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                             MARKETING MANAGEMENT
                                        12th edition
                                        Chapter#19
  MANAGING PERSONAL COMMUNICATIONS: DIRECT MARKETING AND PERSONAL
                             SELLING
                                    Chapter Questions

    •           How can companies use integrated direct marketing for competitive
                                          advantage?

                •         How can companies do effective e-marketing?

        •           What decisions do companies face in designing a sales force?

            •           How do companies manage a sales force efficiently?

    •           How can salespeople improve selling, negotiating, and relationship
                                        marketing skills?
                                  Direct Marketing
                    Use of consumer-direct channels to reach
                         and deliver goods and services to
                             customers without using
                                market middlemen.


                              Direct Marketing Channels
   Direct marketing is the use of consumer-direct (CD) channels to reach and deliver
           goods and services to customers without using marketing middlemen.
(This is sometimes called direct-order marketing).



                                    •          Catalogs

                                   •          Direct mail

                               •            Telemarketing

                                   •           Web sites

                              •           Email marketing

                               •            Mobile devices

                               •            Interactive TV
                                        Direct Mail
  Direct-mail marketing involves sending an offer, announcement, reminder, or other
                                   item to a person.


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                               Direct mail marketing stages

•          Carpet bombing.

•          Database marketing.

•          Interactive marketing.

•          Real-time personalized marketing.

•          Lifetime value marketing.

                            Public Issues in Direct Marketing

                                   •               Irritation

                                   •              Unfairness

                              •               Deception / fraud

                              •        Invasion of privacy
                         Constructing A Direct-Mail Campaign
                                      Objectives
             Most direct marketers aim to receive an order from prospects.

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

    •       An order-response rate of 2 percent is normally considered good, although
                      this number varies with product category and price.
                              Target Markets and Prospects
Direct marketers need to identify the characteristics of prospects
and customers who are most able, willing, and ready to buy.

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

The company selects customers according to:

•          How much time as passed since their last purchase.
•          How many times they have purchased.
•          How much they have spent since becoming a customer.


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                                            Offer Elements
                    The offer strategy as consisting of five elements:

•          The product.
•          The offer.
•          The medium.
•          The distribution method.
                              •               The creative strategy.
                                  Components of the Mailing
        In addition to these elements, the direct-mail marketer has to decide on
                          five components of the mailing itself:


                                  •             Outside envelope

                                      •             Sales letter

                                        •             Circular

                                      •             Reply form

                                  •              Reply envelope

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

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

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

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

•          Awareness.
•          Intention to buy.
•          Word of mouth.

                        Measuring Campaign Success: Lifetime Value
By adding up the planned campaign costs, the direct marketer can figure out in
          advance
the needed break-even response rate.


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

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

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

                                        Purpose:
             1.         Inbound telemarketing. (receiving calls from customers)
      2.          Outbound telemarketing. (initiating calls for prospects and customers)

                                                  Types:

                                         •            Telesales
                                   •                Tele-coverage
                                  •               Tele-prospecting
                      •          Customer service and technical support
                               Other Media for Direct Response
        Direct marketers use all the major media to make offers to potential buyers.
                                                Television
                    Television is used by direct marketers in several ways:
                           •                 Direct Response Advertising
                           •                 At home shopping channels
                           •                 Videotext and interactive TV
                                                  Kiosks
    A kiosk is a small building or structure that might house a selling or information unit.

                                     •      News-stands.
                                •        Refreshment stands.
                                •        Free-standing carts.
                       •          Computer-linked vending machines.
                       •          “Customer-order-placing machines.”



                                  INTERACTIVE MARKETING
     The newest channels for direct marketers are electronic. The Internet provides marketers
      and consumers with opportunities for much greater interaction and individualization.



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                            Benefits of Interactive Marketing
  Interactive marketing offers many unique benefits. Messages delivered by attractive or
            popular sources can potentially achieve higher attention and recall.


