BK SG ch19.doc.doc


Published on

1 Like
  • Be the first to comment

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

BK SG ch19.doc.doc

  1. 1. Chapter 19 Personal Selling and Sales-Force Management Chapter Outline You may want to use the following outline as a guide in taking notes. I. Chapter Overview—In exploring personal selling strategies, this chapter gives special attention to the relationship-building opportunities the selling situation presents. Personal selling is the process of a seller’s person-to-person promotional presentation to a buyer. The sales process is essentially interpersonal and is basic to any enterprise. Personal selling is a primary component of a firm’s promotional mix in six well- defined situations. These are (1) when customers are geographically concentrated; (2) when the dollar amounts of individual orders are large; (3) when the firm markets goods and services that are expensive, technically complex, or require special handling; (4) when trade-ins are involved; (5) when products move through short channels; or (6) the firm markets to relatively few potential customers. II. The Evolution of Personal Selling covers a span of several thousand years. Selling is far different today than it was even forty or fifty years ago, today’s sales representative being a highly-trained professional. Selling is a vital, dynamic process, which has transitioned from a transactions-based to a relationship-based philosophy along with the other practitioners of the marketing discipline. In fact, personal selling is an attractive career choice for today’s college and university students. III. The Four Sales Channels available to marketers each have their own positive and negative aspects. Telemarketing and online selling are cheaper than field selling and over-the counter sales, but their lack of personal contact with prospective make them somewhat less effective. A. Over-the-counter selling is the most frequently-used sales channel, typical of selling in retail and some wholesale situations. Customers come to the stores of their choice to select products or services appropriate to their needs. Before the advent of the big chain retailers, it was not unusual for local retailers to know their customers by name and be familiar with their tastes and preferences. Some firms are attempting to recreate this relationship in the old-fashioned way. Other firms are trying to recreate the personalized one-on-one experience of over the counter selling over the Internet, but so far, success has been elusive. B. Field selling involves making sales calls on prospective and existing customers at their businesses or homes. Considerable creative effort and technical expertise may be required. Field selling is considerably more expensive than other selling options largely because of the travel required. In fairly routine selling situations, the field sales representative may basically act as an order taker who processes regular customers’ orders. Some field selling may have a local focus, or it may require many days and nights away from home calling on distant customers. C. Telemarketing is a sales channel in which the selling process is conducted by phone, provides sales and services to the business-to-business and direct-to-customer markets. Outbound telemarketing involves a sales force that relies on the phone to contact customers, reducing the substantial costs of personal visits to personal visits to customers’ homes or businesses. A major drawback to outbound telemarketing is that is that the majority of customers don’t like it. There are both federal and state laws (in twenty-three states) restricting the use of telemarketing. So why is outbound telemarketing such a popular sales technique? It is cost-effective and it works. Inbound telemarketing usually involves a toll-free number that customers call to obtain information, make reservations, and purchase goods and services. D. Inside selling is a combination of field selling techniques applied through inbound and outbound telemarketing channels with a strong customer orientation. A successful inside sales force relies on close 117
  2. 2. working relationships with field representatives to solidify customer relationships. E. Integrating selling channels involves blending alternative sales channels to create a successful cost- effective sales organization. All of the types of selling outlined above may be used to complement each other in one situation or another. IV. Recent Trends in Personal Selling reflect current conditions that call for different strategies than salespeople used in the past. Team selling, technical capacity and a technological vocabulary, and patience are requirements the modern sales representative is more likely to need than his or her predecessors. Companies rely on four major personal selling approaches to address these concerns, which together are changing the sales function. A. Relationship selling is a technique for building a mutually beneficial relationship with a customer through regular contacts over an extended period. The success of tomorrow’s marketers depends on the relationships they build today in both the consumer and B2B markets. B. Consultative selling involves meeting customer needs by listening to customers, understanding and caring about their problems, paying attention to details, and following through after the sale. It builds customer loyalty by working hand in hand with relationship selling to build customer loyalty. The rapid pace of technology drives business at an unprecedented pace, and the need for sales representatives to possess engineering educations has become a serious one in many industries. Online companies use consultative selling models to create long-term customers. Cross-selling is a technique that capitalizes on a firm’s strengths by offering multiple products or services to the same customer. C. Team selling joins sales representatives with specialists from other functional areas of the firm to complete the selling process. In situations where selling involves detailed knowledge