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					Marketing Principles
    Session 13

  Personal Selling
and Direct Marketing


   Jeffrey E. Newcomb
    Red Widget Strategies
     for Hosei University

     2006 Jeffrey E. Newcomb / Red Widget Strategies
                     for Hosei University              1
           Looking Forward:
       Where are we going?
Session 13, Personal Selling and Direct
Marketing, will help you to:
•   Discuss the role of salespeople in creating value for
        customers, and building customer relationships.

•   Identify and explain steps in managing a sales force.

•   Discuss the personal selling process.

•   Define direct marketing and discuss its benefits to
        customers and organizations.

•   Identify and discuss major applications of direct
        marketing.

                    2006 Jeffrey E. Newcomb / Red Widget Strategies
                                    for Hosei University              2
                  CDW Corporation
                           [Case Story]
•   CDW is US’s largest reseller of
    technology products and services
•   Core market target: small and
    mid-sized businesses                        •    Circle of Service philosophy:
•   Products for sale include                        everything revolves around the
    computers, software accessories,                 customer
    network equipment                           •    Salespeople are highly
•   Brands represented include Sony,                 knowledgeable
    Hitachi, HP, IBM, Toshiba, Apple            •    Training is extensive: 340,000
•   400,000+ active commercial                       hours of training annually for
    customer accounts                                2,000 salespeople
•   Sales up 21% and profits up                 •    120+ Factory trained specialists
    17% annually; sales = $6 billion            •    CDW’s Clicks and People direct
                                                     marketing strategy combines
                                                     personal selling with strong
                                                     Web presence


                         2006 Jeffrey E. Newcomb / Red Widget Strategies
                                         for Hosei University                        3
            Personal Selling
Salespeople have many names:
 • Agents                             •Sales Engineers
 • Sales Consultants                  •District Managers
 • Sales                              •Marketing
   Representatives                     Representatives
 • Account                            •Account Development
   Executives                          Representatives

 In a sense, we are all salespeople. Each day we are selling our
 skills and ideas. Sometimes, we may want to persuade others to
 our point-of-view. Consider various salespeople you have may
 know. What do they do in sales?

                    2006 Jeffrey E. Newcomb / Red Widget Strategies
                                    for Hosei University              4
               But wait…

Why do we need sales?
• If the societal marketing concept is
 designed to satisfy customers needs
 and wants, why is selling a necessary
 part of marketing?

         Consider reasons why personal selling may be useful
                for customers and business.


                2006 Jeffrey E. Newcomb / Red Widget Strategies
                                for Hosei University              5
                 Personal Selling
Why do we need sales in practicing
    the Societal Marketing Concept?
• Professional salespeople are well-educated, well-trained,
        and committed to building and maintaining long-term
        customer relationships

•       Sales positions cover a range of activity:
    •      Order taker: Transaction-based selling; a facilitator of the
           exchange between buyer and seller
           Example: Department store clerk

    •      Order getter: Relationship-based selling; a developer or
           builder of buyer-seller connections, in various environments
           Examples: IT (information technology) systems sales;
           Boeing aircraft, valued at $100 million each


                         2006 Jeffrey E. Newcomb / Red Widget Strategies
                                         for Hosei University              6
             Personal Selling
The Role of the Sales Force
  •    Success of the sales force is based upon
      two-way personal communication
  •   Personal selling is more effective than
      advertising in complex selling situations
       Examples: Komatsu, Cisco Systems
  •   The sales force serves as critical link between
      organization and its customers
       -Representatives of organization, values and
             products
       -Champions of customer interests
  •   Goal of the sales force: customer satisfaction
      and organization profit

                   2006 Jeffrey E. Newcomb / Red Widget Strategies
                                   for Hosei University              7
How Salespeople Use Their Time
                12.7%
              Service calls



                                                  28.8%
         16%                                Face-to-face selling
  Administrative tasks


                                                    17.4%
              25.1%                                Traveling
         Telephone selling                        and waiting

                                                           Source: Armstrong and Kotler




                2006 Jeffrey E. Newcomb / Red Widget Strategies
                                for Hosei University                                      8
  Managing the Sales Force
 Sales Force Strategy….
          • Territorial sales force
          • Product sales force
          • Customer sales force
          • Complex sales force
and Structure
 • Territorial: Salesperson assigned to exclusive area and
     sells full line of products
     Examples: Avon Products; Campbell’s Soup
 •   Product: Sales force sells only certain product lines
     Example: At Kodak, different sales groups may call upon the same
     client for different applications – coordination is vital