                            Designing An Attractive Web Site
A key challenge is designing a site that is attractive on first viewing and interesting enough
                                 to encourage repeat visits.
                                  Effective Web sites 7C’s
            The effective Web sites feature seven design elements that are
                                  known as the 7Cs:


                            •         Context (Layout & Design)

                    •         Content (Text, pictures, sound & video)

                   •        Community (user-to-user communication)

                   •        Customization (allow user to personalize)

     •       Communication (site-to-user, user-to site or 2-way communication)

                      •         Connection (site linked to other sites)

                      •         Commerce (commercial transactions)

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

                               Ease of Use and Attractiveness
                                         Ease of Use

                                      •        Downloads quickly
                              •        First page is easy to understand
                                        •        Easy to navigate

                                          Attractiveness

                                         •         Clean looking
                            •         Not overly crammed with content
                                        •         Readable fonts
                                •         Good use of color and sound

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                                Re-Visits
             Retuning to a site depends on content.

                          Content must be:


                       •              Interesting.

                        •                 Useful.

               •              Continuously changing.



               Increasing Visits and Site Stickiness

               •        Deep information with links

               •         Changing news of interest

                       •        Changing offers

                •        Contests and sweepstakes

                      •        Humor and jokes

                             • Games
                             Online Ads
A company has to decide which forms of Internet advertising will
    be most cost-effective in achieving advertising objectives.


                         •         Banner ads

                         •          Micro-sites

                         •         Sponsorships

                         •         Interstitials

                    •          Search-related ads

             •         Content-targeted advertising

                           •         Alliances

                     •     Affiliate programs
                      e-Marketing Guidelines
If a company does an e-mail campaign right, it cannot only build

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       customer relationships, but also reap additional profits.

        Guidelines followed by pioneering e-mail marketers:

             •      Give the customer a reason to respond
             •      Personalize the content of your emails
  •     Offer something the customer could not get via direct mail
           •      Make it easy for customers to unsubscribe
                              Sales Force
The original and oldest form of direct marketing is the field sales call.

                      Types of Sales Representatives
   The term sales representative covers a broad range of positions.


                          •                Deliverer

                         •                Order taker

                          •               Missionary

                          •               Technician

                        •             Demand creator

                        •              Solution vendor


                   Figure 19.2 Designing a Sales Force
                  Sales-Force Objectives and Strategy
                               Sales Tasks


                           • Prospecting
                           • Targeting
                          • Communicating
                            • Selling
                            • Servicing
                      •         Information gathering

                              •   Allocating
                  Figure 19.3 Managing the Sales Force


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                                  Sales-Force Structure
                Established companies need to revise their sales-force
                structure as market and economic conditions change.




                           •              Territorial Structure

                      •              Product or Market Structure


                                      Sales-Force Size
Sales representatives are one of the company’s most productive and expensive assets.
              Increasing their number will increase both sales and costs.


                 Workload Approach to Determine Sales Force Size

                  •        Customers are grouped into size classes


                  •       Desirable call frequencies are established


      •     Number of accounts in each size class multiplied by call frequency


            •      Average number of calls possible per year established


•     Number of reps equal to total annual calls required divided by number possible
                                 (Average annual calls)
                    Components of Sales Force Compensation
          To attract top-quality sales reps, the company has to develop an
                         attractive compensation package.

                 The four components of sales-force compensation:


                              •               Fixed amount

                            •               Variable amount

                            •             Expense allowances

                                   •        Benefits
                               What Motivates Sales Reps?

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                                        Most Rewarding

                                             •     Pay

                                         •     Promotion

                                     •     Personal growth

                               •      Sense of accomplishment

                                        Least Rewarding

                                         • Liking
                                         • Respect
                                         • Security
                                        • Recognition
                            Figure 19.4 Steps in Effective Selling




Notes Ch#19
 Today, marketing communications are increasingly seen as an interactive dialogue between the
 company and its customers. Companies must ask not only, “How can we reach our
 customers?” but also, “How can our customers reach us?” Personalizing communications is
 critical: Saying and doing the right thing to the right person at the right time.


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

  A) These channels include:
     1) Direct mail.
     2) Catalogs.
     3) Telemarketing.
     4) Interactive TV.
     5) Kiosks.
     6) Web sites.
     7) Mobile devices.
  B) Direct marketers seek a measurable response, typically a customer order.

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  C) This is sometimes called direct-order marketing.
  D) Today, many direct marketers use direct marketing to build a long-term relationship with the
     customer.
  E) Direct marketing is one of the fastest growing avenues for serving customers.
  F) More and more businesses have turned to direct mail and telemarketing in response to the high
     and increasing costs of reaching business markets through a sales force.
      1) Companies are seeking to substitute mail- and phone-based selling units to reduce field
         sales expenses.
  Figure 19.1 provides a breakdown of the various types of direct marketing.

