Download Managing the Sales Force (H3 subhead)

MRKT 495: Marketing Policies and
Strategies
Module 4: Managing and
Delivering Marketing Programs
Production directions and notes (from Andrew): (same as first three modules):
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– Objectives
– Commentary
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link to popup with that word only. Defs are at end of module file in glossary table.
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Graphics title
Strategic
Marketing
Process
Figure 4.1 The
Communication
Process
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Overview
This module concludes our discussion of the Strategic Marketing Process model by
focusing on the ultimate goal of marketing, which is satisfying consumers’ wants and
needs by developing and delivering marketing programs.
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Up to this point, we have discussed the tools and processes that can assist in this final
step; however, the acid test of any marketing program is the products and services
ultimately “delivered” to the marketplace.
In module 3, we focused on marketing decisions related to the marketing mix (4Ps/4Cs).
We explored strategies involving:
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product development
placement and differentiation
promotion
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pricing
marketing channels
In this module, we will discuss strategies and polices related to:
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managing retailing, wholesaling, and market logistics, i.e., place
designing and managing integrated marketing communications, i.e., promotion
managing the sales force for results
This module focuses on design, implementation, and managing these key marketing
activities.
Objectives
After completing this module, you should be able to:
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describe and classify the various types of retailers and wholesalers
explain the fundamental retailing and wholesaling decisions
discuss current retailing trends
define marketing logistics support
explain the importance of logistics to the marketing process
identify communication and advertising objectives
explain the process of advertising
describe how to establish promotion mix strategies
describe the process involved in establishing advertising objectives
evaluate advertising and promotion tools for effectiveness
develop and evaluate sales promotion programs
describe the future of direct and online marketing
identify the fundamental principles of personal selling
explain the key factors in designing and controlling a sales force
Commentary
Topics
(DTP: make hot links to subheads in text)
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Managing Retailing, Wholesaling, and Market Logistics
Designing and Managing Integrated Marketing Communications
Managing the Sales Force
Managing Retailing, Wholesaling, and Market Logistics (H3 subhead)
Retailing (H4 subhead)
Retailing and wholesaling organizations are part of the system designed to bring goods
and services from the point of production to consumption. Retailing is selling goods or
services directly to final consumers for personal use. Retailers include store retailers,
non-store retailers, and retail organizations.
Store retailers include specialty stores, department stores, supermarkets, convenience
stores, superstores, combination stores, hypermarkets, discount stores, warehouse stores,
and catalog showrooms. Stores have different longevities and are in different stages of
the retail life cycle.
Today, non-store retailing is growing more rapidly than store retailing. Examples of
non-store retailing include direct selling, direct marketing, automatic vending, buying
services, and the Internet. The dramatic growth in the availability and use of computers
has led to burgeoning revenues based on Internet sales. The range of products, services,
and non-profit transactions offered on the Internet appears limitless.
Chains, seller cooperatives, consumer cooperatives, franchises, and merchandisers
sponsor diverse retailing lines and forms.
Retailers, like manufacturers, must prepare marketing plans that include:
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decisions on target markets
product assortment and supporting services
store atmosphere or ambiance
pricing, promotion, and place
Retailers take steps to improve their professional management and productivity. They
face shorter retail life cycles, new retail forms such as the Internet and boutiques,
increased competition, and new retail technologies.
The key changes in the retailing field are both a result and a by-product of changes in our
population, such as where and how people live, work, and purchase. During the next
decades the trends will accelerate, but most changes will come as a result of
technological advances surrounding the handling of information, communication,
management, and in serving the needs of customers – “brick” stores and “e-clicks”
combined!
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to see your answer compared to a model answer. This will not be graded.
Check Answer button
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that repeats what student typed, displays it next to the model answer.)
Try This 4.1 Retailing challenges
One of the challenges of a retailer is to get the customer to spend more time in the store.
Studies have shown a direct relationship between time spent in the store and total expenditures.
Given this fact, what would you do as a retailer to encourage consumers to spend more time instore shopping?
Hint: Focus on the convenience and comfort of the store and the shopper.
Answer: There are numerous examples of how retailers have attempted to keep shoppers
in their stores longer, such as: making food and drink available; providing baby-sitting
services; creating an ambiance that is comfortable and relaxed, e.g., the piano player at
Neiman Marcus, and providing chairs or sofas on which customers can rest and relax.
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End of pop-up text
Wholesaling (H4 subhead)
Wholesaling includes all the activities involved in selling goods or services to those who
are buying for the purpose of resale or for business use. Wholesalers help manufacturers
deliver their products efficiently to the many retailers and industrial users across the
nation. Wholesalers perform many functions, including selling and promoting, buying
and assortment-building, break-bulk of shipments, warehousing, transporting, financing,
and inventory risk.