 •   Customer: Sales force organizes along customer or industry lines
     Example: At IBM, a sales force works specifically with an assigned
     large customer

 •   Complex: Combination of several types of structures
 •   Outside Sales Force: Call on customers in the field
                     2006 Jeffrey E. Newcomb / Red Widget Strategies
                                     for Hosei University                 9
Managing the Sales Force
Sales force
structure,
based on
brand and
geographic
region

                                                       Source: Armstrong & Kotler




          2006 Jeffrey E. Newcomb / Red Widget Strategies
                          for Hosei University                                      10
           Inside Sales Force
An inside sales force conducts business from offices
     by telephone, or through visits from perspective buyers
• Example: CDW uses phone and internet to
       make close contact with customers
• Typically, an inside sales force includes:
        -Technical support people
        -Sales assistants
        -Telemarketers

Inside sales teams: Used by IBM, Xerox, Procter & Gamble
• Typical for servicing large, complex accounts
• Teams include experts from different areas of selling firm
• Challenges of inside sales teams:
        -Can confuse or overwhelm customers
        -Some people have trouble working in teams
        -Hard to evaluate individual contributions


                      2006 Jeffrey E. Newcomb / Red Widget Strategies
                                      for Hosei University              11
   Managing the Sales Force
Key talents of salespeople:
  •   Intrinsic motivation
  •   Disciplined work style
  •   Skill to close a sale
  •   Ability to build relationships with customers

How large should a sales force be?
   It depends….
  •   Microsoft: 23,000 salespeople in US alone
  •   Pepsi: 36,000 salespeople
  •   Workload approach: grouping accounts
            according to size and customer needs

                   2006 Jeffrey E. Newcomb / Red Widget Strategies
                                   for Hosei University              12
  Managing the Sales Force
Recruiting and selecting salespeople
  • Careful recruiting can:
      -Increase overall sales force performance
      -Reduce turnover
      -Reduce recruiting and training costs


To find good salespeople, recruiters use
  • Recommendations from current sales force
  • Employment agencies
  • Classified ads
      -Web searches
      -College students
      -Recruit from other organizations


                  2006 Jeffrey E. Newcomb / Red Widget Strategies
                                  for Hosei University              13
Online Job Search Sites for
 Recruiting Salespeople




       2006 Jeffrey E. Newcomb / Red Widget Strategies
                       for Hosei University              14
   Managing the Sales Force
Training salespeople
   • Training period can be superficial or extensive –
        from a few weeks to a year or more
   •   Training can be initially expensive, but yields strong
        returns, with substantial multiplier effects
   •   Web-based sales training programs: $20+ billion
        industry, with grow estimated by 35%+ annually
        Example: Cisco Systems

Typical training components
Training programs have many goals:
   • Learn about and skillfully represent the sales organization
   • Know the organization’s products and services
   • Understand customers’ and competitors’ characteristics
   • Determine how to make effective presentations
   • Master field procedures and responsibilities
   • Practice negotiation strategies
                      2006 Jeffrey E. Newcomb / Red Widget Strategies
                                      for Hosei University              15
     AIDA in Personal Selling
The AIDA process applies to any communication when
  response is needed
AIDA is a guideline for design of marketing material

                           A = Attention
                           I = Interest
                           D = Desire
                           A = Action

When we buy, we buy according to the AIDA process;
When we sell, we sell through the AIDA stages
•   If a product or service gets our attention;
•   If the product or service is relevant, we are motivated to learn more;
•   If the product or service appears to match our needs, wants and resources,
          our desire increases;
•   If we are stimulated to overcome our natural caution we may become
          motivated to taking action, to buy

       If you remember just one sales or selling model, remember AIDA
                         2006 Jeffrey E. Newcomb / Red Widget Strategies
                                         for Hosei University              16
 Managing the Sales Force
Compensating salespeople
  • Compensation elements: salary, bonuses,
    commissions, expenses, and fringe benefits
  • Basic compensation plans:
    •   Straight salary
    •   Straight commission
    •   Salary plus bonus
    •   Salary plus commission
  • Compensation plans should direct the sales
   force toward activities that are consistent with
   overall marketing objectives


                   2006 Jeffrey E. Newcomb / Red Widget Strategies
                                   for Hosei University              17
Compensation Data Online