of new, complex, and ever-changing technology, team selling offers a distinct competitive edge in meeting customers’ needs. On occasion, team selling may involve bringing in help from outside the company. In any team selling situation, preparation is the key to selling well. D. Sales force automation is the application of new technologies to the selling process. It may be broadly defined to mean the use of pagers, Web-browsing cell phones, voice and electronic mail, and laptop and notebook computers. Alternatively, it may be narrowly interpreted to mean the use of computers by salespeople for activities beyond the use of word processors, spreadsheets, and connections to order-entry systems. Using these tools, both small and large firms can increase efficiency and spend more time on client acquisition and retention. Some firms have integrated UPC scanning and order generation to expedite order processing, while other have integrated telephony with the Internet as part of their selling effort. SFA usage differs sharply from industry to industry. Food, beverage, and pharmaceutical firms have been using sophisticated systems for a number of years, while apparel companies have been reluctant to shift from their traditional methods. V. Sales Tasks today are oriented toward establishing long-term buyer-seller relationships and with helping customers select the best products to meet their needs rather than simply selling what is available. Not all selling activities are alike, but all them seem to involve three basic tasks: order processing, creative selling, and missionary sales. Most sales personnel do not fall into a single category, but perform all three of these to some extent. Improving the productivity of the sales force is a major consideration for most firms. A. Order processing, which both field selling and telemarketing may perform, is most often found at the wholesale and retail levels. Order processing involves three steps: (1) identifying customer needs; (2) pointing out the need to the customer; (3) completing (writing up) the order. Order processing is part of most selling positions. Sales force automation is easing order-processing tasks. B. Creative selling is generally used to develop new business by adding new customers or by introducing new goods and services. The technique involves identifying the customer’s problems and needs and proposing a solution in the form of the good or service being offered. As more and more companies consolidate their operations and the number of buyers for a product or service shrinks, creative selling becomes increasingly important to make the sale. 118
  3. 3. C. Missionary selling is an indirect approach to sales. Salespeople sell the firm’s good will and provide customers with information and technical or operational assistance. Missionary sales may involve both field selling and telemarketing. Many aspects of team selling also fit the definition of missionary work. VI. The Sales Process involves seven steps in a sequence. The steps follow the AIDA concept of Attention – Interest – Desire – Action previously discussed. Sales personnel modify the steps in the process to match their customers’ buying processes. The seven steps are explained below. A. Prospecting and qualifying are two activities which go together. Prospecting is the process of identifying potential customers while qualifying is determining that the prospect really is a potential customer. New sales personnel may find that prospecting is frustrating because there is generally no immediate payback from the work. Recently, sales representatives have turned to the Internet for prospects. Qualifying can be a two-way street, with the sales representative determining that the prospect has the authority and resources to make the purchase decision and the prospect agreeing that he or she is a candidate for the goods or services being offered. B. Approach is the sales representative’s initial contact with the prospective customer. Based on all the relevant information available about a qualified prospect – precall planning – allows the sales representative to contact the prospect armed with knowledge about the prospect’s purchasing habits, attitudes, activities, and opinions. Retail salespeople usually cannot do much precall planning, but they can compensate by asking leading questions during the actual approach process. C. Presentation is when the sales representative gives the prospective customer the actual sales message. The presentation should be clear, concise, well-organized, and it should emphasize the positive issues on the table. The degree of preparation and the depth of presentation depend on the circumstances of the situation. Increasingly, presentations are going high-tech. D. Demonstration of a product or service is the real thing. Photographs of the product in action or even a video of the service being rendered are not the same as actually experiencing the event. The involvement created by a demonstration awakens customer interest in a way that no amount of verbal presentation can. Most firms use new technologies to make their demonstrations more effective, often using full-color video and stereo sound as part of the process. The key to a good demonstration is planning. . E. Handling Objections is a vital part of the selling process. Objections are expressions of sales resistance by the prospect – and it is only reasonable to expect them to occur. They may involve the product’s features, its price, and services to be provided by the vendor. During this stage of the selling process, sales representatives are often confronted with objections concerning a competitor’s product. It is best not to criticize the competition. Overcoming objections starts with a “we can do it” attitude and the superior features of the firm’s product – it’s not that the competitor’s product is bad, it’s just not as good for the particular purpose of this customer. F. Closing is the moment of truth in selling – the point at which the sales representative asks the prospect for the order. Some sales representatives find it difficult to do this, however. To be effective, sales people must learn when and how to close a sale. There are several fairly standard methods which might be used. 1. The “If I can show you . . .