科特勒：PERSONAL SELLING AND SALES PROMOTION
SALESFORCE: You Need a Great Sales Force to Sell Salesforce
Salesforce is the leader in customer relationship management (CRM) solutions, a $20 billion market. It is a leading innovator in finding ways to help client companies connect with customers to achieve greater sales force effectiveness. It supplies numerous tools that gather, organize, analyze, and disseminate in-depth data about a company’s customers, sales, and individual sales rep and overall sales force performance. Salesforce’s revenues have reached $6.2 billion, up 24 percent over the previous year. To succeed, the company practices effective personal selling, just what it is selling to its clients. Its sales force models the products and services its sells and achieves the sales force results that the company promises its clients. It starts by recruiting and hiring top-notch sales people. Training is also top-of-the-line and uses all the latest tools. But even so, nothing beats good personal selling skills. At Salesforce—or anywhere else— good selling starts with the fundamentals of engaging and listening to customers, understanding and empathizing with their problems, and building relationships by offering meaningful solutions for mutual gain. That’s how you build an incredibly successful sales force and Salesforce.
A focused 10-minute discussion of Salesforce’s own focus on customer relationship management and sales force training will give students a clearer understanding of modern, customer-centered sales. The discussion should also extinguish any lingering, stereotypical perceptions of salespeople as pushy glad-handers. Salesforce’s salespeople are well-educated, well-trained professionals who succeed by partnering with corporate customers and solving their problems for mutual gain.
Starting the Discussion
After a brief discussion about what Salesforce offers, visit https://www.salesforce.com. Review the tabs at the top of the page, especially “Customers,” “Products,” and “Solutions.” Doing so may significantly boost the number of students interested in learning more about sales careers with organizations such as Salesforce, or even its clients. Move along quickly guided by the following questions.
1. Why does Salesforce focus on partnering with its customers rather than simply selling its products to them? (Salesforce understands that if its customers don’t do well, neither will the company. Therefore, to grow its own business, Salesforce must first grow the business of its clients by helping improve the performance of their sales forces.)
2. Describe Salesforce’s corporate culture and how it supports a successful customer-focused sales force. (Salesforce’s salespeople have always been customer relationship developers and solutions providers. If the company doesn’t use its own techniques and solutions in its own business, it will not be able to sell them to its clients.)
3. How does the Salesforce story relate to the concepts in Chapter 16 on personal selling? (When it comes to almost any aspect of managing a sales force, Salesforce sets a high standard. It’s a great example of the role sales forces play in creating and managing customer relationships. Keep the Salesforce example in mind as you discuss various aspects of designing and managing a sales force.)
Use Power Point Slide 16-1 here
This chapter concentrates on two more IMC elements—personal selling and sales promotion.
Personal selling is the interpersonal arm of marketing communications, in which the sales force interacts with customers and prospects to build relationships and make sales.
Sales promotion consists of short term incentives to encourage the purchase or sale of a product or service.
Although this chapter examines personal selling and sales promotion as separate tools, they must be carefully integrated with other elements of the promotion mix.
Use Power Point Slide 16-2 here
1. Discuss the role of a company’s salespeople in creating value for customers and building customer relationships.
2. Identify and explain the six major sales force management steps.
3. Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing.
4. Explain how sales promotion campaigns are developed and implemented.
Salesforce is the leader in providing customer relationship management solutions, ahead of more familiar names, such as Microsoft, Oracle, and IBM. Since it is in the business of selling solutions regarding sales force performance, it must lead by example, and it does so with stunning success. Salesforce leads in developing innovative products and platforms. Yet, it focuses even more strongly on the personal selling aspect in training its own sales force. Nothing beats good selling skills.
Its gold standard sales force helps make the company so successful. Salesforce focuses on ensuring that its own sales forces are trained, not only on the products, and the clients’ needs but in the absolute best ways of being great salespeople.
Opening Vignette Questions
1. What does Salesforce look for in its salespeople?
2. What tools does it provide them to ensure they succeed?
3. In addition to the customer focus and the strong sales skills, what does Salesforce offer its clients? What are these products and services valuable?
Discuss the role of a company’s salespeople in creating value for customers and building customer relationships.
Robert Louis Stevenson once noted, “everyone lives by selling something.”
The Nature of Personal Selling
Personal selling is one of the oldest professions in the world.
The people who do the selling go by many names: salespeople, sales representatives, district managers, account executives, sales consultants, sales engineers, agents, and account development reps to name just a few.
The term salesperson covers a wide range of positions.
At one extreme, a salesperson might be an order taker, such as the department store salesperson standing behind the counter.
At the other extreme are order getters, whose positions demand creative selling and relationship building for products and services ranging from appliances to industrial equipment.
The Role of the Sales Force
Personal selling is the interpersonal arm of the promotion mix.
The role of personal selling varies from company to company.
Some firms have no salespeople at all—for example, companies that sell only online or through catalogs, or companies that sell through manufacturer’s reps, sales agents, or brokers. In most firms, however, the sales force plays a major role.
Linking the Company with Its Customers
The sales force serves as a critical link between a company and its customers.
• They represent the company to customers.
• They represent customers to the company.
Coordinating Marketing and Sales
A company can take several actions to help bring its marketing and sales functions closer together.
• It can increase communications between the two groups by arranging joint meetings and by spelling out when and with whom each group should communicate.
• The company can create joint assignments.
• The company can create joint objectives and reward systems for sales and marketing.
• They can appoint marketing-sales liaisons—people from marketing who “live with the sales force” and help to coordinate marketing and sales force programs and efforts.
• The firm can appoint a high-level marketing executive who oversees both marketing and sales.
Review Learning Objective 1: Discuss the role of a company’s salespeople in creating value for customers and building customer relationships. Learning Objective 1
Key Term: Personal Selling
Key Term: Salesperson
Photo: Salesperson links to customer
Use Discussion Question 16-1 here
Use Additional Project 1 here
Use Individual Assignment 1 here
p. 458PPT 16-7
Identify and explain the six major sales force management steps.