       2006 Jeffrey E. Newcomb / Red Widget Strategies
                       for Hosei University              18
    Managing the Sales Force
Supervising Salespeople
  • Effective supervisors also
     motivate the sales force:
     •   Organizational climate
     •   Sales quotas
     •   Positive incentives
         •   Sales meetings, sales contests, honors, etc.
         •   US companies spend $30 billion annually on incentives

Evaluating Salespeople
  • Several tools are used:
     • Sales reports
     • Call reports
     • Expense reports
                      2006 Jeffrey E. Newcomb / Red Widget Strategies
                                      for Hosei University              19
       Seven Steps of a Sale
1. Prospecting: Salesperson identifies and screens
    qualified potential customers. Good marketing research
    provides added-value for the potential customer, and helps
    sales to be efficient

2. Pre-approach: Salesperson learns about a prospective
    customer before a first sales call. Research helps to avoid
    wasting resources with unnecessary effort

3. Approach: Salesperson meets customer for the first time.
    Practice naïve listening! Ask good questions. Use a
    facilitative approach - helping to identify the buying criteria

4. Presentation: Salesperson gives the “product story” or
    sales proposition, highlighting benefits to the customer

                     2006 Jeffrey E. Newcomb / Red Widget Strategies
                                     for Hosei University              20
     Seven Steps of a Sale
5. Handling Objections and Negotiating:
  Salesperson overcomes customer objections to buying. Use
  facilitative questioning to shape the sales proposition to
  customer’s needs

6. Closing:     Salesperson asks customer for order, with
  collaborative agreement. Use facilitative help where
  appropriate

7. Follow-up:     Salesperson is in close contact with the
  customer after the sale to support customer satisfaction
  and repeat business



                   2006 Jeffrey E. Newcomb / Red Widget Strategies
                                   for Hosei University              21
      Managing the Customer
          Relationship
• Good salespeople facilitate supplier fulfillment to
  the customer, and satisfaction of the customer
  with the sale

• Managing the customer relationship may require
  internal support and “buy-in” within the
  customer’s organization and good project
  management skills

• Good salespeople take responsibility for periodic
  checks with the customer, and effective sales
  follow-through
                  2006 Jeffrey E. Newcomb / Red Widget Strategies
                                  for Hosei University              22
              Direct Marketing
 Direct Marketing: one-to-one connections
 with targeted individual consumers to:
 • obtain an immediate response and
 • cultivate lasting customer relationships
Direct marketing’s added value for buyers:
  •   Convenient
  •   Easy to use
  •   Private
  •   Access to a wealth of information
  •   Immediate
  •   Interactive
          Direct sales to consumers & businesses in the US represents
          18% of the economy, over $2+ trillion; direct sales growing
          faster than all other forms of sales
                     2006 Jeffrey E. Newcomb / Red Widget Strategies
                                     for Hosei University              23
 Direct Marketing Channels
                    Online
                   Marketing

 Direct-Mail
 Marketing
                                                                    Personal
 Kiosk                                                               Selling
Marketing
                                                             Catalog
Direct-Response                                             Marketing
 TV Marketing
                       Telemarketing
                          & Email
                  2006 Jeffrey E. Newcomb / Red Widget Strategies
                                  for Hosei University                         24
  Benefits of Direct Marketing

Added value for sellers:
  • Direct marketing is a useful tool for
    building good customer relationships
  • Allows for targeting of small groups or
    individuals with customized offers
  • Can be scheduled to reach customer prospects
    at the right time, to meet customer needs
  • Offers access to buyers who cannot be reached
    through other marketing channels
  • Low-cost, effective alternative for reaching
    specific markets

                 2006 Jeffrey E. Newcomb / Red Widget Strategies
                                 for Hosei University              25
             Direct Marketing
Customer Databases & Direct Marketing
  • Databases include comprehensive customer data,
    representing geographic, demographic,
    psychographic and behavioral segmentation
    variables
  • Databases can be used to identify prospects,
    customize products, and maintain customer
    relationships
  • Database marketing requires investment in
    hardware, software, skilled personnel

    Examples: Dell is #1 PC maker globally, largest computer direct
    marketer; USAA supplies financial services to US military and families
                      2006 Jeffrey E. Newcomb / Red Widget Strategies
                                      for Hosei University              26
       Direct-Mail and Catalog
              Marketing
Direct Mail:
•   Sending an marketing offer, announcement or reminder
     to a customer or prospect
•   Accounts for more than 30% of all direct-marketing sales
•   Permits high target-market selectivity
•   Personal and flexible
•   Easy to measure results