“ technique identifies the prospect’s major cause for concern and then offers convincing evidence of the offering’s ability to solve the problem. 2. The alternative-decision technique poses choices for the prospect either of which is favorable to the sales rep. 3. The SRO (or standing-room-only) technique warns the prospect that a sales agreement should be concluded now because the product may not be available at such favorable terms later on or that an important feature will soon be changed. 4. Silence is often an effective close because it puts the prospect in the position of having to take some action – either positive or negative. 5. An extra-inducement close offers the prospect special incentives designed to motivate a positive buyer response. 119
  4. 4. G. Follow-up includes those activities designed to reinforce the customer’s purchase decision and make sure that the company delivers high-quality goods or services on schedule. These post-sales activities often determine whether the current buyer will become a repeat customer. Follow-up helps strengthen the bond salespeople try to build with customers in relationship selling. VII. Managing the Sales Effort – the overall direction and control of the personal selling effort, are in the hands of sales managers, who are organized hierarchically. Sales managers perform a boundary-spanning role in that they link the sales force to other elements of the environment. The sales manager’s job requires a unique blend of administrative and sales skills depending on the specific level of the sales hierarchy. Personal selling requires effective planning and strategic objectives. Sales-force management is the administrative channel for sales personnel, linking individual salespeople to general management. Women account for almost half of U. S. professional sales people, but only about a quarter of B2B sales representatives. Sales managers perform seven basic managerial functions. These functions are as follows: A. Recruitment and Selection of successful salespeople are, together, one of the sales manager’s greatest challenges. One of the difficulties lies in the reluctance of many high-school guidance counselors and colleges to promote the advantages of a sales career to students. Careful selection of salespeople is important because (1) the process involves substantial amounts of money and management time and (2) selection mistakes damage customer relations and create costly-to-correct performance problems. 1. A successful sales career, however, satisfies all of the following five areas that many people think of as important in the choice of a profession. a. Opportunity for advancement is ample is sales. Sales representatives advance rapidly in most firms. b. High earnings are typical in sales; a top-level consumer sales representative typically earns more than $75,000 a year. c. Personal satisfaction is achieved by performing successfully in a competitive environment and by helping customers satisfy their needs and wants. d. Job security in the selling profession is high. Economic downturns affect sales personnel less than other employees and there is a continuing need for good sales personnel. e. Independence of action and a variety of experiences are typical of sales positions. 2. A seven step process is typically used in the selection of sales personnel. It typically includes application, a screening interview, in-depth interview, testing, reference checks, a physical examination, and analysis followed by a hiring decision. B. Training of sales representatives may be accomplished by on-the-job methods, individual instruction, in- house classes, and/or external seminars. Techniques applied include instructional videotapes, lectures, role-playing exercises, slides, films, and interactive computer programs. Simulations may also be used. Ongoing sales training is important for veteran salespeople as well as for individuals new to the profession. Mentoring is a key training tool at many organizations. C. Organization of the sales force is the responsibility of sales management. The most common schemes used to organize the sales force are geography, products, types of customers, or some combination of these. A product sales organization should have specialized sales forces for each major category of the firm’s products. Firms that market similar products throughout large territories often specialize geographically. Customer-oriented organizations use different sales strategies for each major type of customer they serve. Among firms organizing by customer type, a growing trend is the national accounts organization, an arrangement where sales managers or sales teams are assigned to major accounts in each of the firm’s markets. As companies expand their market coverage across national borders, they may elect to use a variant of the national accounts organization. Individual sales managers may adapt the strategies described to suit the specific needs of the areas under their control. D. Supervision of the sales function in amount and type depending on the nature of the marketplace and selling task. It is difficult to say how much and what type of supervision works best in general, but the concept of span of control does give some idea. This concept states that the number of sales representatives that can be handled by a first-level sales manager varies with the complexity of the selling task, the ability of the individual sales manager, the interdependence among the various sales reps, and the training each of them receives. 120