The Benefits of Direct Marketing
  The extraordinary growth of direct marketing is the result of many factors.

  A) Market demassification has resulted in an ever-increasing number of market niches.
  B) Societal changes and difficulties are encouraging at-home shopping.
  C) Direct marketing benefits customers in many ways:
      1) Home shopping can be fun, convenient, and hassle-free.
      2) Saves time.
      3) Introduces consumers to a larger selection of merchandise.
      4) Ease of comparative shopping.
      5) Can order goods for themselves and others.
      6) Business customers can benefit by learning about available products and services..
  D) Sellers benefit as well.
      1) Direct marketers can buy a mailing list containing the names of almost any group.
      2) They can customize and personalize messages.
      3) Can build a continuous relationship with each customer.
      4) Direct marketing can be timed to reach prospects at the right moment.
      5) Can receive higher readership because it is sent to more interested prospects.
      6) Permits the testing of alternative media and messages in a cost-effective approach.
      7) Direct marketers can measure responses to their campaigns to decide which one has been
         more profitable.
  E) Direct marketers can use a number of channels to reach individual prospects and customers:
      1) Direct mail.
      2) Catalog marketing.
      3) Telemarketing.

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       4) TV and other direct-response media.
       5) Kiosk marketing.
       6) E-marketing .

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

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

  A) Direct marketing is a popular medium because it:
       1) Permits target market selectivity.
       2) Can be personalized.
       3) Is flexible.
       4) Allows for early testing and response measurement.
  B) Direct mail marketing has passed through a number of stages:
       1) Carpet bombing.
       2) Database marketing.
       3) Interactive marketing.
       4) Real-time personalized marketing.
       5) Lifetime value marketing.
  C) In constructing an effective direct-mail campaign, direct marketers must decide on their:
       1) Objectives.
       2) Target market.
       3) Prospects.
       4) Offer elements.
       5) Means of testing the campaign.
       6) Measures of campaign success.


Objectives
  Most direct marketers aim to receive an order from prospects.

  A) A campaign’s success is judged by the response rate.
  B) An order-response rate of 2 percent is normally considered good, although this number varies
     with product category and price.


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  C) Direct mail can achieve other communication objectives as well:
           1) Producing prospect leads.
           2) Strengthening customer relationships.
           3) Informing and educating customers.
           4) Reminding customers of offers.
           5) Reinforcing recent customer purchase decisions.


Target Markets and Prospects

  A) Most direct marketers apply the R-F-M formula (recency, frequency, monetary amount) for
     rating and selecting customers.
  B) The company selects customers according to:
      1) How much time as passed since their last purchase.
      2) How many times they have purchased.
      3) How much they have spent since becoming a customer.
  C) Prospects can also be identified based on such variables as age, sex, income education, and
     previous mail-order purchases.
  D) In B2B direct marketing, the prospect is the group of people or committee that includes
     decision makers and multiple decision influencers.
  E) Once the target market is defined, the direct marketer needs to obtain specific names.
      1) The company’s best prospects are customers who have bought its products in the past.
      2) The direct marketer can also buy lists of names from list brokers.
Offer Elements
  Nash sees the offer strategy as consisting of five elements:
  A) The product.
  B) The offer.
  C) The medium.
  D) The distribution method.
  E) The creative strategy.
  F) In addition to these elements, the direct-mail marketer has to decide on five components of the
     mailing itself:
      1)      The outside envelop.
      2)      Sales letter.
      3)      Circular.

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       4)      Reply form.
       5)      Reply envelope.
   G) Direct mail should be followed up by an e-mail.

Testing Elements
    One of the great advantages of direct marketing is the ability to test, under real marketplace
   conditions, different elements of an offer strategy, such as products, product features, copy
   platform, mailer type, envelope, prices, or mailing lists.
   A) Direct marketers must remember that response rates typically understate a campaign’s long-
      term impact.
   B) To derive a more comprehensive estimate of the promotion’s impact, some companies are
      measuring direct marketing’s impact on:
       1)      Awareness.
       2)      Intention to buy.
       3)      Word of mouth.