MANAGING THE SALES FORCE
Sales force management is defined as the analysis, planning, implementation, and controlling of sales force activities. (Figure 16.1)
Designing the Sales Force Strategy and Structure
The Sales Force Structure
A company can divide sales responsibilities along any of several lines.
Territorial sales force structure: Each salesperson is assigned to an exclusive geographic area and sells the company’s full line of products or services to all customers in that territory.
• The organization defines each salesperson’s job and fixes accountability.
• The organization increases the salesperson’s desire to build local customer relationships.
• Because each salesperson travels within a limited geographic area, travel expenses are relatively small.
Product sales force structure: The sales force sells along product lines.
This structure can lead to problems if a single large customer buys many different company products.
Customer (or market) sales force structure: The sales force is organized along customer or industry lines.
Separate sales forces may be set up for different industries, for serving current customers versus finding new ones, and for major accounts versus regular accounts.
Complex sales force structure: A company often combines several types of sales force structures when it sells a wide variety of products to many types of customers over a broad geographic area.
Sales Force Size
Sales forces may range in size from only a few salespeople to tens of thousands. Salespeople are one of the company’s most productive and expensive assets. Therefore, increases in the size of the sales force can increase sales as well as costs.
Workload approach: A company first groups accounts into different classes according to size, account status, or other factors related to the amount of effort required to maintain them. It then determines the number of salespeople needed to call on each class of accounts the desired number of times.
Other Sales Force Strategy and Structure Issues
Outside and Inside Sales Forces
Outside salespeople travel to call on customers in the field.
Inside salespeople conduct business from their offices via telephone, the Internet, or visits from buyers.
• Technical sales support people provide technical information and answers to customers’ questions.
• Sales assistants provide administrative backup for outside salespeople.
• Telemarketers and online sellers use the phone and Internet to find new leads and qualify prospects or to sell and service accounts directly.
Most companies now use team selling to service large, complex accounts. Sales teams can unearth problems, solutions, and sales opportunities that no individual salesperson could.
Such teams might include experts from any area or level of the selling firm—sales, marketing, technical and support services, R&D, engineering, operations, finance, and others. Shortcomings of team selling:
1. Salespeople who are used to having customers all to themselves may have trouble learning to work with and trust others on a team.
2. Selling teams can confuse or overwhelm customers who are used to working with only one salesperson.
3. Difficulties in evaluating individual contributions to the team selling effort can create some sticky compensation issues.
Learning Objective 2
Key Term: Sales force management
Figure 16.1: Major Steps in Sales Force Management
Key Terms: Territorial sales force structure, Product sales force structure, Customer (or market) sales force structure
Key Terms: Outside sales force (field sales force), Inside sales force
Photo: Outside an inside sales
Key Term: Team selling
Use Marketing by the Numbers here
Use Additional Project 2 here
Use Think-Pair-Share 1 here
PPT 16-15 Recruiting and Selecting Salespeople
In a typical sales force, the top 30 percent of the salespeople might bring in 60 percent of the sales.
The best salespeople possess four key talents:
1. Intrinsic motivation
2. Disciplined work style
3. The ability to close a sale
4. The ability to build relationships with customers
When recruiting, companies should analyze the sales job itself and the characteristics of its most successful salespeople to identify the traits needed by a successful salesperson in their industry.
Sources of new potential hires:
• The human resources department obtains names from current salespeople, uses employment agencies, places classified ads, searches the internet and social media, and works through college placement services.
• Another source is to attract top salespeople from other companies as these will need less training and can be productive more quickly.
Training programs have several goals.
1. The training program must teach them about different types of customers and their needs, buying motives, and buying habits.
2. It must teach them how to sell effectively and train them in the basics of the selling process.
3. The training program must teach them about the company’s objectives, organization, and chief products and markets, and about the strategies of major competitors.
Many companies are adding e-learning to their sales training programs.
Most e learning is internet-based but many companies now offer on-demand training via mobile devices.
Photo: Great Salespeople
Use Critical Thinking Exercise 16-6 here
Use Individual Assignment 2 here
Compensation is made up of several elements—a fixed amount, a variable amount, expenses, and fringe benefits.
Management must decide what mix of compensation elements makes the most sense for each sales job.
The fixed amount, usually a salary, gives the salesperson some stable income. The variable amount, which might be commissions or bonuses based on sales performance, rewards the salesperson for greater effort and success.
Compensation should direct salespeople toward activities that are consistent with overall sales force and marketing objectives.
Supervising and Motivating Salespeople
The goal of supervision is to help salespeople “work smart” by doing the right things in the right ways.
The goal of motivation is to encourage salespeople to “work hard” and energetically toward sales force goals.
Companies vary in how closely they supervise their salespeople.
• The annual call plan shows which customers and prospects to call on and which activities to carry out.
• The time and duty analysis shows the time the salesperson spends selling, traveling, waiting, taking breaks, and doing administrative chores. (Figure 16.2)
On average, active selling time accounts for only 37 percent of total working time!
Sales force automation systems are computerized, digitized sales force operations that let salespeople work more effectively anytime, anywhere.
Salespeople often need special encouragement to do their best.
Organizational climate describes the feeling that salespeople have about their opportunities, value, and rewards for a good performance.
Sales quotas are Standards stating the amount salespeople should sell and how sales should be divided among the company’s products.
Compensation is often related to how well salespeople meet their quotas.
Companies use various positive incentives to increase sales force effort:
• Sales meetings provide social occasions, breaks from routine, chances to meet and talk with “company brass,” and opportunities to air feelings and to identify with a larger group.
• Companies also sponsor sales contests to spur the sales force to make a selling effort above what would normally be expected.
• Other incentives include honors, merchandise and cash awards, trips, and profit sharing plans.
Photo: Sales force compensation
Figure 16.2: How Salespeople Spend Their Time
Key Term: Sales quota
Use Discussion Questions 16-2 here
Use Critical Thinking Exercise 16-7 here
Use Marketing Ethics here
Use Think-Pair-Share 2 here
The issues surrounding managing the sales force can be difficult for some students. Individually, each decision a sales manager needs to make seems reasonable enough. A sales manager must have an overall plan to develop and manage the sales force. Understanding the way each decision relates to that development plan may be confusing to many students. These issues can be simplified by going through each of the concepts carefully and thoroughly. You may also want to have students design their own sales force for a product or service idea they have. This will really drive home the concepts of how you design the sales force, as well as all the management processes.