  5. 5. E. Motivation is an important component of the management of the sales force. Satisfaction of emotional needs is involved, as is provision of financial incentives. Incentives may include, as well as basic monetary compensation, leisure trips or travel, gifts, recognition dinners, plaques, awards, and cash. Not all incentive programs, however, are successful in motivating employees. Sales managers can improve sales-force productivity by understanding what motivates individual salespeople. Expectancy theory relates motivation to the employee’s appraisal of his or her ability to do the job and how performance relates to achieving awards. F. Compensation of sales personnel may be done using a commission plan, a straight-salary plan, or some combination of these options. Bonuses based on end-of-year total results are another popular form of compensation. Commissions are payments tied directly to the sales or profits a sales representative achieves. Salaries are fixed payments made periodically to an employee. Because good sales personnel are high to find and expensive to train, sales managers want to make every effort to retain productive workers. Compensating new people fairly while recognizing the productivity of longer-term workers is one of the problems faced by sales managers. The typical U. S. sales representative is well compensated, earning approximately $80,000 per year. G. Evaluation and control of sales performance is one of the more difficult tasks of sales management. The process typically includes sales quotas – specified sales or profit targets that the firm expects its sales representatives to achieve – but many other factors can come into play, such as customer satisfaction, profit contribution, share of product-category sales, and customer retention. Regardless of the elements in the evaluation program, the sales manager must follow a formal system of decision rules. First, individual performance must be compared to a set of standards. Second, the strong points of the person being ranked must be considered. And finally, the weaknesses or negative aspects of the individual’s performance must be examined. The evaluation is summarized following a set procedure that weighs and evaluates all the components of the evaluation process. Areas of weakness or deficiency should be pointed out, and a program for correcting the deficiencies implemented. VIII. Ethical Issues in Sales are significant because selling as a profession has a negative image in the minds of many people. Television, movies, and literature have tended to create and perpetuate this point of view. Today’s highly paid, professional sales representative knows that success is based on building and maintaining relationships with clients. Some people believe that ethical problems are inevitable because making sales benefits the person making them, therefore how can such a person be unbiased or work for the benefit of the client? Thousands of companies are working to overcome the stigma associated with sales careers and to educate the public about the contributions of today’s sales professionals. Meanwhile, programs to promote ethical behavior have become a part of the central philosophy of many firms. A. Despite management efforts to foster ethical behavior, sales personnel do find themselves, from time to time, in situations with their employers, fellow employees, and customers that involve ethical dilemmas. Among the ethical breaches that occur between sales people and their employers are improper use of company property and stealing. Sexual harassment is another problem faced by sales representatives – of both sexes. Another issue is that of using bribes to secure a sale. Some customers demand kickbacks to do business with a particular firm. In all such cases, the alternatives of going along with the unethical request, ignoring it, confronting the individual who suggests the behavior, or reporting it are the essential options. Generally speaking, the worst course is to succumb to the unethical proposal. Experts recommend that the sales representative tell the person who suggests the unethical behavior that they prefer to gain the business on its merits without unethical conduct. If that doesn’t solve the problem, it is recommended that the sales representative report the situation to his or her supervisor, who should then take it up with the other company’s purchasing supervisor. 121
  6. 6. Name_________________________________________ Instructor______________________________________ Section________________________________________ Date__________________________________________ Key Concepts The purpose of this section is to allow you to determine if you can match key concepts in the chapter with their definitions. It is essential that you know the definitions of the concepts before using the concepts in later exercises in this chapter. From the list of lettered terms, select the one that best fits the numbered statement below. Write the letter of that choice in the space provided. Key Terms a. personal selling i. sales force automation (SFA) b. over-the-counter selling j. order processing c. field selling k. creative selling d. telemarketing l. missionary selling e. inside selling m. boundary-spanning role f. relationship selling n. national accounts organization g. consultative selling o. expectancy theory h. team selling p. sales quota ____ 1. Promotional presentation involving outbound telephone contacts by salespeople or inbound contacts by customers who want to obtain information and place orders. ____ 2. Sales manager's activities to link the sales force to other elements of an organization's internal and external environments. ____ 3. Indirect selling in which specialized salespeople promote the firm's goodwill among indirect customers, often by assisting in product use. ____ 4. Personal selling conducted in retail and in some wholesale locations in which customers come to the seller's place of business. ____ 5. The theory that motivation depends on an individual’s expectations of his or her ability to perform a job and how that performance relates to obtaining a desired reward. ____ 6. Meeting customer needs by listening to them, understanding – and caring about – their problems, paying attention to details, and following through after the sale. ____ 7. Personal selling situations in which buyers must undertake considerable analytical decision making, creating a need for skillful vendor proposals of solutions for customer needs. ____ 8. Interpersonal influence process involving a seller's promotional presentation conducted face-to-face with a buyer. ____ 9. Performing field selling functions but avoiding travel expenses by relying on phone, mail, and electronic commerce to provide sales and product service for customers on a continuing basis. ____ 10. Level of expected sales for a territory, product, customer, or salesperson against which evaluations compare actual results. ____ 11. Organization scheme that assigns sales teams to a firm's largest accounts. 122
