Chapter 17: Personal Selling and Sales Promotion

1. Chapter 17:Personal Selling and Sales Promotion Pride/Ferrell Foundations of Marketing Fourth Edition Prepared by Milton Pressley University of New Orleans

2. Objectives • Define personal selling and understand its purpose. • Describe the basic steps in the personal selling process. • Identify the types of sales force personnel. • Understand sales management decisions and activities. • Explain what sales promotion activities are and how they are used. • Recognize specific consumer and trade sales promotion methods.

3. Personal Selling • Paid personal communication that attempts to inform customers and persuade them to purchase products in an exchange situation Nature of Personal Selling State Farm provides professional sales career opportunities to serve local communities.

4. Personal Selling in the Promotion Mix • Provides greatest freedom to adjust message • Most precise focus on sales prospects • Usually most expensive element in the promotion mix • Often the closest relationship with customers • Sales professionals are gaining respect and trust as ethical codes of conduct are enforced

5. Figure 17.1 General Steps in the Personal Selling Process

6. Prospecting for Customers • Developing a list of potential customers • Sources of prospects: Sales records Trade shows Commercial databases Newspaper announcements Public records Telephone directories Trade association directories

7. Personal Selling • Evaluating prospects - Find and analyze information about each prospect’s specific need, current use of brands, feelings about available brands and personal characteristics • Preapproaching and approaching the customer - The manner in which a salesperson researches, then contacts a potential customer • Making the presentation -Must attract and hold the prospect’s attention, stimulate interest and spark a desire for the product • Overcoming objections - Anticipate and counter them before the prospect raises them • Closing the sale - The stage when the salesperson asks the prospect to buy the product • Following up - Determine if the order was delivered on time and if there were problems

8. Discussion Question • Often when following up on a sale, salespeople will find that the customer has one or more complaints. Wouldn’t it make more sense just to skip the follow up step instead of creating the additional work necessary to handle such complaints?

9. Types of Salespeople • Order getters - The salesperson who sells to new customers and increases sales to current ones Current-customer sales New-business sales • Order takers - Salespersons who primarily seek repeat sales Inside order takers Outside/field order takers • Support personnel - Sales staff members who facilitate selling but usually are not involved solely with making sales Missionary salespeople Trade salespeople Technical salespeople

10. Types of Selling • Team Selling - The use of a team of experts from all functional areas of a firm, led by a salesperson, to conduct the personal selling process • Relationship Selling - The building of mutually beneficial long-term associations with a customer through regular communications over prolonged periods of time

11. Integrity Issues in Sales and Marketing Source: KPMG Forensic Integrity Survey, KPMG LLP (U.S.), 2008–2009.

12. Managing the Sales Force • Establishing sales force objectives • Determining sales force size • Recruiting and selecting salespeople • Training sales personnel • Compensating salespeople • Motivating salespeople • Managing sales territories • Controlling and evaluating sales force performance Recruiting and Selecting Salespeople Careerbuilder.com assists in recruiting the right sales professionals.

13. Training Salespeople Training Sales Personnel Sales training occurs in numerous ways, such as small groups with technological support.

14. Compensating Salespeople • Straight salary compensation plan - Paying salespeople a specific amount per time period, regardless of selling effort • Straight commission compensation plan - Paying salespeople according to the amount of their sales in a given time period • Combination compensation plan - Paying salespeople a fixed salary plus a commission based on sales volume

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

16. Characteristics of Sales Force Compensation Methods

17. Discussion Question • If you were the owner of a company that compensated its salespeople using a (contribution-to-profit) straight commission compensation plan, and the commission for 5 of your 32 salespeople was higher than your salary, what (if anything) would you do? Why?

18. What is Sales Promotion? Sales Promotion - An activity and/or material meant to induce resellers or salespeople to sell a product or consumers to buy it Sales Promotion DenTek included a sample and a coupon in this sales promotion program.

19. Consumer Sales Promotion Methods • Ways of encouraging consumers to patronize specific stores or try particular products - Coupons and cents-off offers - Refunds and rebates - Frequent-user incentives - point-of-purchase materials and demonstrations, such as signs and display racks - Free samples and premiums - Consumer games, contests, and sweepstakes

20. Top Ten Coupon Categories

21. Younger Consumers Prefer Online Coupons

22. Trade Sales Promotion Defined • Trade sales promotion methods stimulate wholesalers and retailers to carry a producer’s products and to market those products more aggressively • Encourage resellers to carry a product or stock more of it

23. Trade Sales Promotion Methods • Trade allowances - Buying allowance – Temporary price reduction for purchasing specified quantities - Buy-back allowance – Money given to a reseller for each unit bought after an initial promotion is over - Scan-back allowance – Manufacturer’s reward based on the number of pieces scanned - Merchandise allowance – Manufacturer’s agreement to pay in exchange for providing special promotional efforts

24. Trade Sales Promotion Methods Cooperative Advertising – Manufacturer agrees to pay a portion of retailer’s media costs for advertising the manufacturer’s products Dealer Listings – Ads that promote a product and list the names of retailers of that product Free merchandise – manufacturer’s reward to retailers for purchasing a stated quantity of product Dealer Loader – Gift given to a retailer for purchasing a stated quantity of product

25. Trade Sales Promotion Methods (con’t) Premium (push) money – Extra compensation to salespeople for pushing a product line Sales contest – Used to motivate distributors, retailers, and salespeople by recognizing outstanding sales achievements

26. Discussion Question • Which form of compensation do you think the very best salespersons will prefer?

27. After Reviewing This Chapter You Should: • Be able to define personal selling and understand its purpose. • Know the basic steps in the personal selling process. • Know the types of sales force personnel. • Understand sales management decisions and activities. • Know what sales promotion activities are and how they are used. • Be able to recognize specific consumer and trade sales promotion methods.

28. After Reviewing This Chapter You Should: • Be able to examine physical distribution as a part of supply-chain management. • Know how to explore legal issues in channel management.

29. Key Concepts • Prospecting • Approach • Closing • Order getter • Order takers • Support personnel • Missionary salespeople • Trade salespeople • Technical salespeople • Team selling • Relationship selling • Straight salary compensation plan • Straight commission compensation • Combination compensation plan • Sales promotion • Consumer sales promotion methods • Coupons • Cents-off offer • Money refunds • Point-of-purchase (P-O-P) materials • Rebates • Demonstrations • Free samples • Premiums • Consumer contests

30. Key Concepts • Consumer games • Consumer sweepstakes • Trade sales promotion methods • Buying allowance • Buy-back allowance • Scan-back allowance • Merchandise allowance • Cooperative advertising • Dealer listings • Free merchandise • Dealer loader • Premium (push) money • Sales contests