Catalog:
•   Increasingly, catalogs are published online
•   But print catalogs today remain the primary media
•   Expected sales in 2008 = $176 billion

                   2006 Jeffrey E. Newcomb / Red Widget Strategies
                                   for Hosei University              27
       Other Forms of Direct
            Marketing
Direct Response Television:
•   Direct-response advertising
•   Infomercials
•   Home shopping channels

Kiosks:
•   Information and ordering machines
    in stores, airports, other high-traffic
    locations
                2006 Jeffrey E. Newcomb / Red Widget Strategies
                                for Hosei University              28
Public Policy and Ethical Issues
      in Direct Marketing
•   Consumer irritation from noise, clutter
•   Taking unfair advantage of impulsive or
     less-sophisticated buyers
•   Deception and fraud
•   Invasion of privacy
     -Google, Yahoo
     -Sale of credit card information
     -Sale of government records



                2006 Jeffrey E. Newcomb / Red Widget Strategies
                                for Hosei University              29
                             3QQ
             3 Question Quiz
1. As a sales representative for your firm, your
territory is limited to accounts located within the
region where you live. This type of sales force
structure is called:
  1.   Customer sales force structure
  2.   Product sales force structure
  3.   Territorial sales force structure
  4.   Combination sales force structure

                 2006 Jeffrey E. Newcomb / Red Widget Strategies
                                 for Hosei University              30
                              3QQ
             3 Question Quiz
1. As a sales representative for your firm, your
territory is limited to accounts located within the
region where you live. This type of sales force
structure is called:
1. Customer sales force structure
2. Product sales force structure
3. Territorial sales force structure
4. Combination sales force structure
             Under a territorial sales force structure, salespeople
             sell the entire line of products and services to
             customers within an exclusive geographic area
                  2006 Jeffrey E. Newcomb / Red Widget Strategies
                                  for Hosei University              31
                          3QQ
           3 Question Quiz
2. Using referrals from suppliers and dealers
to identify potential customers is part of
which step in the selling process?
  1. Prospecting
  2. Pre-approach
  3. Approach
  4. Handling objections
              2006 Jeffrey E. Newcomb / Red Widget Strategies
                              for Hosei University              32
                              3QQ
            3 Question Quiz
2. Using referrals from suppliers and dealers
to identify potential customers is part of
which step in the selling process?
  1. Prospecting
  2. Pre-approach
  3. Approach
  4. Handling objections
       Prospecting is the process of identifying qualified
       potential customers who have the need for a product or
       service, a willingness to buy, and the ability to pay
                  2006 Jeffrey E. Newcomb / Red Widget Strategies
                                  for Hosei University              33
                             3QQ
             3 Question Quiz

3. The most challenging public policy issue currently
facing the direct marketing industry is/are:


1.   Sweepstakes contest rules
2.   Invasion of privacy
3.   Investment, research in direct marketing
4.   Irritating infomercials


                 2006 Jeffrey E. Newcomb / Red Widget Strategies
                                 for Hosei University              34
                                3QQ
               3 Question Quiz
3. The most challenging public policy issue currently
facing the direct marketing industry is/are:

  1. Sweepstakes fraud and deceit
  2. Invasion of privacy
  3. Investment, research in direct marketing
  4. Irritating infomercials

           Computer database technology allow companies to
           collect excessive information about consumers, including
           that which many buyers feel should be private
                    2006 Jeffrey E. Newcomb / Red Widget Strategies
                                    for Hosei University              35
                        Your
            TOP TEN
                  Terms
•   Closing
•   Direct marketing
•   Follow-up
•   Handling objections
•   Inside sales force
•   Pre-approach
•   Prospecting
•   Outside sales force
•   Sales quota
•   Territorial sales force structure
             2006 Jeffrey E. Newcomb / Red Widget Strategies
                             for Hosei University              36
      Looking Back
    Where have we been?
•   Understand the role of an organization’s
    salespeople in creating value.
•   Know the major sales force management steps.
•   Understand the personal selling process -- and
    specifically, how to distinguish between
    transaction-oriented marketing and relationship
    marketing.
•   Define direct marketing and discuss its benefits
    to customers and organizations.
•   Know the major forms of direct marketing.


                 2006 Jeffrey E. Newcomb / Red Widget Strategies
                                 for Hosei University              37

				
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