  7. 7. ____ 12. Selling, mostly at wholesale and retail levels, that involves identifying customer needs, pointing them out to customers, and completing orders. ____ 13. Application of computer and other technologies to improve the efficiency and competitiveness of the sales function. ____ 14. Regular contacts over an extended period to establish a sustained buyer-seller relationship. ____ 15. Combination of salespeople with specialists from other functional areas to promote a product. ____ 16. Face-to-face sales presentations made at prospective customers' homes or places of business. 123
  8. 8. Name_________________________________________ Instructor___________________________________ Section________________________________________ Date_______________________________________ Self-Quiz You should use these questions to test your understanding of the material in this chapter. You can check your answers with those provided at the end of the chapter. While these questions cover most of the chapter topics, they are nor intended to be the same as the test questions your instructor may use in an examination. A good understanding of all aspects of the source material is essential to good performance on any examination. True/False Write "T" for True and "F" for False for each of the following statements. ____ 1. Expenditures for advertising almost always exceed expenditures for personal selling in the average American firm. ____ 2. Rather than selling one-on-one, as was the case in the past, salespeople today may need to sell to teams of corporate representatives who make up the client firm’s decision-making units. ____ 3. In team selling, a single sales practitioner seeks to build a mutually beneficial relationship with a large customer on a regular basis over an extended period. ____ 4. Approximately 60 percent of college marketing graduates choose sales as their first marketing position, in part because of the attractive salaries and career potentials. ____ 5. The most expensive of the available selling channels is inside selling because of the high level of technology required in order to implement the technique. ____ 6. A sales representative whose job is to answer the phone and take orders or answer customers' questions is involved in outbound telemarketing. ____ 7. Consultative selling works hand-in-hand with relationship selling to build customer loyalty. ____ 8. Sales force automation usage differs sharply by industry. The food, beverage, and pharmaceutical industries are using sophisticated third-generation systems, while many apparel firms do not use it at all. ____ 9. Order processing is part of most sales positions, but assumes primary importance in situations where it is difficult for the customer to readily identify and acknowledge needs. ____ 10. Creative selling techniques are seldom used in over-the-counter selling, field selling, and inside selling. ____ 11. Many aspects of team selling can also be described as missionary sales, such as when technical support personnel train customers’ employees and provide information or operational assistance. ____ 12. The first step in the selling process is making the approach to the prospective customer. ____ 13. One of the most frustrating things about prospecting is the likelihood that it will yield no immediate payback. ____ 14. Effective pre-call planning gives the salesperson relevant information about the prospect's purchasing 124
  9. 9. habits, attitudes, activities, and opinions. ____ 15. The seller's objective in a features-benefits presentation is to talk about the technical features of a good or service, rather than explaining benefits the buyer might receive from their use. ____ 16. Objections raised by sales prospects should be treated as opportunities to provide additional information to the potential customer. ____ 17. The moment of truth in selling is the closing – the point at which the sales representative asks the prospect for an order. ____ 18. The "If-I-can-show-you . . ." closing technique warns the prospect that a sales agreement should be concluded now because some important feature of the deal being offered, such as price or availability, will soon be changed. ____ 19. One of the problems with successfully recruiting people to become sales practitioners is the low degree of job security offered by this kind of employment. ____ 20. The concept of span of control refers to the number of sales representatives who report to first-level sales managers. ____ 21. Much ongoing sales training, an important feature of the job even for veteran sales personnel, is conducted by sales managers in an informal manner. ____ 22. In the evaluation process, sales representatives’ strong points may be categorized according to the task, or technical ability; the process, or sequence of work flow; or the goals or end results of sales performance. ____ 23. A straight salary compensation plan gives management more control over how sales personnel allocate their efforts, but it reduces the incentive to expand sales. ____ 24. Compensating sales representatives by commission combines maximum selling incentive with ample reason to perform nonselling activities such as completing sales reports, delivering sales promotional materials, and normal account servicing. ____ 25. The process area of the work environment refers to the sales practitioner's technical ability -- knowledge of the products, customers, and company, as well as selling skills. 125