Evaluating Salespeople and Sales Force Performance
Management sources of salesperson information:
• Sales reports
• Call reports
• Expense reports
Formal evaluation forces management to develop and communicate clear standards for judging performance and to provide salespeople with constructive feedback and motivate them to perform well.
As with other marketing activities, the company wants to measure its return on sales investment.
Social Selling: Online, Mobile, and Social Media Tools
The fastest-growing sales trend is the explosion in social selling—the use of online, mobile, and social media to engage customers, build stronger customer relationships, and augment sales performance. New digital sales force technologies are creating exciting new avenues for connecting with and engaging customers in the digital and social media age. These tools won’t make salespeople obsolete; they will make them more productive and effective.
Review Learning Objective 2: Identify and explain the six major sales force management steps.
Key Term: Social selling
Photo: Online selling tools
Use Discussion Question 16-3 here
Use Real Marketing 16.1 here
Use Company Case here
Sales to most students equates to retail sales, a field that many people dislike. Therefore, many students will not be planning on a sales career, which could cause them to “tune out” during this section. You can bring them back by talking about the nature of selling in various kinds of service firms (e.g., accounting firms) that many students may be heading toward after graduation. Also, a discussion of the sophistication and professionalism of the salespeople in companies such as Dell and other business-to-business companies can generate some enthusiasm for this important field.
Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing.
THE PERSONAL SELLING PROCESS
Steps in the Selling Process (Figure 16.3)
The selling process consists of seven steps:
1. Prospecting and qualifying
4. Presentation and demonstration
5. Handling objections
Prospecting and Qualifying
Prospecting involves identifying qualified potential customers.
The best source of prospects is referrals.
Sources of referrals:
• Current customers
• Suppliers and dealers
• Noncompeting salespeople
• Online or social media contacts
• Dropping in unannounced on various offices (a practice known as cold calling)
Qualifying a lead involves learning how to identify the good ones and screen out the poor ones.
Prospects can be qualified by:
• Their financial ability
• Volume of business
• Special needs
• Possibilities for growth
Preapproach is the stage in which the salesperson learns as much as possible about the organization (what it needs, who is involved in the buying) and its buyers (their characteristics and buying styles).
Call objectives may be qualifying the prospect, gathering information, or making an immediate sale.
Other call objectives include deciding on the best approach, the best timing, and a determination of the overall sales strategy for the account.
During the approach step, the salesperson should know how to meet and greet the buyer and get the relationship off to a good start.
Presentation and Demonstration
During the presentation, the salesperson tells the “value story” to the buyer, showing how the company’s offer solves the customer’s problems.
The customer-solution approach fits better with a relationship marketing focus.
Before salespeople can present customer solutions, they must develop solutions to present.
The qualities that buyers dislike most in salespeople include being:
• Unprepared or disorganized
• Overly talkative
The qualities that buyers value most in salespeople include:
• Good listening
In handling objections, the salesperson should:
• Use a positive approach
• Seek out hidden objections
• Ask the buyer to clarify any objections
• Take objections as opportunities
• Turn the objections into reasons for buying
Every salesperson needs training in the skills of handling objections.
Salespeople can use one of several closing techniques:
• Ask for the order
• Review points of agreement
• Offer to help write up the order
• Ask whether the buyer wants this model or that one
• Note that the buyer will lose out if the order is not placed now
Follow-up is necessary if the salesperson wants to ensure customer satisfaction and repeat business.
Learning Objective 3
Figure 16.3: Steps in the Selling Process
Key Terms: Selling process, Prospecting
Key Terms: Preapproach,
Key Terms: Handling objections, Closing, Follow-up
Use Discussion Question 16-4 here
Use Critical Thinking Exercise 16-7 here
Use Additional Project 3 here
Use Think-Pair-Share 3 and 4 here
Use Outside Examples 1 and 2 here
The personal selling process will be a surprise to many students, again because they typically think of retail sales, if they’ve thought about sales at all. The importance of all of these steps in the sales process can be highlighted in the discussion of business-to-business sales.
Personal Selling and Managing Customer Relationships
Transaction orientation: The purpose is to help salespeople close a specific sale with a customer.
Relationship orientation: The purpose is to serve the customer over the long haul in a mutually profitable relationship.
Today’s large customers favor suppliers who can sell and deliver a coordinated set of products and services to many locations, and who can work closely with customer teams to improve products and processes.
Review Learning Objective 3: Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing.
Photo: Value Selling
Use Small Group Project 1 here
Use Individual Assignment 2 here
PPT 16-35 Explain how sales promotion campaigns are developed and implemented.
Sales promotion consists of short term incentives to encourage the purchase or sale of a product or service now.
The Rapid Growth of Sales Promotion
Sales promotion tools are targeted toward final buyers (consumer promotions), retailers and wholesalers (trade promotions), business customers (business promotions), and members of the sales force (sales force promotions).
Today, in the average consumer packaged-goods company, sales promotion accounts for 60 percent of all marketing expenditures.
Several factors have contributed to the rapid growth of sales promo¬tion:
1. Product managers face greater pressures to increase their current sales.
2. The company faces more competition, and competing brands are less differentiated.
3. Advertising efficiency has declined.
4. Consumers have become more deal oriented.
The growing use of sales promotion has resulted in promotion clutter. Consumers are increasingly tuning out promotions, weakening their ability to trigger immediate purchase.
Sales Promotion Objectives
Sales promotion objectives vary widely.
• Consumer promotions urge short-term customer buying or to enhance customer brand involvement.
• Trade promotions get retailers to carry new items and more inventory, buy ahead, or promote the company’s products and give them more shelf space.
• Business promotions are used to generate business leads, stimulate purchases, reward customers, and motivate salespeople.
• Sales force are used to get more sales force support for current or new products or get salespeople to sign up new accounts.