Measuring Campaign Success: Lifetime Value
   By adding up the planned campaign costs, the direct marketer can figure out in advance the
   needed break-even response rate.
   A) By carefully analyzing past campaigns, direct marketers can steadily improve performance.
   B) Even when a specific campaign fails to break-even in the short-run, it can still be profitable in
      the long run if customer lifetime is factored in.
Catalog Marketing
   In catalog marketing, companies may send full-line merchandise catalogs, specialty consumer
   catalogs, and business catalogs.
A) Catalogs are huge business—71 percent of Americans shop from home using catalogs, by phone,
   mail, or the Internet.
B) The success of a catalog business depends on the company’s ability to manage its:
       1) Customer lists.
       2) Control inventory.
       3) Offer quality merchandise so returns are low.
       4) Project a distinctive image.
   C) Global consumers in Asia and Europe are catching on to the catalog craze.
   D) Business marketers are making inroads to global consumers as well.



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Telemarketing
  Telemarketing is the use of the telephone and call centers to attract prospects, sell to existing
  customers, and provide service by taking orders and answering questions.
  A) Telemarketing helps companies increase revenue, reduce selling costs, and improve customer
     satisfaction.
  B) Companies use calls centers for:
      1)      Inbound telemarketing.
      2)      Outbound telemarketing.
 C) Companies carry out four types of telemarketing:
      1)          Telesales.
      2)          Telecoverage.
      3)          Teleprospecting.
      4)          Customer service and technical support.
  D) October 2003, National Do Not Call Registry.
      1) Only political organizations, charities, telephone surveyors, or companies with existing
         relationships with consumers were exempt.
  E) Telemarketing is increasingly used in business as well as consumer marketing.
  F) Telemarketing, as it improves, with the use of videophones, will increasingly replace, though
     never eliminate, more expensive field sales calls.


Other Media for Direct-Response Marketing
  Direct marketers use all the major media to make offers to potential buyers.

Television
  Television is used by direct marketers in several ways:

  A) Direct-response advertising.
  B) At-home shopping channels.
  C) Videotext and interactive TV.


Kiosk Marketing
  A kiosk is a small building or structure that might house a selling or information unit.


  A) The name describes:
      1)      Newsstands.


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       2)      Refreshment stands.
       3)      Free-standing carts.
       4)      Computer-linked vending machines.
       5)      “Customer-order-placing machines.”


INTERACTIVE MARKETING
   The newest channels for direct marketers are electronic. The Internet provides marketers and
   consumers with opportunities for much greater interaction and individualization.


   A) Today companies can send individualized content and consumers themselves can further
      individualize the content.
   B) Companies can interact and dialogue with much larger groups than in the past.
   C) The exchange process has become increasingly customer-initiated and customer-controlled.
       1)      Customers define the rules of engagement.
       2)      Define what information they need.
       3)      What offering they are interested in.
       4)      What prices they are willing to pay.


Benefits of Interactive Marketing
   Interactive marketing offers many unique benefits. Messages delivered by attractive or popular
   sources can potentially achieve higher attention and recall.

   A) It is highly accountable and its effects can be easily traced.
   B) The Web offers the advantage of “contextual placements.”
   C) Light consumers of other media can be reached.
   D) The Web is especially effective at reaching people during the day.
   E) Young, high income, high education consumer’s online media consumption exceeds that of
      TV.

Designing An Attractive Web Site
    Clearly all companies need to consider and evaluate e-marketing and e-purchasing
   opportunities.

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

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B) Rayport and Jaworski have proposed that effective Web sites feature seven design elements
   that they call the 7Cs:
     1)      Context.
     2)      Content.
     3)      Community.
     4)      Customization.
     5)      Communication.
     6)      Connection.
     7)      Commerce.
C)                   To encourage repeat visit, companies need to pay special attention to context
     and content factors and embrace another “C”—constant change.
D)                     Visitors will judge a site’s performance on its ease of use and its physical
     attractiveness.
E)                     Ease of use breaks down into three attributes:
     1)                        The Web site downloads quickly.
     2)                        The first page is easy to understand.
     3)                        The visitor finds it easy to navigate to other pages that open quickly.
F) Physical attractiveness is determined by the following factors:
     1) The individual pages are clean looking and not overly crammed with content.
     2) The typefaces and font sizes are very readable.
     3) The site makes good use of color (and sound).
G) Retuning to a site depends on content.
     1) Content must be:
          a. Interesting.
          b. Useful.
          c. Continuously changing.
H) Certain types of content function will attract first-time visitors and bring them back again:
     1)      Deep information with links to related sites.
     2)      Changing news of interest.
     3)      Changing free offers to visitors.
     4)      Contests and sweepstakes.
     5)      Humor and jokes.
     6)      Games


