MODULE 2 : THE SELLING PROCESS : SALES ACTIVITIES AND CAREERS
Organisational Buying Decisions
Participants
Initiators : People who perceive a problem or opportunity that may require the
purchase of a new product or service
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Users : People in the organization who must use or work with the product or
service often influence the purchase decision
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Influencers : People who provide information for evaluating alternative
products and suppliers, and play a major role in determining the specifications
and criteria to use in making the purchase decision.
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Gatekeepers : People who control the flow of information to other people
involved in the purchase process. The Purchase agents, suppliers’ salespeople.
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Buyers : Purchasing agent or Purchasing manager, who has the authority to
contact suppliers and negotiate purchases. May be constrained by technical
specifications and contract requirements determined by technical experts and
top users.
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Deciders : Person with the final authority to make a purchase decision.
Organisational Buying Center :
All the people who participate in buying a particular product or service can be
referred to as a buying center. Normally there are 3-12 members in the buying
center.
Two kinds of Purchase Decisions :
(i)
New Buy
(ii)
Straight Rebuy
Relative influence of representatives from various functional departments at different
stages in the two types of organizational purchase decisions may be different.
Steps in the Buying Process
(i)
Identify need
(ii)
Set specifications
(iii) Evaluate choices
(iv)
Select Supplier
Implications of the Buying Decision on Sales planning
Trying to determine who the salesperson should contact
When each contact should be made
What kind of information and appeals each kind of participant is likely to find
most useful and persuasive
Stages in the Organisational Buying Process
(i)
Anticipation or recognition of a problem or need
(ii)
Determination and description of the characteristics and the quantity of the
needed item
(iii)
Search for and qualification of potential suppliers
(iv)
Acquisition and analysis of proposals and bids
(v)
(vi)
(vii)
Evaluation of proposals and selection of suppliers
Selection of an order routine
Performance evaluation and feedback
Anticipation or Recognition of a Problem or Need
A firm’s demand for goods is a derived demand. This characteristic makes organizational
markets quite volatile. Many different situations can lead someone to recognize a need
for a particular product or service. Need recognition may be almost automatic or a need
may arise when someone identifies a better way of operating, or when the focus of a
firm’s operations changes. Needs may be identified and the purchasing process maybe
initiated by a variety of people in the organization.
Determination and Description of the Characteristics and Quantity of the Needed
Item
These are usually determined by the demand for the firm’s outputs and by the
requirements of its production process and operations. Criteria used must ensure that :
Criteria should be technically precise
Careful consideration to quantities required to minimize inventories or
downtime caused by lack of needed materials
A variety of technical experts and also people who will use the material or equipment are
involved in this stage of the decision making process. Clear communication regarding the
above points is required.
Search for and Qualification of Potential Suppliers
In case of repeat buying, the search maybe limited to one or a few suppliers that have
performed satisfactorily in the past. If the purchase involves a new item or if the item is
complex and expensive, organizational buyers often search for several potential suppliers
to ensure that they can select the one with the best product and most favourable terms.
Acquisitions of Proposals or Bids
Once potential suppliers are identified, the buyer may request specific proposals or bids
from each. When the item is frequently purchased, standardized or technically simple,
this process may not be extensive. For more complicated and expensive goods and
services, lengthy and detailed sales presentations and written proposals may be requested
from each potential vendor.
Evaluation of Offerings and Selection of Suppliers
Various members of the buying center examine the acceptability of the various proposals
and potential suppliers. It may also involve negotiation about prices, credit terms and
delivery schedules.
Factors influencing the choice of the supplier
Service/working relationship
Product quality/selection
Low price
Ability to meet deadlines
Reputation for fair dealing
Nearness/location
Friendship with supplier
Salesperson’s personality
Credit policies
Prestige of supplier
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Reciprocity
The relative importance of different types of selection criteria varies across organizations
snf the types of products and services being purchased.
Selection of an Order Routine
After an order has been placed with a supplier, the purchasing department often tries
to expedite the delivery of the goods.
Performance Evaluation and Feedback
This involves evaluation of both the product and the suppliers. In most organizations,
evaluation is a formal process, involving written reports from the user department and
other persons involved in the purchase.
Repeat Purchase Behaviour
In Straight Rebuys, a customer reoders an item that it has purchased many times. Straight
rebuys are often carried out by members of the purchase department with little influence
from other employees. The buyer chooses suppliers from an approved list, giving weight
to the company’s past satisfaction with those suppliers and their products.