Sales promotions should help to reinforce the product’s position and build long-term customer relationships. Learning Objective 4
Key Term: Sales promotion
Ad: Orange Leaf
Use Discussion Question 16-5 here
Major Sales Promotion Tools
Many tools can be used to accomplish sales promotion objectives. Descriptions of the main consumer, trade, and business promotion tools follow.
Consumer promotions include a wide range of tools.
Samples are offers of a trial amount of a product.
Sampling is the most effective—but most expensive—way to introduce a new product or to create new excitement for an existing one.
Coupons are certificates that give buyers a savings when they purchase specified products.
Most major consumer goods companies are issuing fewer coupons and targeting them more carefully.
Rebates (or cash refunds) are like coupons except that the price reduction occurs after the purchase rather than at the retail outlet.
Price packs (also called cents-off deals) offer consumers savings off the regular price of a product.
Premiums are goods offered either free or at low cost as an incentive to buy a product.
Advertising specialties, also called promotional products, are useful articles imprinted with an advertiser’s name, logo, or message that are given as gifts to consumers.
Point-of-purchase (POP) promotions include displays and demonstrations that take place at the point of sale.
Contests, sweepstakes, and games give con¬sumers the chance to win something.
• A contest calls for consumers to submit an entry to be judged.
• A sweepstakes calls for consumers to submit their names for a drawing.
• A game presents consumers with something every time they buy.
Event marketing (or event sponsorships) allows companies to create their own brand marketing events or serve as sole or participating sponsors of events created by others.
Trade promotions persuade resellers to carry a brand, give it shelf space, promote it in advertising, and push it to consumers.
Manufacturers use several trade promotion tools:
• A straight discount (also called a price-off, off-invoice, or off-list)
• An allowance (usually so much off per case)
• Free goods
• Push money
• Free specialty advertising items
Business promotions are used to generate business leads, stimulate purchases, reward customers, and motivate salespeople.
Conventions and trade shows: Firms selling to the industry show their products at trade shows.
Vendors receive many benefits:
• Opportunities to find new sales leads
• Contact customers
• Introduce new products
• Meet new customers
• Sell more to present customers
• Educate customers with publications and audio-visual materials
• Reach many prospects not reached through their sales forces
Sales contests: Contests for salespeople or dealers to motivate them to increase their sales performance over a given period.
Developing the Sales Promotion Program
Marketers must decide:
1. Size of the incentive
2. Conditions for participation
3. Promotion and distribution
4. Length of the promotion
Review Learning Objective 4: Explain how sales promotion campaigns are developed and implemented.
Photo: Ben & Jerry’s
Key Term: Event marketing (event sponsorships)
Photo: Delta Faucet
Key Term: Trade Promotions
Photo: Red Bull
Photo: Trade show
Key Term: Business promotions
Use Discussion Questions 16-5 here
Use Critical Thinking Exercise 16-8 here
Use Real Marketing 16.2 here
Use Online, Mobile, and Social Media Marketing here
Use Video Case here
Use Additional Projects 4 and 5 hereUse Think-Pair-Share 5 here
END OF CHAPTER MATERIAL
16-1 Define personal selling and discuss its role in a company’s promotion mix. (AASCB: Communication; Reflective Thinking)
Answer: Student answers will vary based on their personal response. Refer to the MyLab for an opportunity to assign this question, and all starred MyLab questions, to a student discussion board.
16-2 Name and describe the four sales compensation elements. What are the various compensation combinations, and how can they be used to achieve the company’s marketing objectives? (AACSB: Communication; Reflective Thinking)
Compensation consists of four elements: a fixed amount, a variable amount, expenses, and fringe benefits. The fixed amount, usually a salary, gives the salesperson some stable income. The variable amount, which might be commissions or bonuses based on sales performance, rewards the salesperson for greater effort and success.
Management must determine what mix of these compensation elements makes the most sense for each sales job. Different combinations of fixed and variable compensation give rise to four basic types of compensation plans: straight salary, straight commission, salary plus bonus, and salary plus commission.
A sales force compensation plan can both motivate salespeople and direct their activities. Compensation should direct salespeople toward activities that are consistent with the overall sales force and marketing objectives. For example, if the strategy is to acquire new business, grow rapidly, and gain market share, the compensation plan might include a larger commission component, coupled with a new-account bonus to encourage high sales performance and new account development. In contrast, if the goal is to maximize current account profitability, the compensation plan might contain a larger base-salary component with additional incentives for current account sales or customer satisfaction.
16-3 What is social selling, and how is it affecting the sales function in organizations? (AACSB: Communication; Reflective Thinking)
The fastest-growing sales trend is the explosion in social selling—the use of online, mobile, and social media to engage customers, build stronger customer relationships, and augment sales performance. New digital sales force technologies are creating exciting new avenues for connecting with and engaging customers in the digital and social media age. Some analysts even predict that the internet will mean the death of person-to-person selling, as salespeople are ultimately replaced by websites, online social media, mobile apps, video and conferencing technologies, and other tools that allow direct customer contact. Used properly, online and social media technologies won’t make salespeople obsolete; they will make salespeople more productive and effective.
The new digital technologies are providing salespeople with powerful tools for identifying and learning about prospects, engaging customers, creating customer value, closing sales, and nurturing customer relationships. Internet-based technologies can produce big organizational benefits for sales forces. They help conserve salespeople’s valuable time, save travel dollars, and give salespeople new vehicles for selling and servicing accounts. Using the internet hasn’t really changed the fundamentals of selling. However, the internet and social media are dramatically changing the customer buying process. As a result, they are also changing the selling process. In today’s digital world, many customers no longer rely as much as they once did on information and assistance provided by salespeople. Instead, they carry out more of the buying process on their own—especially the early stages. Increasingly, they use online and social media resources to analyze their own problems, research solutions, get advice from colleagues, and rank buying options before ever speaking to a salesperson.