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Placing Ads and Promotion Online
   A company has to decide which forms of Internet advertising will be most cost-effective in
  achieving advertising objectives.

  A) Banner ads are small rectangular boxes containing text and perhaps a picture.
  B) Companies pay to place banner ads on relevant Web sites.
  C) Sponsorships are best placed in well-target sites where they can offer relevant information or
     service.
  D) A microsite is a limited area on the Web managed and paid for by an external
     advertiser/company.
  E) Interstitials are advertisements that pop up between changes on a Web site
  F) The hottest growth area has been search-related ads.
  G) A newer trend, content-target advertising links ads not keywords to the content of Web pages.
  H) Companies can set up alliances and affiliate programs (when one Internet company works
     with another one, they end up advertising each other).
  I) Web advertising is showing double-digit growth.
E-Marketing Guidelines
  If a company does an e-mail campaign right, it cannot only build customer relationships, but
  also reap additional profits.

  A) Here are some guidelines followed by pioneering e-mail marketers:
      1) Give the customer a reason to respond.
      2) Personalize the content of your e-mails.
      3) Offer something the customer could not get via direct mail.
      4) Make it easy for customers to “unsubscribe.”
  B) Direct marketing must be integrated with other communications.


DESIGNING THE SALES FORCE
  The original and oldest form of direct marketing is the field sales call.

  A) Today most industrial companies rely heavily on a professional sales force to:
      1)      Locate prospects.
      2)      Develop them into customers.
      3)      Grow the business.


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  B) U.S. firms spend over a trillion dollars annually on sales forces and sales-force materials—
     more than they spend on any other promotional method.
  C) Nearly 12 percent of the total workforce work full time in sales occupations.
  D) No one debates the importance of the sales force in marketing programs.
      1) However, companies are sensitive to the high and rising costs of maintaining a sales force.
  E) The term sales representative covers a broad range of positions.
  F) Six can be distinguished, ranging from the least to the most creative types of selling:
      1) Deliverer.
      2) Order taker.
      3) Missionary.
      4) Technician.
      5) Demand creator.
      6) Solution vendor.
  G) Sales personnel serve as the company’s personal link to the customers.
      1) The sales representative is the company to many of its customers.
      2) The sales representative brings back much needed information about the customer.
  H) Therefore, the company needs to carefully consider issues in sales force design namely:
      1) Development of sales force objectives.
      2) Strategy.
      3) Structure.
      4) Size.
      5) Compensation.
  Figure 19.2 shows designing a sales force.

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

  A) Companies need to define the specific objectives they want their sales force to achieve.
  B) The specific allocation scheme depends on the kind of products and customers, but regardless
     salespeople will have one or more of the following specific tasks to perform:
  1) Prospecting.
  2) Targeting.


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3) Communicating.
4) Selling.
5) Servicing.
6) Information gathering.
7) Allocating.
C) Because of the expense, most companies are moving to the concept of a leveraged sales force.




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     1) A leveraged sales force is where the sales force focuses on selling the company’s more
        complex and customized products to large accounts.
          a. Low-end selling is done by inside salespeople and Web ordering.
          b. Tasks such as lead generation, proposal writing, order fulfillment, and post-sale
             support are turned over to others.
          c. As a result, salespeople handle fewer accounts, but are awarded for key account
             growth
  D) Today’s sales representatives act as “account manager” who arrange fruitful contacts between
     various people in the buying and selling organizations.
  E) Selling increasingly calls for teamwork requiring the support of other personnel such as :
     1)      Top management.
     2)      Technical people.
     3)      Customer service representatives.
     4)      Office staff.
  F) To maintain a market focus, salespeople should know how to:
     1)      Analyze sales data.
     2)      Measure market potential.
     3)      Gather market intelligence.
     4)      Develop marketing strategies and plans.
  G) Once the company decides on an approach, it can use a direct or a contractual sales force.
  H) A direct (company) sales force consists of full- or part-time paid employees who work
     exclusively for the company.
  I) A contractual sales force consists of manufacturers’ reps, sales agents, and brokers who are
     paid a commission based on sales.