Wholesalers fall into four groups:
1. Merchant wholesalers take possession of the goods and include full-service
wholesalers and limited-service wholesalers, such as cash-and-carry wholesalers,
truck wholesalers, drop shippers, rack jobbers, producers’ cooperatives, and mailorder wholesalers.
2. Agents and brokers do not take possession of the goods but are paid a commission
for facilitating buying and selling.
3. Miscellaneous wholesalers include agricultural assemblers, petroleum bulk plants
and terminals, and auction companies.
4. Wholesalers also must make decisions on their target market, product assortment
and services, pricing, promotion, and place. Wholesalers who do not carry
adequate assortments and inventory or provide unsatisfactory service are likely to
be bypassed by manufacturers. Progressive wholesalers, on the other hand, adapt
marketing concepts and streamline their costs of doing business.
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Market Logistics (H4 subhead)
The marketing concept calls for paying increased attention to marketing logistics, an
area of potentially high cost savings and improved customer satisfaction.
When order processors, warehouse planners, inventory managers, and transportation
managers make decisions, they affect each other’s costs and demand. The physicaldistribution concept calls for treating all these decisions within a unified or integrated
framework. These are referred to as Vertical Marketing Systems (VMS).
Vertical integration within the channel can occur as a result of ownership (corporate),
contract (franchise), or administered (Wal-Mart) systems. The task becomes that of
designing physical-distribution arrangements that minimize the total cost of providing a
desired level of customer service.
Food for thought 4.1: Eliminate the middleman?
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Food for thought 4.1: Eliminate the middleman?
We hear a lot today about “eliminating the middleman.” Is this possible? If so, will it
result in lower prices to the consumer?
Answer:
Contemporary wisdom suggests that although you cannot eliminate the functions
performed by the middleman, you may be able to eliminate the middleman. However, the
reason we use middlemen is because they tend to be more effective and/or more efficient.
If we decide to not out-source middleman functions and rather do them ourselves, we
should be aware of the need to maintain an acceptable level of performance.
End of pop-up text.
Designing and Managing Integrated Marketing Communications (H3 subhead)
Marketing communications is one of the four major elements of the company’s
marketing mix.
Marketers must know how to use advertising, sales promotion, direct marketing,
public relations, and personal selling to communicate the product’s existence and value
to the target customers.
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The communication process itself consists of: sender, receiver, encoding, decoding,
message, media, response, feedback, and noise. Marketers must know how to get through
to the target audience in the face of the audience’s tendencies toward selective attention,
distortion, and recall.
Figure 4.1
The Communication Process
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http://coursedev.umuc.edu:9090/MRKT495/0606/Modules/M4Module_4/images/communication_process.gif
Developing the promotion program involves several discrete steps. The communicator
must first identify the target audience and its characteristics, including the image it carries
of the product. Next, the communicator has to define the communication objective,
whether it is to create awareness, knowledge, liking, preference, conviction, or purchase.
A message must be designed containing effective content, structure, format, and source.
Then communication channels, both personal and non-personal, are selected.
Next, the total promotion budget can be established. Four common methods are the
affordable method, the percentage-of-sales method, the competitive-parity method, and
the objective-and-task method.
Food for thought 4.2: Target audience
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Food for thought 4.2: Target audience
Why is it essential for marketers to identify the target audience for a message? What happens if
they incorrectly identify the target audience? How does identifying the audience help with the
communication decisions that follow?
Answer:
It is critical to identify the proper target audience because this will make firms more
efficient and more effective. Our products/services are intended for specific consumers
based on their wants and needs. Therefore, focusing attention on those segments alone
ensures that we are not wasting resources on “customers” who will not respond to our
offering. Also, properly identifying the target market will give us clues on how to reach
them with our message and how to communicate with them.
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End of pop-up text.
The promotion budget should be divided among the main promotional tools, as affected
by such factors as push versus pull strategy, buyer readiness stage, product life-cycle
stage, and company market rank. The marketer should then monitor to see how much of
the market becomes aware of the product, tries it, and is satisfied in the process.
Finally, all of the communications efforts must be managed and coordinated for
consistency, good timing, and cost effectiveness.
Advertising—the use of paid media by a seller to communicate persuasive information
about its products, services, or organization—is a potent promotional tool. Advertising
takes on many forms (national, regional, local, consumer, industrial, retail, product,
brand, institutional, etc.) designed to achieve a variety of objectives (awareness, interest,
preference, brand recognition, brand insistence).