For suppliers not on the approved list, the objective is to move the customer away from
the automatic reordering process of a straight rebuy toward the more extensive evaluation
process of a modified rebuy purchase decision – where the buyer is interested in
modifying product specifications, or other terms it has been receiving from existing
suppliers and is willing to consider dealing with new suppliers.
It might be recommended for the company’s salespeople here tyo bypass the purchasing
department and call directly on users or technical personnel and try to convince them the
firm’s products offer advantages on some important dimension over the products they are
currently using.
SELLING ACTIVITIES
(i)
The Selling Function
Plan selling activities
Search out leads
Call potential accounts
Identify decision makers
Prepare sales presentations
Make sales presentations
Overcome objections
Introduce new products
Call new accounts
(ii)
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Working with Others
Write up orders
Expedite orders
Handle back orders
Handle shipping problems
Find lost orders
(iii)
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Servicing the Product
Learn about the product
Test equipment
Supervise installation
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Train customers
Supervise repairs
Perform maintenance
(iv)
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Managing Information
Provide technical information
Receive feedback
Provide feedback
Check with superiors
(v)
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Servicing the Account
Stock shelves
Set up displays
Take inventory for client
Handle local advertising
(vi)
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Attending conferences/meetings
Attending sales conferences
Attending regional sales meetings
Work at client conferences
Set up product exhibitions
Attend periodic training sessions
(vii)
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Training/Recruiting
Recruit new sales reps
Train new salespeople
Travel with trainees
(viii)
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Entertaining
Entertain clients
(ix)
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Travelling
Travel out of town
Spend nights on the road
Travel in town
(x)
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Distribution
Establish good relations with distributors
Sell to distributors
Handle credit
Collect past due accounts
How Sales People Spend Their Time
Account service/coordination
:
Internal Meetings
:
Travel
:
Face to face selling
:
Phone Selling
:
Administration
:
Different Types of Sales Jobs
(i)
Retail Selling
16%
5%
20 %
33 %
16 %
10 %
These jobs involve selling goods and services to ultimate consumers for their own
personal use, such a sdoor-to-door selling, insurance agents, real estate brokers and retail
store clerks.
(ii)
Industrial Selling
This involves the sales of goods and services at the wholesale level.
It involves three kinds of customers :
(a)
Sales to Resellers
(b)
Sales to Business Users
(c)
Sales to institutions
Many of the goods and services sold by industrial salespeople are more expensive and
technically complex than those in retailing.
Industrial customers tend to be larger and engage in extensive decision making processes
involving many people.
Decisions made in effectively managing an industrial salesforce are broader than those
required for a retail salesforce.
Types of Industrial Sales Jobs
Four different types of trade selling according to Derek Newton are :
(i)
-
(iii)
-
(iii)
-
(iv)
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Trade Selling
Increase business from current and potential customers by providing them
with merchandising and promotional assistance.
Missionary Selling
To increase business from current and potential customers by providing them
with product information and other personal selling assistance.
Technical Selling
To increase business from presently identified customers and potential
customers by providing them with technical and engineering information and
assistance.
New Business Selling
To identify and obtain business from new customers.
Steps in the Selling Process
(i)
Prospecting for Customers
(ii)
Opening the relationship
(iii)
Qualifying the prospect
(iv)
Presenting the sales Message
(v)
Closing the sale
(vi)
Servicing the account
Prospecting for Customers
Sales people use a variety of information sources to identify relevant prospects, including
trade association and industry directories, telephone directories, other salespeople, other
customers, suppliers, non-sales employees of the firm, and social and professional
contacts. New technologies, particularly telemarketing, toll-free numbers and the internet
can also help identify new accounts.
A firm’s account management policies should address how much emphasis salespeople
should give to prospecting for new customers versus servicing existing accounts.
Opening the Relationship
In the initial approach, salespersons should :
Determine who within the organisaation will have the greatest influence and
or authority to purchase the product
Generate enough interest within the firm to obtain the information needed to
qualify the prospect as worthwhile potential customer
Qualifying the Prospect
Does the prospect have need for my product or service?
Can I make the people responsible for buying so aware of that need that I can
make a sale?
Will the sale be profitable to my company?
For this, information is required regarding the prospect’s operations, the kinds of
products it makes, its competitors, likely future demand for its products, present
suppliers, special relationships with present suppliers, financial health and credit rating.
Thus, non-selling departments may also be involved in the qualification process.