In response to this new digital buying environment, sellers are reorienting their selling processes around the new customer buying process. They are “going where customers are”— social media, web forums, online communities, blogs—in order to engage customers earlier. They are engaging customers not just where and when they are buying, but also where and when they are learning about and evaluating what they will buy. Salespeople now routinely use digital tools to monitor customer social media exchanges to spot trends, identify prospects, and learn what customers would like to buy, how they feel about a vendor, and what it would take to make a sale. They generate lists of prospective customers from online databases and social networking sites, such as InsideView, Hoovers, and LinkedIn. They create dialogs when prospective customers visit their web and social media sites through live chats with the sales team. They use internet conferencing tools such as WebEx, GoToMeeting, or TelePresence to talk live with customers about products and services. They provide videos and other information on their YouTube channels and Facebook pages.
Ultimately, online and social media technologies are helping to make sales forces more efficient, cost-effective, and productive. The technologies help salespeople do what good salespeople have always done—build customer relationships by solving customer problems—but do it better, faster, and cheaper.
16-4 Name and explain the steps in the selling process. (AACSB: Communication)
Answer: Student answers will vary based on their personal response. Refer to the MyLab for an opportunity to assign this question, and all starred MyLab questions, to a student discussion board.
16-5 What is sales promotion? Discuss its growth as a short-term consumer promotion tool. (AACSB: Communication)
Sales promotion consists of short-term incentives to encourage purchase or sales of a product or service and includes tools such as coupons, sweepstakes, premiums, and trade allowances. Sales promotion tools are used by most organizations, including manufacturers, distributors, retailers, and not-for-profit institutions. They are targeted toward final buyers (consumer promotions), retailers and wholesalers (trade promotions), business customers (business promotions), and members of the sales force (sales force promotions).
Several factors have contributed to the rapid growth of sales promotion, particularly in consumer markets. First, inside the company, product managers face greater pressures to increase current sales, and they view promotion as an effective short-run sales tool. Second, the company faces more competition, and competing brands are less differentiated. Increasingly, competitors are using sales promotion to help differentiate their offers. Third, advertising efficiency has declined because of rising costs, media clutter, and legal restraints. Finally, consumers have become more deal oriented. In the current economy, consumers are demanding lower prices and better deals. Sales promotions can help attract today’s more thrift-oriented consumers.
Critical Thinking Exercises
16-6 There are considerable free sales training resources available on the internet. Search “free sales training” to find some of these resources and access one of them. Create a presentation highlighting what you learned. (AACSB: Communication; Use of IT; Reflective Thinking)
Students’ responses will vary. Searching “free sales training” provides several sources of free training opportunities. Students will likely have to register for the resources but they are free. For example, www.docurated.com/all-things-productivity/50-free-online-training-resources-learn-consultative-selling-process describes and provides links to 50 free online sales training resources. Instructors may want to review these resources and assign specific ones to students.
16-7 You are the district manager for Pureation Beverage Group, a beer and wine distributor. The company has experienced rapid growth and needs to add additional salespeople to its team. Using the sales force management steps in Figure 16.1, discuss what needs to be done to effectively manage your sales force. Support your position. (AACSB: Communication; Reflective Thinking)
Answer: Student answers will vary based on their personal response. Refer to the MyLab for an opportunity to assign this question, and all starred MyLab questions, to a student discussion board.
16-8 In a small group, design a sales promotion campaign using online, social media, and mobile marketing for a small business or organization in your community. Develop a presentation to pitch your campaign to the business or organization and incorporate what you’ve learned about the selling process. (AACSB: Communication; Reflective Thinking)
Students’ responses will vary but they should incorporate elements of the selling process. The selling process consists of seven steps: prospecting and qualifying, preapproach, approach, presentation and demonstration, handling objections, closing, and follow-up. Instructors may want to arrange for specific businesses or organizations to be the clients and have the students present their ideas to the client. Students should be expected to apply knowledge from at least the presentation/demonstration, handling objections, and closing steps of the selling process.
With respect to the sales promotion campaign, consumer promotions include a wide range of tools—from samples, coupons, refunds, premiums, and point-of-purchase displays to contests, sweepstakes, and event sponsorships. Beyond selecting the types of promotions to use, marketers must make several other decisions in designing the full sales promotion program. First, they must decide on the size of the incentive. A certain minimum incentive is necessary if the promotion is to succeed; a larger incentive will produce more sales response. The marketer also must set conditions for participation. Incentives might be offered to everyone or only to select groups. Marketers must decide how to promote and distribute the promotion program itself. The length of the promotion is also important. Evaluation is also very important. The most common evaluation method is to compare sales before, during, and after a promotion.
APPLICATIONS AND CASES
Online, Mobile, and Social Media Marketing: Snap It and Redeem It!
More than 320 billion coupons are distributed each year, with more than 90 percent of them printed on paper. Consumers redeem only about 1 percent of coupons distributed, often because they clip them but forget to use them in the store. SnipSnap has a solution for consumers. Hailed as the Best Shopping App by About.com and winning Media Post’s Apply Awards for Best Finance App, this app has mobilized those paper coupons for consumers. SnipSnap now boasts 4 million users and more than 50 national retail partners. The app allows consumers to snap a photo of retailers’ paper coupons and redeem them at the store. Users can share with friends on Facebook and Twitter and follow others’ couponing. SnipSnap is the first mobile app that scans the text, images, logos, and barcodes in printed coupons and creates a mobile coupon. It also sends expiration date reminders and location-based notifications. Retailer Lord & Taylor installed iBeacon technology and partnered with SnipSnap to send shoppers targeted coupons based on where they are in the store. So if you want a good deal on a Michael Kors purse, it knows you are looking at the item and might send you a coupon through the app. SnipSnap employees noticed consumers were snapping pictures of “coupons” they created to send to friends and family that were good for some special treatment, so the company created a spinoff app called GoodFor. Now, if you want to send a special someone a coupon good for a 30-minute massage or your kid a “get out of chores free” coupon, GoodFor allows you to do it!
