.   form...
CONTD…
•    methods of prospecting

    1.   acquintance references
    2.   cold calling
    3.   centre of influence met...
PRE-APPROACH
• the kind of preparation to meet the buyer
• significance of pre-approach

    concentrate on prospect and ...
APPROACH
• direct contact between sales person & prospect

• importance of successful approach

    enhances sales & thus...
CONTD…
• methods of approach

       cashing on brand name or company’s reputation
       customer benefit approach
    ...
PRESENTATION & DEMONSTRATION

    – requirements of good presentation
   quick presentation of products
   attractive, d...
HANDLING OBJECTIONS
• types of objections

      objections on price
      objections on quality
      objections on pa...
THE SALES CLOSE
convince the customer to buy a product

• reasons for failure to close
      prospect not fully convinced...
SALES ORGANIZATIONS
• purpose of sales organizations

  to permit the development of specialist
  to assure that all nec...
SETTING UP A SALES ORGANIZATION

• Defining the objective

    Set both quantitative as well as qualitative objectives
  ...
CONTD…
• grouping activities into ‘jobs’ or ‘positions’

     activities identified are allocated to different positions
...
CONTD…
 coordination & control is obtained through both formal &
  informal means

 formal instruments of organizational...
BASIC TYPES OF SALES ORGANIZATION
                   STRUCTURE
• factors affecting the organizational structure

• types o...
LINE SALES DEPARTMENT ORGANIZATION

                          GM




                          SM



 ASSISTANT    ASSISTA...
CONTD…
    no cross communication between persons at same level
    greatest use in companies where all sales persons re...
CONTD…
• line & staff sales organizations

     found in large & medium-sized firms employing number of
      sales perso...
LINE & STAFF SALES DEPTT. ORGANIZATION

                             President

                            Vp marketing

...
CONTD…
• Advantages

   Specialization

   planning activities are divided and apportioned to staff
    members

   exe...
CONTD…
• functional sales organization

    each individual in an organization should have few
     distinctive duties as...
CONTD…
• committee sales organization

     never a sole basis for organizing a sales deptt.
     method of organizing t...
SALES TERRITORIES
• a sales territory is a grouping of customers and
  prospects assigned to an individual sales person

•...
Procedure for setting up or revising sales
                          territories
• four steps
1. selecting a basic geograp...
CONTD…
2.   determining sales potentials in control unit
     sales potential represents the maximum possible sales
     o...
CONTD…
4. adjusting for coverage difficulty and redistricting tentative territories – redistricting
   to adjust for cover...
SALES QUOTAS
– quotas are quantitative objectives assigned to
  sales organizational units.
– all quotas have time dimensi...
OBJECTIVES IN USING QUOTAS
• to provide quantitative performance standard – comparision
  of quota with sales performance ...
TYPES OF QUOTAS
• sales volume quota

   oldest & most common type

   communicates – “ how much for what period”

   s...
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Behvioural Formula Theory Editttt