Sales-Force Structure
   The sales-force strategy has implications for the sales-force structure. Established
  companies need to revise their sales-force structure as market and economic conditions
  change.

Sales-Force Size
   Sales representatives are one of the company’s most productive and expensive assets.
  Increasing their number will increase both sales and costs.
  A) Once the company establishes the number of customers it wants to reach, it can use a
     workload approach to establish sales-force size. This method consists of the following five
     steps:
     1) Customers are grouped into size classes.


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      2) Desirable call frequencies.
      3) The number of accounts in each size class is multiplied by the corresponding call
         frequency.
      4) The average number of call per sales rep is determined.
      5) The number of sales reps needed is determined.

Sales-Force Compensation
  To attract top-quality sales reps, the company has to develop an attractive compensation
  package.

  A) The company must determine the four components of sales-force compensation:
      1)     The fixed amount.
      2)     The variable amount .
      3)     Expense allowances .
      4)     Benefits.
  B) Fixed compensation receives more emphasis in jobs with a high ratio of non-selling to selling
     duties and in jobs where the selling task is technically complex and involves teamwork.
  C) Variable compensation receives more emphasis in jobs where sales are cyclical or depend on
     individual initiative.
  D) Fixed and variable compensation give rise to three basis types of compensation plans:
      1)         Straight salary.
      2)         Straight commission.
      3)         Combination salary and commission.
  E) Some companies see a new trend toward deemphasizing volume measures in favors of factors
     such as profitability, customer satisfaction, and customer retention.
  F) Other companies are basing the rep’s reward partly on a sales team’s performance or even
     companywide performance.


Managing the Sales Force
  Once the company has established objectives, strategy, structure, size and compensation, it
  has to recruit, select, train, supervise, motivate, and evaluate sales representatives.
  Figure 19.3 illustrates managing the sales force.

Recruiting and Selecting Representatives
   At the heart of a successful sales force is the selection of effective representatives. One
  survey revealed that the top 27 percent of the sales force brought in over 52 percent of the
  sales.


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   A) Selecting sales reps would be simple if one knew what traits to look for.
      1) One good starting point is to ask customers what traits they prefer.
      2) Finding what traits will actually lead to sales success is challenging.
      3) Numerous studies have shown little relationship between sales performance and
         background and experience variables.
   B) Once management develops its selection criteria it must recruit.


Training and Supervising Sales Representatives
   Today’s customers expect salespeople to have deep product knowledge, to add ideas to improve
   the customer’s operations, and to be efficient and reliable. Companies use sales-promotion
   tools to draw a stronger and quicker buyer response.
   A) These demands have required companies to make a much higher investment in sales training.
   B) New reps may spend a few weeks to several months in training.
   C) Training time varies with the complexity of the selling task and the type of person recruited
      into the sales organization.
   D) New methods of training are continually emerging.
   E) Companies vary in how closely they supervise sales reps.

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


Norms for Prospect Calls
  Companies often specify how much time reps should spend prospecting for new accounts.
   A) Companies set up prospecting standards for a number of reasons:
      1) Left to their own devices, many reps will spend most of their time with current customers.
      2) Some companies rely on a missionary sales force to open new accounts. The appeal of
         public relations and publicity is based on three distinctive qualities:

Using Sales Time Efficiently
  Studies have shown that the best sales reps are those who manage their time effectively
   A) One planning tool is time-and-duty analysis.
   B) Companies are constantly seeking ways to improve sales-force productivity.



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C) To cut costs, reduce time demands on their outside sales force, and take advantage of
   computer and telecommunications innovations, many companies have increased the size and
   responsibilities of their inside sales force.
D) Inside salespeople are of three types:
    1)      Technical support people.
    2)      Sales assistants.
    3)      Telemarketers.
E) The inside sales force frees the outside reps to spend more time selling to:
    1)      Major accounts.
    2)      Identifying and converting new major prospects.
    3)      Placing electronic ordering systems in customers’ facilities.
    4)      Obtaining more blanket orders and systems contracts.