Presenting the Sales Message
The salesperson transmits information about a product or service and attempts to
persuade the prospect a customer. Major complaints companies have against salespeople
are :
Running down competitors
Being too aggressive or abrasive
Having inadequate knowledge of competitors’ producrs or services
Having inadequate knowledge of our business or organization
Delivering poor presentations
For an effective sales presentation, decide how many members of the buying firm should
attend based on the attitudes and concerns of members of the buying center and whether
all their concerns can be addressed in a single presentations.
Demonstrate a product’s advantage.
Closing the Sale
Closing refers to obtaining a final agreement to purchase. The salesperson’s task is to
speed up the final decision in order to maximize profits. Often, this can be done by
simply asking for an order.
Servicing the account
Involves providing a variety of service and assistance to customers after a sale to ensure
their satisfaction and repeat business.
Why Salespeople Sell?
(i)
Freedom of action and opportunities for personal initiative
(ii)
Variety and challenge
(iii)
Compensation
(iv)
Working conditions
(v)
Opportunities for career development and advancement
Alternative Selling Techniques
Stimulus Response Approach
The Mental Sales Approach
The Need-Satisfaction Approach
The Problem-Solution Approach
Stimulus Response Approach
This is based on the notion that every sensory stimulus produces a response. Sales
recruits thus learn what to say (stimulus) and what buyers are likely to say in most
circumstances 9response). In a well-planned sales model, most of the unfavourable
responses are known, allowing the company to train representatives to respond
appropriately. The emphasis in training is on standardized sales presentation, the likely
responses by customers, and the possible rejoinders to overcome their objections.
Advantages :
ensures that the salesperson will give smooth, complete talk that covers all the
important selling points in a logical order.
Enables a firm to hire inexperienced salespeople and get them ready for the
field with only minimal training.
Disadvantages :
Limits appropriateness for many types of personal selling.
Ignores differences in the needs and interests of different customers
Failure to adjust presentation to feedback provided by the customer,
particularly one for which he has not been trained
Characteristics of effective Sales Presentations :
Conserves the prospects’ time
Tells the complete story
Delivers and accurate, authoritative and ethical message
Persuades the prospect
Anticipates objections
Facilitates training of salespeople
Increases salesperson’s self-confidence
Facilitates supervision of salespeople
Mental Sales Approach
This approach is based on the idea that a buyer’s mind passes through several successive
stages before deciding to make a purchase. It is based on the AIDA theory of persuasion,
which stresses that promotional messages must attract the prospect’s attention, gain
interest, create desire and stimulate action to complete a sale successfully.
Firms using this approach emphasise the use of a selling formula in designing a
presentation that organizes selling points to coincide with the buyer’s movement through
the stages of attention, interest, desire and action.
Advantages :
salesperson can tailor the sales pitch to each individual prospect
This selling strategy is used most commonly by firms with products or services that are
complicated and difficult for prospective customers to understand and when repeat calls
are likely to be required to close a sale. Most common in industrial markets than in retail
or consumer goods markets.
Disadvantage :
Salesperson oriented rather than customer oriented
No general agreement among psychologists that mental states exist in the
minds of potential buyers or that all buyers proceed through the same states in
the same sequence.
Difficult to train salespeople to figure out the prospect’s current state of mind.
Hard to decide when to leave selling points related to one state and move to
the next.
Need satisfaction approach
Here, the customer’s needs are the starting point in making a sale.The salesperson’s task
is to identify the prospect’s need, make the prospect aware of that need, and then
convince the prospect that the rep’s product or service will satisfy that need better than
any other alternative.
Advantages :
Customer-oriented and flexible
Provides the basis for friendly buyer-seller relationship with two-way
communication
Disadvantages :
Highly qualified saleepeople with an excellent understanding of potential
customers required
Time consuming
Should be used only when the value of the potential sale justifies the expense
Can be adopted when overall business philosophy of the firm is customeroriented rather than product-oriented.
More common in the sale of consumer durables than in the sale of industrial goods.
Problem-Solution approach
The sales person provides an extension of the need-satisfaction approach by helping the
prospect identify several alternative solutions, analyse their advantages and disadvantages
and select the best solution.
The emphasis is more on expert advice rather than on product offering. The primary
objective is to build long-term relationships with customers in which sales rep is seen as a
trusted source of technical information and advice.
Requires extremely competent , well-trained and experienced sales representatives who
spend a great deal of time with each prospect. Hence, it is a very expensive selling
method. However, it builds the foundation for long-term relationships that are most likely
to be satisfied and loyal customers over time.