  1. 1. BEHAVIOURAL EQUATION THEORY J A Howard formulated the theory four essential elements of learning process in stimulus-response model  drives , cues , response , reinforcement 1. drives: strong internal stimuli that impels the buyer to respond. there are two kinds  innate drive: stems from physiological needs  learned drives: such as striving for status or social approval, are acquired when paired with satisfying of innate drives 2. cues: weak stimuli that determine when the buyer will respond  triggering cues: activate the decision process for any given purchase  non-triggering cues: influence the decision process but do not activate it. two kinds –
  2. 2. A) Product cues: external stimuli received from the product directly. (Package, weight, price) B) Informational cues: external stimuli. May come from advertising, personal selling etc. ***Specific product and information cues may also act as triggering cues 3. Response: what buyer does 4. Reinforcement: any event that strengthens the buyer’s tendency to make particular response Howard incorporates these four elements into an equation: B=p X D X K X V B= response (purchasing the brand/patronising the supplier) P= predisposition (inward response tendency) D= present drive level (amount of motivation) K= incentive potential (value of product or its potential satisfaction to the buyer) V= intensity of all cues
  3. 3. CONTD… the relation among the variable is multiplicative. thus, if any independent variable has zero value, b will also be zero and there is no response. buyer-sellers dyad and reinforcement  by providing the product to the buyer  by giving social approval salespersons influence process the process is explainable in terms of equation b= p x d x k x v  salesperson influences p directly  sales person also influences d, which ultimately affects k  finally the sales person vary the intensity of his efforts, so making difference in v
  4. 4. salesperson’s role in reducing buyer’s dissonance: four types of cases involving the salesperson’s role. 1. an established product: an ongoing salesperson’s- client relationship 2. an established product: a new salesperson-client relationship 3. a new product: an ongoing salesperson-client relationship 4. a new product: a new sales person-client relationship how to reduce buyers dissonance 1. to emphasize the advantages of products purchased 2. by providing the information that permits the buyer to rationalize the decision
  5. 5. FORMULATION OF PERSONAL SELLING STRATEGIES Pure competition  No single buyer/seller is so large that affects the product total demand/supply  All sellers products are identical  No artificial restraints on price exists  All buyers are informed about sellers price Personal selling strategy Unrealistic assumptions, therefore, no personnel selling strategies Monopolistic competition  Large number of sellers of generic product but each product is differentiated  Easy entry conditions  Buyers are not fully informed about the offering of competing sellers Personal selling strategy Sellers differentiate their market offerings through individualizing one or several components of overall marketing strategy.
  6. 6.  Oligopolistic competition – Few & large competitors – Entry barriers – Changing of marketing strategy of one competitor has direct repurcussions on other Personal selling strategies Plays important role in building and maintaining dealer competition, in servicing the distribution network and in gathering information on competitor’s activities.  No direct competition No direct but indirect competition exists. Personal selling strategies – Selling strategies required to stimulate primary demand – Requirement of distribution strategy – Requirement of pricing strategy – Integration of product, distribution, pricing strategies in overall marketing strategies
  7. 7. DETERMINING THE KIND OF SALES PERSONNEL 1. Product market analysis A) Product specialist B) Market specialist C) Combination of both 2. Analysis of sales personnel role in securing the order: choice of basic selling style A) Trade selling:  Developing and maintaing long-term relationship with stable customers  Low key selling, little or no pressure, job is dull & routine  Advetising & other promotional measures are preferrred than personal selling  Sales person role is to buildup volume by providing promotional assistance B) Missionary selling  Low key and does not require high-level technical training or ability  Salesperson job is to persuade indirect customers to buy from the company’s direct customers c) Technical selling d) New business selling
  8. 8. DETERMINING THE KIND OF SALES PERSONNEL CONTD… C) Technical selling  Sales person deals with company’s established account & perform advisory function  Sales person sells directly to the industrial users & other buyers  Sales person specialize by either product or market  The ability to identify, analyze & solve customers problem is important D)New business selling  Sales persons role is to convert prospects into customer  Sales person should unusually creative, ingenious and possess a high degree of resourcefulness
  9. 9. DETERMINING THE SIZE OF SALES FORCE 1. The workload method: all sales persons should share equal workload i. Classify customers into sales volume potential category ii. Decide on length of time per sales call and desired calls frequencies on each class iii. Calculate the total workload iv. Calculate total worktime available per person v. Divide total worktime available per person by task vi. Calculate the total no. Of sales person needed – Large firms like ibm & at&t has used this approach – Basic flaw – disregard profit as an explicit consideration - All sales person will utilize their time with equal efficiency
  10. 10. Contd… 2. The sales potential method  Performance of the set of activities contained in the job description represents one sales personnel unit  Does not consider the lead time  Assumes sales potential are identical in all territories  Estimate of sales productivity of one unit sale & turnover is crucial & relies on accuracy N = s/p+t(s/p) or n=s/p(1+t) N = no. Of sales personnel units S = forecasted sales volume P = estimated sales productivity of one sales personnel unit T = allowance for rate of sales turnover