F) Another dramatic breakthrough is the new high-tech equipment (PCs, etc.).
G) One of the most valuable electronic tools for the sales rep is the company Web site:
    1)          As a prospecting tool.
    2)          To help define the firm’s relationship with individual accounts.
    3)          Identify those whose business warrants a personal sales call.
    4)          Provides an introduction to self-identified potential customers.
H) Selling over the Internet supports relationship marketing by solving problems that do not
   require live intervention and thus allows more time to be spent on issues that are best
   addressed face-to-face.




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Motivating Sales Representatives
    The majority of sales representatives require encouragement and special incentives. Most
   marketers believe that the higher the salesperson’s motivation, the greater the effort and the
   resulting performance, rewards, and satisfaction, and thus further motivation
   A) Such thinking is based on several assumptions:
       1) Sales managers must be able to convince salespeople that they can sell more by working
          harder or by being trained to work smarter.
       2) Sales manager must be able to convince salespeople that the rewards for better
          performance are worth the extra effort.
   B) To increase motivation, marketers reinforce intrinsic and extrinsic rewards of all types.
   C) One research study that measured the importance of different rewards found that the reward
      with the highest value was pay, followed by:
       1) Promotion.
       2) Personal growth.
       3) Sense of accomplishment.
   D) The least-value rewards were:
       1) Liking and respect.
       2) Security and recognition.
   E) In other words, salespeople are highly motivated by pay and taking the chance to get ahead to
      satisfy their intrinsic needs, and less motivated by complements and security.
   F) Most companies set annual sales quotas.
       1) Quotas can be set on dollar sales:
           a. Unit volume.
           b. Margin.
           c. Selling effort or activity.
           d. Product type.
   G) Compensation is often tied to degree of quota fulfillment.
   H) Sales quotas are developed from the annual marketing plan.
   I) Each area sales manager divides the area’s quota among the area’s sales reps.
       1) One general view is that a salesperson’s quota should be at least equal to the person’s last
          year’s sales plus some fraction of the difference between territory sales potential and last
          year’s sales.
   J) Conventional wisdom is that profits are maximized by sales reps focusing on the more
      important products and more profitable products.
   K) Setting sales quotas creates problems:


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       1)      If the company underestimates, it overpays its reps.
       2)       If the company overestimates salespeople, they will not make their quotas and feel
            frustrated or quit.
       3)      Another downside is that quotas can drive reps to get as much business as possible—
            possibly ignoring the service side of the business.
   L) Some companies are dropping quotas altogether to focus on the service side of the business.


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


Sources of Information
  The most important source of information about reps is sales report.
   A) Additional information comes through.
   1) Personal observation.
   2) Salesperson self-reports.
   3) Customer letters and complaints.
   4) Customer surveys.
   5) Conversations with other sales representatives.
 B)    Sales reports are divided between:
   1) Activity plans.
   2) Write-ups or activity results.
   C) Many companies require representatives to develop an annual territory marketing plan in
      which they outline their program for developing new accounts and increasing business from
      existing accounts.
   D) Sales reps write up completed activities on call reports.
   E) These reports provide raw data from which sales managers can extract key indications of sales
      performance:
            1) Average number of sales calls per salesperson per day.
            2) Average sales call time per account.
            3) Average revenue per sales call.
            4) Average cost per sales call.
            5) Entertainment cost per sales call.


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           6) Percentage of orders per hundred sales calls.
           7) Number of new customers per period.
           8) Number of lost customers per period.
           9) Sales-force cost as a percentage of total sales.

Formal Evaluation
  The sales force’s reports along with other observations supply the raw materials for evaluation.
  There are several approaches to conduction evaluations.
 Table 19.1 shows one example.

  A) Evaluations can also assess the salesperson’s knowledge of:
      1)           Company.
      2)           Products.
      3)           Customers.
      4)           Competitors.
      5)           Territory.
      6)           Responsibilities.
  B) Personal characteristics can be rated, such as:
      1)           General manner.
      2)           Appearance.
      3)           Speech.
      4)           Temperament.
  C) The sales manager can review any problems in motivation or compliance.