16-9 Research other types of apps that rely on smartphone cameras to redeem a sales promotion offer. Explain how they work and how they are similar to and different from SnipSnap. (AACSB: Communication; Use of IT; Reflective Thinking)
One example is Checkout51 (www.checkout51.com). In this app, consumers browse the offers in the app, go to the store and purchase the product, and then snap a picture of their receipt. Checkout51 credits the user’s account the value of the offer. For example, if there was a $5.00 rebate offer, the consumer simply snaps a picture of her receipt, and the $5.00 is credited to her Checkout51 balance. Once the purchase is confirmed, the consumer’s account is credited. When the account reaches $20, the consumer can request a check to receive the cash. For more information on how the app works, see www.thecouponingcouple.com/what-is-checkout-51-and-how-does-it-work/.
SnipSnap (www.snipsnap.it) enables consumers to snap pictures of retailers’ coupons and redeem them at the store. Unlike Checkout51, it does not support manufacturers’ coupons. Checkout51 also supports other types of price-based promotions, such as rebates.
16-10 The profitable growth potential for SnipSnap is in the enterprise market where it provides mobile promotion services to retailers. SnipSnap is working with retailers to create and manage geo-conquesting campaigns. Research what this is and create a presentation explaining how it works. (AACSB: Communication; Use of IT; Reflective Thinking)
Geo-conquesting focuses on targeting consumers when they are nearby (based on their phone’s location). It can be used to send a message or offer to a consumer who is near a competitor’s location. For example, a consumer waiting in line at a coffee shop might be sent an offer from a competing coffee shop. Messages and offers for a store or restaurant can also be sent to shoppers in a shopping mall. Geo-conquesting incorporates geo-fencing, which defines and digitally maps out the geographical area or shopping center that encompasses the campaign.
For an example of how Outback Steakhouse used geo-precision targeting, see www.xad.com/press-releases/geo-conquesting-is-the-new-craze-in-mobile-advertising-according-to-the-xad-q2-2013-mobile-location-insights-report/.
For a good how-to brief, see Shannon E. Denison, “A Marketer’s Guide to Mobile Conquesting,” ClickZ, April 2, 2014, www.clickz.com/clickz/column/2337286/a-marketer-s-guide-to-mobile-conquesting.
Marketing Ethics: Walking the Customer
Employees at Staples face a challenging work environment. According to The New York Times, Staples maintains an internal reporting system nicknamed “Market Basket” that carefully tracks all equipment and protection plan add-ons that each sales staff member sells. Staples expects that each salesperson will upsell each transaction by $200 with additional merchandise and warranty contracts. Staples salespeople have been trained to push until they get at least three objections. This is a classic hard-sell technique. Sales staff who do not meet their goals are coached. If that doesn’t work, the underperforming employees face disciplinary action that can lead to more night and weekend shifts, reduced work hours, or even termination.
Store managers also face intense scrutiny. They have received a clear message that to avoid bringing down a store’s Market Basket averages, salespeople should “walk the customer” if they cannot be successfully upsold. The customer is informed that the merchandise is not in stock and then leave the store empty- handed. Salespeople have another option: They can escort customers to an in-store kiosk to place an online order. Online orders are not subject to Staples’s key performance indicators (KPI) and are not reported to a store’s Market Basket. (For more reading, see David Haggler, “Selling It with Extras, or Not at All,” www.nytimes.com/2012/09/09/your-money/sales-incentives-at- staples-draw-complaints-the-haggler.html?smid=pl-share.)
16-11 A company’s sales force creates and communicates customer value by personally engaging customers and building customer relationships. With its Market Basket approach, was Staples focusing on building customer value and relationships? Explain.
Companies can create goals that make sense at a corporate level. But when the goals are counter to building strong customer relationships, everyone loses—the company, the salesperson, and the customer. According to the text, sales force management is “planning, organizing, leading, and controlling personal contact programs designed to achieve profitable customer relationships.” Once again, the goal of every marketing activity is to create customer value, engage customers, and build profitable customer relationships. Staples is missing this important part of personal selling.
According to the text, the goal of motivation is to encourage salespeople to work hard and energetically toward sales force goals. If salespeople work smart and work hard, they will realize their full potential—to their own and the company’s benefit. Staples does not have an organizational climate that encourages this behavior. It does not appear to value or reward employees who build customer relationships.
16-12 Read Staples’s code of ethics at www.staples.com/ sbd/cre/marketing/staples_soul/documents/staples- code-of-ethics_english.pdf. Is the situation outlined above consistent with Staples’s ethics policies? Is “walking the customer” a violation of the ethics code? Provide specific examples.
Most students will view “walking a customer” as having negative ethical implications. It is not specifically addressed in the company code of ethics but is clearly against the company’s printed ethics code. Students’ research will provide a variety of supportive arguments such as the following:
• Sales and marketing include promoting your products and services to potential customers. Ethical promotion portrays your offers honestly and accurately. Salespeople have to promote products and services on their own merits and highlight those features that members of a target market might find valuable when promoting to that market segment. (See smallbusiness.chron.com/ethical-practices-sales-marketing-64319.html.)
• At the National Ethics Association, we believe there is no easy, quick path to success. Expedient sales practices might take you one step close to higher revenue but derail the process of building a strong reputation and sustainable business. Only by knowing what you stand for ethically, writing these values down, and running your business consistent with those values over many years will you win at the long game of sales. (See www.ethics.net/a/ethical-selling-how-to-play-the-long-game-and-win.)
Marketing by the Numbers: Sales Force Analysis
Wheels, Inc. is a manufacturer of bicycles sold through retail bicycle shops in the southeastern United States. The company has two salespeople who do more than just sell the products—they manage relationships with the bicycle shops to enable them to better meet consumers’ needs. The company’s sales reps visit the shops several times per year, often for hours at a time. The owner of Wheels is considering expanding to the rest of the country and would like to have distribution through 1,000 bicycle shops. To do so, however, the company would have to hire more salespeople. Each salesperson earns $40,000 plus 2 percent commission on all sales. Another alternative is to use the services of sales agents instead of its own sales force. Sales agents would be paid 5 percent of sales.