  11. 11. Contd… 3. Incremental method  Best approach to determine sales force size  Based on proposition: net profits will increase when additional sales personnel are added if the incremental sales revenues exceeds the incremental costs incurred  Conceptually most correct but most difficult to apply  It is doubtful that the method is appropriate where personal selling is not primary means of making sales  It fails to account for possible competitive reactions and long term investment effect of personal selling
  12. 12. STEPS IN PERSONAL SELLING Presentation Handling Prospecting Pre-Approach Approach and Close objects demonstration
  13. 13. PROSPECTING • the planning work which is essential in eliminating non-buyers • steps in prospecting 1. formulating prospects definition 2. searching out potential accounts 3. qualifying prospects & determining probable requirements 4. relating company product’s to each prospect’s requirement
  14. 14. CONTD… • methods of prospecting 1. acquintance references 2. cold calling 3. centre of influence method 4. personal observation method 5. direct mail/ telephone method 6. company’s record 7. newspapers 8. retailers 9. any other
  15. 15. PRE-APPROACH • the kind of preparation to meet the buyer • significance of pre-approach  concentrate on prospect and not the suspect  helps gain information about the prospect before approaching  efficient & effective sales presentation  does not waste the prospects time & energy
  16. 16. APPROACH • direct contact between sales person & prospect • importance of successful approach  enhances sales & thus important for running business  enlightens the customer  failed approach gives opportunity to rivals • key to successful approach  meet prospect with prior appointment  professionalism, confidence & complete information  make prospect feel relaxed  respect the views & critism of prospects  effective presentation with the use of sales figure  efficient follow up
  17. 17. CONTD… • methods of approach  cashing on brand name or company’s reputation  customer benefit approach  innovative products open the door to salesman  the premium approach  the shock approach  the approach of making prospect feel important  the survey approach  the interactive approach
  18. 18. PRESENTATION & DEMONSTRATION – requirements of good presentation  quick presentation of products  attractive, decorated & well organized packages  explaination of product features in simple & easy terms  show the kind of quality demanded by sales person  product appeal to customer senses – advantages of demonstration  shows product features clearly  reinforcement of buying decisions  gives customer opportunity to compare products  increases confidence of customer  speaks louder than salesman
  19. 19. HANDLING OBJECTIONS • types of objections  objections on price  objections on quality  objections on payment  objections on after sale service  objections on timing to buy • procedure for handling objections  give opportunity to prospect to raise objection  admit valid objections and accept in positive spirit  never offend prospect by overruling objection  convince prospect to view problem from different angle  give better deal to customer to counter objection
  20. 20. THE SALES CLOSE convince the customer to buy a product • reasons for failure to close  prospect not fully convinced  pressurized by salesman to buy product  prospects want to postpone purchase  salesman not recognizing his needs/preferences  salesman not fully aware  proper planning, presentation & demonstration is not there
  21. 21. SALES ORGANIZATIONS • purpose of sales organizations to permit the development of specialist to assure that all necessary activities are performed to achive coordination or balance to define authority to economize on executive time
  22. 22. SETTING UP A SALES ORGANIZATION • Defining the objective  Set both quantitative as well as qualitative objectives  Qualitative objectives are indispensable for long-range planning, thus, kept in mind in short range planning also  Quantitative objectives are required as operating guideposts • Delineating the necessary activities  Determining the necessary activities & their volume of performance is based on qualitative & quantitative objectives  Also helps in determining which activities to be performed in what volume
  23. 23. CONTD… • grouping activities into ‘jobs’ or ‘positions’  activities identified are allocated to different positions  activities are grouped so that closely related tasks are assigned to same positions  each position must also contain some variations • assigning personnel to positions  whether to recruit special individuals to fill the positions or to modify the positions to fit the capabilities of available persons • providing for coordination and control  sales executives require means to control their subordinates & to coordinate their efforts  they should not be overburdened nor should have too many subordinates
  24. 24. CONTD…  coordination & control is obtained through both formal & informal means  formal instruments of organizational control: 1. written job description  reporting relationships  job objectives, duties & responsibilities  performance measurements 2. an organization chart  reduces confusion about individuals role  delineates formal relationship 3. organizational manuals  extension of organization chart  contains chart for both the company & the department
  25. 25. BASIC TYPES OF SALES ORGANIZATION STRUCTURE • factors affecting the organizational structure • types of organization structure  the customers  the marketing channelsthe company size  the product or product line  the practices of competitors  personalities & abilities of personnel • line sales organizations  oldest & simplest structure  widely used in smaller firms or firms with small numbers of selling personnels, limited geographical area or narrow product line  chain of command run from top to down  all executives exercise line authority & each sales person is responsible to next in the hierarchy
  26. 26. LINE SALES DEPARTMENT ORGANIZATION GM SM ASSISTANT ASSISTANT ASSISTANT ASSISTANT SM DIV-1 SM DIV-2 SM DIV-3 SM OFFICE SALES SALES SALES OFFICE PEOPLE PEOPLE PEOPLE STAFF