PRINCIPLES OF PERSONAL SELLING
   Effective salespersons have more than instinct, they are trained in methods of analysis and
  customer management.
  A) Today’s companies spend hundreds of millions of dollars each year to train salespeople in the
     art of selling.
  B) Sales-training approaches try to convert a salesperson from a passive order taker into an active
     order getter who engages in customer problem solving.
  C) Most sales-training programs agree on the major steps involved in any effective sales process:
  Figure 19.4 shows the major steps in effective selling.



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The Six Steps
  A) Step 1: Prospecting and Qualifying
     1) The first step in selling is to identify and qualify prospects
     2) More companies are taking responsibility for finding and qualifying leads
     3) Leads can be categorized, with “hot” prospects turned over to the field sales force.
         a. “Warm” prospects turned over to the telemarketing unit for follow-up
  B) Step 2: Preapproach
     1) The salesperson needs to learn as much as possible about the prospect company
     2) The salesperson should set call objectives.
         a. Or decide on the best contact approach.
             (i) And an overall strategy for the account.
  C) Step 3: Presentation and Demonstration
     1) The salesperson now tells the product “story” to the buyer, following the AIDA formula:
             a. Gaining attention.
             b. Holding interest.
             c. Arousing desire.
             d. Obtaining action .
     2) The salesperson uses:
             a. Features.
             b. Advantages.
             c. Benefits.
             d. Value approach (FABV).
  D) Step 4: Overcoming Objections
     1) Customers typically pose objections during the presentation or when asked for the order:
             a. Psychological resistance.
             b. Logical resistance.
     2) To handle these objections, the salesperson maintains a:
             a. Positive approach.
             b. Asks the buyer to clarify the objection.
             c. Questions the buyer in a way that the buyer has to answer his or her own
                objection.
             d. Denies the validity of the objections.
             e. Turns the objection into a reason for buying.

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   3) One potential problem is for salespeople to give in too often when customers demand a
      discount.
          a. “Sell the price” versus “sell through price.”
          b. Received training to recognize value-adding opportunities rather than price-cutting
             opportunities.
E) Step 5: Closing
   1) Salespeople need to know how to recognize closing signs from the buyer:
              a. Physical actions.
              b. Statements or comments.
              c. Questions.
   2) There are several closing techniques:
                        a. Ask for the order.
                        b. Recapitulate the points of agreement.
                        c. Offer to help write up the order.
                        d. Ask whether the buyer wants A or B.
                        e. Get the buyer to make minor choices such as color and sizes.
                        f. Indicate what the buyer will lose if the order is not placed now.
F) Step 6: Follow-Up and Maintenance
                              1) Follow-up and maintenance are necessary if the salesperson
                                 wants to ensure customer satisfaction and repeat business.
                              2) Immediately after the closing, the salesperson should:
                                       a. Cement any details on delivery time, purchase terms,
                                          and other matters important to the customer.
                                       b. Schedule a follow-up call.
                                       c. Develop a maintenance and growth plan for the
                                          account.




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

  A) In routinized exchange, the terms are established by administered programs of pricing and
     distribution.
  B) In negotiated exchange, price and other terms are set via bargaining behavior.
  C) Although price is the most frequently negotiated issue, other issues include:
     1) Contract completion time.
     2) Quality of goods and services.
     3) Purchase volume.
     4) Responsibility for financing.
     5) Risk taking.
     6) Promotion.
     7) Title.
     8) Product safety.
  D) Marketers who find themselves in bargaining situations need certain traits and skills to be
     effective.


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

  A) Today’s customer are large and often global.
  C) They prefer suppliers who can:
     1) Sell and deliver a coordinated set of products and services to many locations.
     2) Who can quickly solve problems that arise in different locations.
     3) Who can work closely with customer teams to improve products and processes.
  C) Salespeople working with key customers must do more than call when they think the
     customers might be ready to place orders.
     1)       They should call or visit at other times.
     2)       Make useful suggestions about the business.
     3)       Monitor key accounts.
     4)       Know customers’ problems.
     5)       Be ready to serve them in a number of way.


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D) When a relationship management program is properly implemented, the organization will
   begin to focus on managing its customers as it does on managing its products.
E) Ultimately, companies must judge which segments and which specific accounts will respond
   to relationship management.




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