chapter 18 personal selling and sales promotion part eight promotion decisions

Chapter 18

Personal Selling and Sales Promotion

Part Eight PromotionDecisions

Copyright © Houghton Mifflin Company. All rights reserved. 18 | 2

Chapter Learning Objectives

1. To define personal selling and understand its purpose

2. To describe the basic steps in the personal selling process

3. To identify the types of sales force personnel4. To understand sales management decisions

and activities5. To explain what sales promotion activities are

and how they are used6. To recognize specific consumer and trade sales

promotion methods


Chapter Outline

• What Is Personal Selling?• The Personal Selling Process

– Prospecting for Customers– Evaluating Prospects– Approaching the Customer– Making the Presentation– Overcoming Objections– Closing the Sale– Following Up

• Types of Salespeople– Order Getters– Order Takers– Support Personnel

• Types of Selling


Chapter Outline (cont’d)

• Managing the Sales Force– Establishing Sales Force Objectives– Determining Sales Force Size– Recruiting and Selecting Salespeople– Training Sales Personnel– Compensating Sales Personnel– Motivating Sales Personnel– Managing Sales Territories– Controlling and Evaluating Sales Force Performance

• The Nature of Sales Promotion– Consumer Sales Promotion Methods– Trade Sales Promotion Methods


What Is Personal Selling?

• Personal Selling– Paid personal communication that informs

customers and persuades them to buy products• Most adjustable to customer information needs• Most precise (targeted) form of

promotion methods• Most expensive element in

promotion mix


Figure 18.1: General Steps in thePersonal Selling Process


Prospecting for Customers

• Prospecting– Developing a list of potential customers

• Sales records, trade shows, commercial databases, newspaper announcements, public records, telephone directories, trade association directories

• Reponses to advertisements with information request forms

• Referrals—recommendations from current customers


Evaluating Prospects

• Preapproach (before contacting the customer)– Finding and analyzing information about the prospect

• Specific product needs• Current use of brands• Feelings about available brands• Personal characteristics

– Additional research• Identifying key decision makers• Reviewing account histories and problems• Contacting other clients for information• Assessing credit histories and problems• Preparing sales presentations• Identifying product needs


Approaching the Customer

• Approach– The manner in which a salesperson contacts a

potential customer• Purpose is to gather information about the buyer’s needs

and objectives• Important to create a favorable first impression and build

rapport with prospective customer

– Typical approaches• Referral by another customer to a prospective customer• “Cold canvass” call without prior introduction to the

customer


Making the Presentation

• During the Presentation– Attract and hold the prospect’s attention.– Stimulate interest in the product.– Spark a desire for the product.– Listen and respond to the prospect questions and

comments.

• Ways to Enhance the Presentation’s Effects– Have the prospect touch, hold, or use the product.– Use audiovisual technology to heighten the impact of

the presentation.


Overcoming Objections

• Anticipate objections and counter them during the presentation

• Generally, best to handle objections as they arise


Closing the Sale

• Closing – The stage in the selling process when the

salesperson asks the prospect to buy the product

• Closing strategies– “Trial” closing: asking questions

(what, how, or why) that assume the customer will buy the product

– Asking for a tryout order: low-risk way for customer to try out the product


Following Up

• Determining if the delivery and setup of order was completed to the customer’s satisfaction

• Ascertaining the customer’s future product needs


Types of Salespeople

• Order Getters– Sell to new customers and increases sales to current

ones– Employ creative selling

• Current-customer sales• New-business sales

• Order Takers– Primarily seek repeat sales

• Inside order takers• Field order takers


Types of Salespeople (cont’d)

• Support personnel facilitate selling but usually are not involved solely with making sales

– Missionary salespeople• Assist the producer’s customers in selling to their own

customers

– Trade salespeople• Primarily involved in helping a producer’s customers

promote a product

– Technical salespeople• Give technical assistance to a firm’s current customers


Selected Types of Selling

• Team selling– The use of a team of experts from all functional

areas of a firm, led by a salesperson, to conduct the personal-selling process

• Relationship selling– The building of mutually beneficial long-term

associations with a customer through regular communications over prolonged periods of time


Establishing Sales Force Objectives

• Objectives tell salespeople what they are to accomplish during a specified time period.