16-13 Refer to Appendix 2 to answer this question. Determine the number of salespeople Wheels needs if it has 1,000 bicycle shop accounts that need to be called on four times per year. Each sales call lasts approximately 2.5 hours, and each sales rep has approximately 1,250 hours per year to devote to customers. (AACSB: Communication; Analytical Reasoning)
The workload method uses the following formula to determine the sales force size:
NC FC LC
NS = ————————
NS = number of salespeople
NC = number of customers
FC = average frequency of customer calls per customer
LC = average length of customer call
TA = time an average salesperson has available for selling per year
1,000 4 2.5
NS = ——————— = 8 salespeople
16-14 At what level of sales would it be more cost efficient for Wheels to use sales agents compared to its own sales force? To determine this, consider the fixed and variable costs for each alternative. What are the pros and cons of using a company’s own sales force over independent sales agents? (Objective 2) (AACSB: Communication; Analytical Reasoning; Reflective Thinking)
To determine the level of sales at which one alternative would be as efficient as the other, we must set the costs equal to each other. Because variable costs are a function of sales, we can solve for the sales level at which the two would be equal:
Total Costssalesforce = Total Costssales agents
Total costs consist of fixed costs and variable costs, so for the salesforce option, total costs would equal the total salaries for the 8 salespeople (fixed costs) plus the commissions on sales (variable costs). Total costs for the sales agent option are just variables costs. Therefore:
Total costssalesforce = ($40,000 x 8 salespeople) + (0.02 x sales)
Total costssales agents = (0.05 x sales)
Set the two equations equal to each other and solve for sales:
Total Costssalesforce = Total Costssales agents
($40,000 x 8) + (0.02 x sales) = (0.05 x sales)
$320,000 + (0.02 x sales) = (0.05 x sales)
$320,000 = (0.05 x sales) – (0.02 x sales)
$320,000 = (0.03 x sales)
Sales = ——————— = $10,666,667
If Wheels expects sales to be greater than $10,666,667, then using its own sales force will be more efficient than using sales agents. If sales are less than this level, then it would be more efficient to use sales agents because the company would not incur the fixed costs associated with maintaining a sales force.
Sales agents are independent of the manufacturer’s organization and typically are paid on commission, so a manufacturer does not have the fixed costs that are necessary to maintain a full-time sales force. A manufacturer’s selling costs are based on the amount the sales agent sells for the manufacturer. On the downside, however, sales agents typically sell multiple products from different manufacturers, although agents don’t normally sell a competitor’s product. However, they cannot devote all of their selling efforts on a given manufacturer’s products nor are they as knowledgeable about a specific product as a manufacturer’s sales representative. Sales agents might be a smart choice if the manufacturer does not have the resources to maintain its own sales force.
A manufacturer’s sales representative is an employee of the company, and the company incurs all the costs of employment. Even if a sales representative only receives compensation based on commission, there are still other employment costs involved, such as benefits. Unlike sales agents, however, a manufacturer’s sales force devotes all of its effort to selling the manufacturer’s products and is more knowledgeable about the products.
Company Case Notes
SunGard: Building Sustained Growth by Selling the SunGard Way
SunGard got its start in the late 1970s as a data recovery backup center for the Sun Oil Company (Sunoco). That division was spun off into its own company and began servicing clients of all types and sizes. SunGard is now one of the leading software and services companies. In the past decade, SunGard has done well despite facing many industry challenges such as government regulations and globalization. SunGard chose to radically transform its sales force and process while times were good, rather than wait and be forced to do so. This case outlines the details of that transformation.
The teaching objectives for this case are to:
1. Allow students to consider the role of a company’s salespeople in creating value for and building relationships with customers.
2. Help students understand how companies make sales force strategy decisions.
3. Give students exposure to the different aspects of sales force management.
4. Consider the dynamics of the marketing environment and their impact on sales organizations.
16-18 Compare SunGard’s sales force structure before and after the transformation.
Before – product sales force structure with sales people assigned by division and product line.
After – market sales force structure with sales people assigned to clients and selling all SunGard technologies and products.
16-19 What are the positive and negative aspects of SunGard’s new sales force structure?
Positive – As Neve and Powell point out, the new sales force structure is designed to maximize channels, sell solutions rather than products, and provide a more coordinated go-to-market effort. It is designed to sell based on insight rather than customer needs.
Negative – There is always resistance to major change. This new structure requires sales reps with greater knowledge and expertise of the full line of SunGard products, which requires better training, detailed competitive analysis, and more effective sales campaigns. It requires that the sales force spend less time on administrative tasks and more time interfacing with clients and potential clients, which requires time and money.
16-20 How would the challenges faced by SunGard have impacted sales productivity had the company not initiated its transformational plan?
The company was doing well. This is a case where top brass initiated major change before they were forced to do so. If this change had not been initiated when it was, the challenges that were posing stumbling blocks for the corporation would have increased in magnitude to affect revenue and market share in a negative way.
16-21 Identify specific ways SunGard’s transformational plan addresses the different steps of managing the sales force.
As already noted, the transformational plan realigned the sales force structure. Given the need for sales reps with different skills, a new-talent assessment tool was put into play for recruiting. Given that sales reps would now need greater knowledge and expertise of the full line of company products, the transformational plan also provided better training to that end. The plan provided administrative help to allow salespeople to concentrate on becoming more familiar with company products and to interface more with clients. Better tools were also provided by way of Salesforce CRM and sales management software, giving sales reps better access to data, tracking, and performance.
16-22 Will “Selling the SunGard Way” really work? Why or why not?
As pointed out in question 16-20, SunGard had the benefit of addressing the problems it faced before those problems had become extreme or insurmountable. The case points out the difference between efforts to improve sales force effectiveness through incremental change versus transformational change. This is clearly a case of corporate-wide transformational change. Almost certainly, there will be growing pains and performance will likely suffer a temporary setback. But given the top-down support and the involvement of experts that have led this kind of transformation time and time again, it would be very surprising if the transformation did not work.
Most people don’t have much of an idea as to what B2B sales representatives do. Lead a discussion based around the question, “What do B2B sales representatives do?” Let students respond, then guide that discussion in a manner that directs it more toward developing relationships with customers rather than just pushing product.
This case also works well with the customer value chapter (Chapter 1) and the marketing strategy chapter (Chapter 2).
