Personal Selling and Sales Promotion Copyright © Houghton Mifflin Company. All rights reserved....

Personal Selling andSales Promotion

Copyright © Houghton Mifflin Company. All rights reserved.Copyright © Houghton Mifflin Company. All rights reserved. PowerPoint Presentation by Charlie CookPowerPoint Presentation by Charlie Cook

1919

Part FivePart FivePromotion Promotion DecisionsDecisions

Copyright © Houghton Mifflin Company. All rights reserved. 19–2

Chapter Learning Objectives

• To understand the major purposes of personal selling

• To describe the basic steps in the personal selling process

• To identify the types of sales force personnel• To understand sales management decisions and

activities• To explain what sales promotion activities are

and how they are used• To explore specific consumer and trade sales

promotion methods


Chapter Outline

• The Nature of Personal Selling• Elements of the Personal Selling Process• Types of Salespeople• Management of the Sales Force• The Nature of Sales Promotion• Sales Promotion Opportunities and Limitations• Sales Promotion Methods


The Nature of 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

–Personal selling as a career• The potential for high income• A great deal of freedom• A high level of training• A high level of job satisfaction


General Steps in the Personal Selling Process

FIGURE 19.1


Elements of the Personal Selling Process

• 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


Elements of the Personal Selling Process (cont’d)• 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


Elements of the Personal Selling Process (cont’d)• 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• Repeat contact based on prior meeting(s) with the potential

customer


Elements of the Personal Selling Process (cont’d)• 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.


Elements of the Personal Selling Process (cont’d)• Overcoming objections

–Anticipate objections and counter them during the presentation

–Generally, best to handle objections as they arise

• Closing the sale–Closing is the stage in the selling process when the

salesperson asks the prospect to buy the product.


Elements of the Personal Selling Process (cont’d)• 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–The salesperson who sells to new customers and

increases sales to current ones–Creative selling

• Current-customer sales• New-business sales

• Order Takers–The salesperson who primarily

seeks repeat sales• Inside order takers• Field order takers


Types of Salespeople (cont’d)

• Support Personnel: sales staff members who facilitate selling but usually are not involved solely with making sales–Missionary salespeople

• Support salespersons who assist the producer’s customers in selling to their own customers

–Trade salespeople• Salespersons involved mainly in helping a producer’s

customers promote a product

–Technical salespeople• Support salespersons who give technical assistance to a

firm’s current customers


Management of the Sales Force

• 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)

–Objective 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


Management of the Sales Force (cont’d)

• Determining Sales Force Size–Size of sales force affects

• compensation methods for salespersons.• corale of salespersons.• overall sales force management.

–Methods for determining optimal sale force size:• Dividing the number of sales calls necessary to serve

customers by the number of sales calls a salesperson makes annually

• Adding 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 for sales 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 • Other firms• Employment agencies • Educational institutions• Job ad respondents • Employee referrals



• Training Sales Personnel–What to teach?

• The company, its products, or selling methods

–Whom 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• Frequency, sequencing, and duration of periodic training

–Who will train?• Sales managers, technical personnel, outside consultants

–How to train?• Materials and instructional methods



• 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



• 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




• 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)



• Managing Sales Territories (cont’d)–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 Evaluating Sales Force Performance–Sales objectives, determined by the sales manager,

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


The Nature of 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

–It encourages product trial and purchase by adding value to the product.

–It is most effective when it facilitates or is facilitated by personal selling and advertising.

–Its use has grown dramatically over the last 20 years at the expense of traditional advertising.


Sales Promotion Opportunities and Limitations• Can increase sales by providing extra purchasing

incentives• Excessive use may damage brand image


Sales Promotion Methods

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


Sales Promotion Methods (cont’d)

• Consumer Sales Promotion Methods–Ways of encouraging 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.

• The nature of the product is the prime consideration in setting up a coupon promotion.

• Advantages: generate brand awareness and interest and reward brand loyalty

• Disadvantages: Fraud and misredemptions; consumer ill-will from stock-outs during promotions.



• Consumer Sales Promotion Methods (cont’d)–Demonstrations

• Manufacturers use it temporarily to encourage trial use and purchase of a product or to show how a product works.

• Highly effective yet costly in practice

–Frequent-user incentives• Incentive programs that foster consumer loyalty by

rewarding customers’ repeat (frequent) purchases

–Point-of-purchase displays• Signs, window displays, display racks, and similar means

used to attract customers and to encourage immediate purchases



• Consumer Sales Promotion Methods (cont’d)–Free samples

• Samples of a product 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

–Money refunds• Offering consumers money when they mail in a proof of

purchase, usually for multiple product purchases

–Rebates• Sending consumers a specific amount of money for

making a single product purchase



• Consumer Sales Promotion Methods (cont’d)–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.