  27. 27. CONTD…  no cross communication between persons at same level  greatest use in companies where all sales persons report directly to the chief sales executives • advantages:  problems of discipline & control are small  authority & responsibilty are clear  saves time in making policy changes  development of close relationship between superior & subordinate  administrative expenses are low • disadvantages  too much dependence on department head  insufficient time for policy making & planning  inappropriate for rapidly growing firms  offers little opportunity to subordinates to acquire management skills
  28. 28. CONTD… • line & staff sales organizations  found in large & medium-sized firms employing number of sales persons, selling diversified product lines over wide geographic areas  provide top sales executives with group of specialists to assist  staff helps in conserving the time & frees executives for other works  staff specialists increases overall effectiveness of department  staff do not have authority to issue orders or directives
  29. 29. LINE & STAFF SALES DEPTT. ORGANIZATION President Vp marketing Advertising Gm sales Manager market research Manager Assistant Sales Director Sales personel Assistant To Promotion Training Director Gm sales Gm sales Manager District sales manager Branch sales manager Sales personnel
  30. 30. CONTD… • Advantages  Specialization  planning activities are divided and apportioned to staff members  executives concentrate on coordination & control • Disadvantages  increase in administrative expenses  difficult to prevent some persons from evading unwanted responsibilities
  31. 31. CONTD… • functional sales organization  each individual in an organization should have few distinctive duties as possible  principle of specialization is utilized to its fullest extent  sales people receive instructions from several executive but at different aspects of their work • Advantages  improved performance • disadvantages  not feasible for small & medium sized firms  suitable for large firms with stable operations & with opportunity for considerable division of labour
  32. 32. CONTD… • committee sales organization  never a sole basis for organizing a sales deptt.  method of organizing the executive groups for planning & policy formulation  the agenda must be planned & controlled to avoid wasting time • advantages • promote coordination • collective decision making • provide focal point for discussion & for suggestions
  33. 33. SALES TERRITORIES • a sales territory is a grouping of customers and prospects assigned to an individual sales person • reason for establishing or revising sales territories a. to provide proper market coverage b. to control selling expenses c. to assist in evaluating sales personnel d. to contribute to sales force morale e. to aid in the co-ordination of personal selling and advertising effort
  34. 34. Procedure for setting up or revising sales territories • four steps 1. selecting a basic geographical control units: the most commonly used control units are – a. counties: smallest unit for which govt. officials report data b. zip code areas: generally reflects economic characteristics of area c. cities: used when sales potential is located in urbanized areas d. metropolitan statistical areas: geographical area with large population nucleus together with adjacent communities e. trading areas: the geographical region surrounding the city that serves as dominant retail or wholesale center or both for the region f. states: used when company with small sales force covering the market extensively rather intensively or when company is first using the national distribution , which assigns its sales person territories with 1 or more states as temporary expedient and as soon as feasible a change is made to a small control unit
  35. 35. CONTD… 2. determining sales potentials in control unit sales potential represents the maximum possible sales opportunities open to a specific company selling a good or services during a stated future period to a particular market segment 3. combining control units into tentative territories  decides on number of territories, assuming that all sales personnel are of average ability  analysis of past sales experience helps in determinig the % of total sales potential that an average sales person should realize  estimate the sales productivity per sales personnel unit and devides it into the total estimated sales potential = no. of sales personnel units - & territories required.  the next step is to decide the territory shape, which affects selling expenses & ease of coverage
  36. 36. CONTD… 4. adjusting for coverage difficulty and redistricting tentative territories – redistricting to adjust for coverage difficulty is a seven step procedure – a. determine no., location & size of customers & prospects in each tentative territory b. estimate time required for each sales call c. determine length of time between calls, that is amount of time required to travel from one customer to another d. decide call frequencies e. calculate the no. of calls possible within a given period f. adjust the no. of calls possible during a given period by the desired call frequencies for the different classes of customers & prospects
  37. 37. SALES QUOTAS – quotas are quantitative objectives assigned to sales organizational units. – all quotas have time dimension – they quantify what management expects within a given period – quotas are devises for directing & controlling sales operation – accurate data are important to the effectiveness of quota system – judgement & administrative skills are required of those with quota setting responsibilities.
  38. 38. OBJECTIVES IN USING QUOTAS • to provide quantitative performance standard – comparision of quota with sales performance identify week & strong points • to obtain tighter sales & expense control • to motivate desired performance • to use in connection with sales contest  companies frequently use “performance against quota” as the main basis of making awards in sales contest  sales contest is a powerful incentive if all participants feel they have equal chance of winning
  39. 39. TYPES OF QUOTAS • sales volume quota  oldest & most common type  communicates – “ how much for what period”  set for geographical areas, product lines or marketing channels or combination  the smaller the unit, the more effective the quota for controlling sales operation • budget

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