• Objectives for the total sales force– Sales volume: total units or dollars of product sold for a period

of time– Market share: unit or dollar percentage share of the total

market for a product– Profit: dollars or percentage of return on investment (ROI)

• Objectives for individual salespersons– Quotas: dollars or units sold, or average order size, average

number of calls, or ratio of orders to calls by an individual salesperson


Determining Sales Force Size

• Size of Sales Force Affects– Compensation methods for salespersons– Morale of salespersons– Overall sales force management

• Methods for Determining Optimal Sale Force Size– Divide the number of sales calls necessary to serve

customers by the number of sales calls a salesperson makes annually

– Add additional salespersons until the cost of adding one more salespersons equals the additional sales that would be generated by that person


Recruiting and Selecting Salespeople

• Recruiting– Developing a list of qualified applicants positions

• Establish a set of qualifications that best match the firm’s particular sales tasks

– Prepare a job description listing specific tasks– Analyze successful salespeople among current

employees

• Sources of applicants– Other departments in the

company– Employment agencies– Job ad respondents

– Other firms– Educational institutions– Employee referrals


Training Sales Personnel

• What to teach?– The company, its products, or selling methods

• Who to train?– Newly hired or experienced salespeople, or both

• When/where to train?– In the field, at educational institutions, in company

facilities– Before or after initial field assignment

• How to train?– Videos, tests, online materials, manuals, and cases– Lectures, demonstrations, simulation exercises, and

on-the-job training


Compensating Salespeople

• Compensation Objectives– Attract, motivate, and retain effective

salespeople– Maintain the desired level of control– Provide acceptable levels of income,

freedom, and incentive– Encourage proper

treatment of customers


Compensating Salespeople (cont’d)

• Compensation Plans– Straight salary

• Paying salespeople a specific amount per period of time

– Straight commission• Paying salespeople according

to the amount of their sales in a given time period

– Combination compensation• Paying salespeople a fixed salary

plus a commission on sales volume


Figure 18.2: Average Salaries for Sales Representatives and Executives

Source: From Christine Galea, “Average Salary for Sales Staffers in 2005,” Sales and Marketing Management, May 2006, p. 30. ©2004 VNU Business Media, Inc. Reprinted with permission from Sales and Marketing Management


Source: Charles Futrell, Sales Management (Fort Worth, TX: Dryden Press), 2001, pp. 307-316.

Gwyn Walters

ART/ED: THIS IS NOW TABLE 18.1


Motivating Salespeople

• Motivation should be provided on a continuous basis.

• Motivational Incentives– Enjoyable working conditions– Power and authority– Job security– Opportunities to excel

• Motivational Methods– Sales contests– Recognition programs– Awards (travel, merchandise, and cash)


Managing Sales Territories

• Creating Sales Territories– Based on similar sales potential or requiring about the same

amount of work– Setting differential commission rates to compensate for

differences in the characteristics of territories (density and distribution of customers)

• Routing and Scheduling Considerations– Geographic size and shape of the territory– Number and distribution of customers– Sequence of customer calls– Routes and distances traveled– Minimizing salesperson’s travel and

lodging costs


Controlling and EvaluatingSales Force Performance

• Performance measures largely determined by sales objectives, stated in terms of sales volume, average number of calls per day, average sales per customer, actual sales relative to sales potential, number of new customer orders, average cost per call, average gross profit per customer

• Salespersons evaluated by comparing performance to

– Performance standards– Other employees– Past performance


What Is Sales Promotion?