–Cents-off offers• Promotions that let buyers pay less than the regular price

to encourage purchase



• Consumer Sales Promotion Methods (cont’d)–Consumer contests and games

• Individuals compete for prizes based on analytical or creative skills.

• Competitions for prizes are used to generate retail traffic and to increase exposure to promotional messages.

–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 Sales Promotion Methods–Ways of persuading wholesalers and retailers to carry a

producer’s products and to market them aggressively–Buy-back allowance

• A sum of money a producer gives a reseller for each additional unit bought after an initial promotion deal is over

–Buying allowance• A temporary price reduction to resellers for purchasing

specified quantities of a product

–Scan-back allowance• A manufacturer’s reward to retailers based on the number

of pieces scanned



• Trade Sales Promotion Methods (cont’d)–Count-and-recount

• A producer’s payment of a specific amount of money for each product unit moved from a reseller’s warehouse in a given period

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

a stated quantity of goods• Usually takes the form of a reduced invoice

–Merchandise allowances• A manufacturer’s agreement to help reseller’s pay for

special promotional efforts



• Trade Sales Promotion Methods (cont’d)–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

–Premium (push) money• Extra compensation to salespersons for pushing a line of

products



• Trade Sales Promotion Methods (cont’d)–Sales contest

• A means of motivating distributors, retailers, and salespeople by recognizing outstanding achievements

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

purchases a specified quantity of merchandise


After reviewing this chapter you should:

• Understand the major purposes of personal selling.• Know the basic steps in the personal selling process.• Be able to identify the types of sales force personnel.• Have insight into sales management decisions and

activities.• Be aware of what sales promotion activities are and how

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

promotion methods.

Chapter 19Chapter 19Supplemental SlidesSupplemental Slides



Key Terms and Concepts

• The following slides (a listing of terms and concepts) are intended for use at the instructor’s discretion.

• To rearrange the slide order or alter the content of the presentation–select “Slide Sorter” under View on the main menu.–left click on an individual slide to select it; hold and drag

the slide to a new position in the slide show.–To delete an individual slide, click on the slide to select,

and press the Delete key.–Select “Normal” under View on the main menu to return

to normal view.


Important Terms

• Personal Selling–Paid personal communication that informs customers

and persuades them to buy products.

• Prospecting–Developing a list of potential customers

• Approach–The manner in which a salesperson contacts a potential

customer

• Closing–is the stage in the selling process when the

salesperson asks the prospect to buy the product.


Important Terms

• Order Getters–The salesperson who sells to new customers and

increases sales to current ones

• Order Takers–The salesperson who primarily seeks repeat sales

• Missionary Salespeople–Support salespersons who assist the producer’s

customers in selling to their own customers

• Trade Salespeople–Salespersons involved mainly in helping a producer’s

customers promote a product


Important Terms

• Technical Salespeople–Support salespersons who give technical assistance to

a firm’s current customers

• 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


Important Terms

• 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

• Coupons–Written price reductions used to encourage consumers

to buy a specific product

• Demonstrations–Manufacturers use them temporarily to encourage trial

use and purchase of a product or to show how a product works.


Important Terms

• Frequent-User Incentives–Incentive programs that foster consumer loyalty by

rewarding customers’ repeat (frequent) purchases

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

means used to attract customers and to encourage immediate purchases

• Free Samples–Samples of a product given out to encourage trial and

purchase


Important Terms

• Money Refunds–Offering consumers money when they mail in a proof of

purchase, usually for multiple product purchases

• Rebates–Sending consumers a specific amount of money for

making a single product purchase

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

purchasing a product

• Cents-Off Offers–Promotions that let buyers pay less than the regular

price to encourage purchase


Important Terms

• Consumer Contests and Games–Individuals compete for prizes based on analytical or

creative skills.

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

for inclusion in a drawing for prizes

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

additional unit bought after an initial promotion deal is over


Important Terms

• Buying Allowance–A temporary price reduction to resellers for purchasing

specified quantities of a product

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

number of pieces scanned

• Count-and-Recount–A producer’s payment of a specific amount of money

for each product unit moved from a reseller’s warehouse in a given period


Important Terms

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

purchasing a stated quantity of goods

• Merchandise Allowances–A manufacturer’s agreement to help reseller’s pay for

special promotional efforts

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

advertising the manufacturer’s products


Important Terms

• 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

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

of products


Important Terms

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

salespeople by recognizing outstanding achievements

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

purchases a specified quantity of merchandise


Transparency Figure 19C

Major Sales Management Decision Areas


Transparency Figure 19D

Major Types of Sales Force Compensation Methods


Transparency Figure 19F

Online Loyalty ProgramsWho are the most likely participants

in online loyalty programs?

Source: “Young Consumers Rack Up The Points,” American Demographics, May 2002, p. 37. Adapted with permission.

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