Part Five
Promotion
Decisions
19
Personal Selling and
Sales Promotion
Copyright © Houghton Mifflin Company. All rights reserved.
PowerPoint Presentation by Charlie Cook
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
Copyright © Houghton Mifflin Company. All rights reserved.
19–2
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
Copyright © Houghton Mifflin Company. All rights reserved.
19–3
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
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19–4
General Steps in
the Personal
Selling Process
FIGURE 19.1
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19–5
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
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19–6
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
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19–7
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
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19–8
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.
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19–9
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.
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19–10
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
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19–11
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
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19–12
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
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19–13
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
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19–14
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
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19–15
Management of the Sales Force (cont’d)
• 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
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19–16
Management of the Sales Force (cont’d)
• 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
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19–17
Management of the Sales Force (cont’d)
• 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
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19–18
Management of the Sales Force (cont’d)
• Compensation Plans
–Straight salary
• Paying salespeople a specific amount per period of time
–Straight commission
• Paying salespeople according to the amount of their sales
in a given time period
–Combination compensation
• Paying salespeople a fixed salary
plus a commission on sales volume
Copyright © Houghton Mifflin Company. All rights reserved.
19–19
Copyright © Houghton Mifflin Company. All rights reserved.
19–20
Management of the Sales Force (cont’d)
• 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)
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19–21
Management of the Sales Force (cont’d)
• 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)
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19–22
Management of the Sales Force (cont’d)
• 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
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19–23
Management of the Sales Force (cont’d)
• 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
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19–24
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.
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19–25
Sales Promotion Opportunities and
Limitations
• Can increase sales by providing extra purchasing
incentives
• Excessive use may damage brand image
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19–26
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
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19–27
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 illwill from stock-outs during promotions.
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19–28
Sales Promotion Methods (cont’d)
• 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
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19–29
Sales Promotion Methods (cont’d)
• 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
Copyright © Houghton Mifflin Company. All rights reserved.
19–30
Sales Promotion Methods (cont’d)
• 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
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19–31
Sales Promotion Methods (cont’d)
• 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
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19–32
Sales Promotion Methods (cont’d)
• 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
Copyright © Houghton Mifflin Company. All rights reserved.
19–33
Sales Promotion Methods (cont’d)
• 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
Copyright © Houghton Mifflin Company. All rights reserved.
19–34
Sales Promotion Methods (cont’d)
• 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
Copyright © Houghton Mifflin Company. All rights reserved.
19–35
Sales Promotion Methods (cont’d)
• 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
Copyright © Houghton Mifflin Company. All rights reserved.
19–36
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.
Copyright © Houghton Mifflin Company. All rights reserved.
19–37
Chapter 19
Supplemental Slides
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19–38
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.
Copyright © Houghton Mifflin Company. All rights reserved.
19–39
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.
Copyright © Houghton Mifflin Company. All rights reserved.
19–40
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
Copyright © Houghton Mifflin Company. All rights reserved.
19–41
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
Copyright © Houghton Mifflin Company. All rights reserved.
19–42
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.
Copyright © Houghton Mifflin Company. All rights reserved.
19–43
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
Copyright © Houghton Mifflin Company. All rights reserved.
19–44
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
Copyright © Houghton Mifflin Company. All rights reserved.
19–45
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
Copyright © Houghton Mifflin Company. All rights reserved.
19–46
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
Copyright © Houghton Mifflin Company. All rights reserved.
19–47
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
Copyright © Houghton Mifflin Company. All rights reserved.
19–48
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
Copyright © Houghton Mifflin Company. All rights reserved.
19–49
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
Copyright © Houghton Mifflin Company. All rights reserved.
19–50
Transparency Figure 19C
Major Sales Management Decision Areas
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19–51
Transparency Figure 19D
Major Types of Sales Force Compensation
Methods
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19–52
Transparency Figure 19F
Online Loyalty Programs
Who 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.
Copyright © Houghton Mifflin Company. All rights reserved.
19–53