• Sales Promotion– An activity and/or material that acts as a direct

inducement to resellers or salespeople to sell a product or consumers to buy it

– Encourages product trial and purchase by adding value to the product

– Facilitates or is facilitated by personal selling and advertising

– Use has grown dramatically over the last 20 years at the expense of traditional advertising


What Is Sales Promotion? (cont’d)

• Deciding Which Sales Promotion Method to Use– Product characteristics– Target market characteristics– Distribution channel(s)– Number and types of resellers– Competitive and legal environment


Consumer Sales Promotion Methods

• Consumer sales promotion methods encourage consumers to patronize specific stores or to try particular products

• Coupons– Written price reductions used to encourage

consumers to buy a specific product– Effective coupons are easily recognized and state

the offer clearly– Advantages: generate brand awareness and interest

and reward brand loyalty– Disadvantages: Fraud and misredemptions;

consumer ill-will from stock-outs during promotions


Figure 18.3: Sources of Coupons

Source: Enid Burns, “Coupons Converge Online,” ClickZ, Oct. 6, 2005, www.clickz.com/showPage.html?page=3554206.


Source: Betsy Spethmann, “FSI Coupon Worth Reaches $300 Billion in 2006: MARX,” Promo, Jan. 4, 2007, http://promomagazine.com/othertactics/news/fsi_coupon_worth_300_billion_010407/ .


Consumer SalesPromotion Methods (cont’d)

• Cents-Off Offers– Let buyers pay less than the regular price to

encourage purchase

• Money Refund– Offers consumers money when they mail in a proof

of purchase, usually for multiple product purchases

• Rebate– Sends consumers a specific amount of money for

making a single product purchase



• Frequent-User Incentives– Loyalty programs reward frequent buyers

• Point-of-Purchase Displays– Signs, window displays, display racks, and similar

means used to attract customers and to encourage immediate purchases

• Demonstrations– Used temporarily to encourage trial use and purchase

of a product or to show how a product works.– Highly effective yet costly in practice



• Free Samples– Free products given out to encourage trial and

purchase– Used to increase sales volume and obtain desirable

distribution for fast turnover products– The most expensive form of sales promotion

• Premiums– Items offered free or at a minimal cost as a bonus for

purchasing a product– Premium must match both the target market and the

brand’s image.– Premiums must be easily recognizable and desirable.



• Consumer Contests, Games, and Sweepstakes– Used to generate retail traffic and to increase

exposure to promotional messages– Consumer Contests

• Individuals compete for prizes based on analytical or creative skills

– Consumer Games• Individuals compete for prizes based primarily on chance,

often by collecting game pieces

– Consumer Sweepstakes• A sales promotion in which entrants submit their names for

inclusion in a drawing for prizes• Used more than contests and attract more widespread

interest


Trade SalesPromotion Methods

• Trade sales promotion methods refer to ways of persuading wholesalers and retailers to carry a producer’s products and to market them aggressively

• Buying Allowance– A temporary price reduction to resellers for

purchasing specified quantities of a product

• Buy-Back Allowance– A sum of money a producer gives a reseller for each

additional unit bought after an initial promotion deal is over


Trade SalesPromotion Methods (cont’d)

• Scan-Back Allowance– A manufacturer’s reward to retailers based on the

number of pieces scanned

• Merchandise Allowance– A manufacturer’s agreement to help resellers pay for

special promotional efforts

• Cooperative Advertising– Sharing of media costs by manufacturer and retailer

for advertising the manufacturer’s products



• Dealer Listings– Ads promoting a product and identifying retailers that

sell the product; influences retailers to carry the products, builds traffic at the retail level, and encourages consumers to shop at participating dealers

• Free Merchandise– A manufacturer’s reward given to resellers for

purchasing a stated quantity of goods– Usually takes the form of a reduced invoice

• Dealer Loader– A gift, often part of a display, offered to a retailer who

purchases a specified quantity of merchandise



• Premium (Push) Money– Extra compensation to salespersons for pushing a

line of products

• Sales Contest– A means of motivating distributors, retailers, and

salespeople by recognizing outstanding achievements


After reviewing this chapter you should:

1. Be able to define personal selling and understand its importance.

2. Be able to describe the basic steps in the personal-selling process.

3. Be able to identify the types of sales force personnel.4. Have insight into sales management decisions and

activities.5. Be able to explain what sales promotion activities are

and how they can be used.6. Be familiar with specific consumer and trade sales

promotion methods.

chapter 18 personal selling and sales promotion part eight promotion decisions

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