Advertising decision-making consists of objectives setting, budget decision, message
decision, media decision, and ad effectiveness evaluation. Advertisers should establish
clear goals as to whether the advertising is supposed to inform, persuade, or remind
buyers.
The factors to consider when setting the advertising budget are:
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stage in the product life cycle
market share
competition and clutter
needed frequency
product substitutability
The advertising budget can be established based on:
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what is affordable, as a percentage budget of sales
competitors’ expenditures
objectives and tasks
more advanced decision models that are available
The message decision calls for generating messages, evaluating and selecting between
them, and executing them effectively and responsibly. The media decision calls for:
defining the reach, frequency, and impact goals; choosing among major media types;
selecting specific media vehicles; deciding on media timing; and geographical allocation
of media. Finally, campaign evaluation calls for evaluating the communication and sales
effects of advertising, before, during, and after the advertising.
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Sales promotion and public relations are two tools of growing importance in marketing
planning.
Sales promotion covers a wide variety of short-term incentive tools designed to stimulate
consumer markets, the trade, and the organization’s own sales force. Sales promotion
expenditures now exceed advertising expenditures and are growing at a faster rate.
Consumer promotion tools include:
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samples
contests
coupons
cash refund offers
price packs
premiums
patronage rewards
free trials
product warranties
tie-in promotions
point-of-purchase displays and demonstrations
Trade promotion tools include:
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price-off
advertising and display allowances
free goods
push money
specialty-advertising items
Food for thought 4.3 What type of consumer promotions are you most responsive to?
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Food for thought 4.3 What type of consumer promotions are you most responsive
to? Do coupons, samples, refunds, contests, or other types of sales promotions work
for you?
Answer:
The answer to this question will depend on the individual consumer. However, all
consumers clearly respond to one or more of these promotional efforts. In fact, the
response from a particular consumer will likely vary over time and circumstance.
End of pop-up text.
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Business promotion tools include conventions, trade shows, contests, sweepstakes, and
games. Sales promotion planning calls for establishing the sales promotion objectives;
selecting the tools; developing, pretesting, and implementing the sales promotion
program; and evaluating the results.
Marketing public relations (MPR) is another important communication/promotion tool.
Traditionally, it has been the least used tool but is now recognized for its ability in
building awareness and preference in the marketplace, repositioning products, and
defending them. Broadly, MPR is those activities that support the ultimate sale of a
product or service. Some of the major marketing public relations tools are news,
speeches, events, public service activities, written material, audio-visual material,
corporate identity, and telephone information services. MPR planning involves
establishing the MPR objectives, choosing the appropriate messages and vehicles, and
evaluating the MPR result.
Integrated Marketing Communications (H4 subhead)
Not all product concepts are right for all individuals, thus bringing about the notion of
market segmentation and targeting. The same holds true for marketing communications.
One message does not fit all. Integrated marketing communications (IMC) focuses on
discrete customer segments. With IMC, the firm learns to understand that while massmarket promotion appears cost-effective on the front end, brand/product messages are
also offered to millions of people who are uninterested.
The mass media no longer serve the mass audiences sought by marketers. Today,
advertisers must ensure that whenever and wherever prospects are exposed to the
message, they receive a consistent one. Customers typically do not differentiate among
message sources; they remember only the message. Considering how many messages that
consumers are exposed to on a regular basis, mixed messages from the same source are
bound to cause confusion and, worse yet, will be quickly forgotten.
While understanding the importance of marketing communications is somewhat simple,
finding the best means through which to implement a marketing communications
program is more difficult. The buying public has been virtually buried alive in
advertisements. Consumers are bombarded with hundreds of ads and thousands of
billboards, packages, and other logo sightings every day.
It is also important to note that a marketer can communicate with customers through
means other than formal marketing communications. Every element of a product’s
marketing mix helps to position that product in the minds of consumers. The result is that
the elements of the promotional mix should all present a consistent theme. The same is
true of the other “Ps” of marketing, namely product, price, and place, which should
support the theme:
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products communicate through size, shape, name, packaging, and various
features/benefits
price communicates to the consumer that the product is high quality, low quality,
prestigious, etc.
retail locations (place) in which customers purchase the product will reflect upon
the product’s image as well (stores can be considered “high-class,” specialty,
discount, etc.)
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Try This 4.2 Integrated marketing communications (IMC)
The concept of the IMC suggests that the elements of the marketing mix other than
promotion have the ability to communicate to the consumer. Can you think of a
time when these factors, product, price, or place influenced your perception of a
product or service and ultimately your decision to buy or not buy?
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Hint: Promotional influences tend to be more direct while product, price, and place are
more likely to be more subtle, affecting perception first and then action.