Go to mymktlab.com for the answers to the following Assisted-graded writing questions:
16-23 Describe the roles a salesperson and the sales force perform in marketing.
16-24 What is team selling, and why has it become more important? Are there any pitfalls to this approach?
ADDITIONAL PROJECTS, ASSIGNMENTS, AND EXAMPLES
1. Take a look at Microsoft (www.microsoft.com). What is the role of the personal sales
force in that company? (Objective 1)
2. Examine Dell (www.dell.com). How is Dell’s sales force structured? (Objective 2)
3. List and describe each step of the personal selling process. Analyze your own potential as a salesperson at each step of the process. What steps of the process would be the easiest for you to handle and what steps the most difficult? Why? (Objective 3)
4. Consider your college/university. How could they effectively use sales promotion as a recruiting tool? (Objective 4)
5. Think about the popular Web-based travel site, Kayak (www.kayak.com). How could Kayak use event marketing to effectively promote its business? (Objective 4)
Small Group Assignments
1. Form students into groups of three to five. Each group should read the opening vignette to the chapter on Salesforce. Each group should then answer the following questions and share their answers with the class. (Objective 1, 2, and 3)
a. What does Salesforce look for in its salespeople?
b. What tools does it provide them to ensure they succeed?
c. In addition to the customer focus and the strong sales skills, what does Salesforce offer its clients? What are these products and services valuable?
2. Form students into groups of three to five. Each group should read Real Marketing 16.2: Red Bull: The Mother of All Event Marketers. Each group should then answer the following questions and share their answers with the class. (Objective 4)
a. What made the Red Bull approach such a unique promotion?
b. Can using social media to expand the reach of an onsite promotion such as the Red Bull events be effective?
c. Does the Red Bull event marketing approach provide a method to bridge social media and personal selling in a single event? Can it be applied to other promotions? Explain.
d. What kinds of other companies might be able to follow this approach and create engagement and loyalty similar to what Red Bull has achieved?
1. The sales force serves as a critical link between a company and its customers. They represent the company to customers and they represent customers to the company. Explain how this would work for a company such as CDW. (Objective 1)
2. Recruiting qualified sales applicants is a difficult job for a sales manager. Review the position openings for sales people at Boeing (https://jobs.boeing.com/), IBM (www.ibm.com/us/) and Mars (www.mars.com/global/home.htm). See the requirements for a sales position with each of these companies. (Objective 2)
Consider the following questions, formulate an answer, pair with the student on your right, share your thoughts with one another, and respond to questions from the instructor:
1. What do you believe to be the major advantages and disadvantages of team selling? (Objective 2)
2. What are the major forms of sales force compensation? Which do you believe to be superior? Why? (Objective 2)
3. List and briefly describe the stages of the personal selling process. (Objective 3)
4. In the personal selling process, when would you consider the sell over? Why?
5. In the past, pharmaceutical companies have provided and paid for educational seminars in exotic locations for physicians to which they were promoting a specific drug. The hope was that the physician would then prescribe their medication. Do you believe this is ethical? Why or why not?
1. Consider that you are a salesperson for the local Toyota dealership. A young, newly married couple enters the lot. Walk us through the personal selling process, using this couple as your target. (Objective 3)
Step 1: Prospecting and Qualifying. In this case, there is no prospecting involved. The potential customer comes to you. It becomes your job to qualify them as potentials as quickly as possible. However, the qualification will have to wait until the actual approach.
Step 2: Preapproach. The salesperson has the responsibility of preparing his/her initial greeting and direction he/she believes the presentation should take.
Step 3: Approach. The opening lines are important. It is necessary not only to build an immediate rapport with the couple; it is important to learn their needs, wants, and abilities as quickly as possible.
Step 4: Presentation and Demonstration. The salesperson should have their method of presentation determined at this point. Here the salesperson tells the “value story.” This is where the buyers see how this product fits their requirements.
Step 5: Handling Objections. If the (potential) buyers believe the price is too high, the salesperson can demonstrate how their financing options can lower the monthly amounts to a reasonable level. If they want to “think about it,” the salesperson may offer an incentive to purchase now. Whatever the objection may be, the well-informed salesperson will already have the information and skills to overcome.
Step 6: Closing. This is the moment where it is important for our salesperson to ask for the sale. In many cases, it becomes necessary for the salesperson to take the lead and direct the buyer to “come on inside and let’s write this up.” At this point, the majority of significant objections should have been met.
Step 7: Follow-Up. The sale is never over. It is important to remain in contact with the buyer as time goes by. They may come back to you for their next vehicle, or they may refer their friends to you.
2. Rent the classic movie Death of a Salesman. This was originally a play on Broadway authored by Arthur Miller, in 1949. It was later made into a successful movie. Watch it and review the approach to selling discussed. (Objective 3)
Death of a Salesman deals only tangentially with sales and the selling process. But it does so enough to drive home the points.
Willy Loman, a salesman based in New York City, returns home from a trip to Yonkers where his sons, Biff and Happy, and his wife, Linda, greet him.
Willy is reminded of his brother Ben. Through flashbacks, Ben begins a dialogue with Willy, who contemplates why he can never seem to become successful.
Throughout the play, Willy has these imaginary conversations with Ben, during most of which he asks Ben how he made his millions. Ben had tried to go to Alaska to get involved in logging but ended up in Africa. In Africa, he “stumbled” upon the diamond business and become wealthy by the time Willy was old enough to care about his own career.
Willy feels that he can also become successful by luck alone.
Whenever Willy asks Ben (in his flashbacks) how he made his millions, Ben only answers “When I walked into the jungle, I was 17. When I walked out, I was 21, and by God I was rich.”
In addition, Willy worked for a man who only had to wake up in the morning, put his slippers on, and make phone calls, and had made millions of dollars. Willy assumes that one does not need to work hard or have ambition; that all these men needed was a “smile and a shoeshine” to be successful.
This philosophy does not work out for Willy.
The primary point to drive home is that success in selling does not come by accident. Professional salespeople succeed through thorough research and planning for contingencies.