Answer:
Certainly, place has a major influence in terms of making products available at a variety
of locations (this is especially true of convenience goods), price has been consistently
shown to have a direct affect on consumers’ perception of quality, and finally, the
product itself in terms of want- or need-satisfying attributes can and does influence
perception and behavior.
End of pop-up text
Managing the Sales Force (H3 subhead)
Most companies use sales representatives, and many companies assign them the pivotal
role in the marketing mix. Salespeople are very effective in achieving certain marketing
objectives. Yet, they are very costly. Management must give careful thought to designing
and managing its personal-selling resources.
Sales force design calls for decisions on objectives, strategy, structure, size, and
compensation. Sales force objectives include prospecting, communicating, selling and
servicing, information gathering, and allocating. Sales force strategy is a question of what
types and mix and selling approaches are most effective (solo selling, team selling, and so
on).
Sales forces may be organized by territory, product, customer, or some combination, and
developing the right territory size and shape. Sales force size involves estimating the total
workload and how many sales hours—and hence salespeople—would be needed. Sales
force compensation involves determining pay level and components such as salary,
commission, bonus, expenses, and fringe benefits.
Managing the sales force involves recruiting and selecting sales representatives and
training, directing, motivating, and evaluating them. Sales representatives must be
recruited and selected carefully to hold down the high costs of hiring the wrong people.
Sales-training programs familiarize new salespeople with the company’s history, its
products and policies, the characteristics of the market and competitors, and the art of
selling.
Salespeople need direction on such matters as developing customer and prospect targets
and call norms and using their time efficiently through computer-aided information,
planning and selling systems, and inside support salespeople.
Salespeople also need encouragement through economic and personal rewards and
recognition because they must make tough decisions and are subject to many frustrations.
The key idea is that appropriate sales force motivation will lead to more effort, better
performance, higher rewards, higher satisfaction, and therefore still more motivation. The
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last management step calls for periodically evaluating each salesperson’s performance to
help him or her do a better job.
The purpose of the sales force is to produce sales, which involves the art of personal
selling. One aspect is salesmanship, which involves a seven-step process:
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prospecting and qualifying
pre-approach
approach
presentation and demonstration
overcoming objections
closing
follow-up and maintenance
Another aspect of selling is negotiation, the art of arriving at transaction terms that satisfy
both parties. The third aspect is relationship management, the art of creating a closer
working relationship and interdependence between the people in two organizations.
The primary variables for the sales force/management effort include the following:
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Setting Objectives: Objectives can be general rules for guiding salespeople or
more specific expectations of behavior. Regardless, the sales objectives should
address the relationships among sales, customer satisfaction, and company profit.
Designing Strategy: Strategy requires decisions on sales force structure, size, and
compensation. Variations are appropriate for differing industries, markets, and
sales objectives.
Recruiting and Selecting: Knowing in advance what characteristics make good
salespeople is difficult. Selectors must screen candidates for both ability and
retention-related issues.
Training Salespeople: Issues in training center on skills such as order taking,
order getting, and seeing customers as people who require problem solutions.
Supervising Salespeople: Supervision addresses problems in directing and
coordinating salespeople’s organization, time management, motivation, and
customer relationships.
Evaluating Salespeople: Evaluation requires both qualitative and quantitative
measures of sales force performance.
Food for thought 4.4: Tell the truth or not?
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Food for thought 4.4: Tell the truth or not? No matter what you call it (a fib, an untruth,
or a fabrication) a lie is a lie. A new SMM survey reveals that nearly half of all
salespeople may lie to clients. Do you think United States firms are creating a culture
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that promotes deception? What are the dangers of lying to customers? What can firms
do to control salespeople who lie?
Answer:
It could be argued that society as a whole is creating an environment in which there are
no absolutes as far as right and wrong go. In that climate, firms feel comfortable doing
whatever they need to do to make a profit, including lying. The danger in lying is that
eventually the consumer will find out that you have lied and this type of behavior will
jeopardize long-term relationships with customers.
End of pop-up text.
Epilogue (H4 subhead)
At the beginning of this course, we identified it as the capstone course in marketing at
UMUC. It is the culmination of your study of marketing!
We have explored ways to integrate and apply proven marketing concepts and principles
to develop marketing strategies and policies that you can use for a variety of
organizations in your career.
Our case studies helped you practice analyzing specific business situations, develop
alternative courses of action, and communicate proposed solutions to decision makers.
Just as in the real world, there were no clear-cut right or wrong answers to the cases.
Integration was our primary aim; that is, learning to appreciate and apply the relationship
between marketing and other functional activities in the organization to create effective
marketing strategies.
As you leave this course and this program, it is our hope that you will now be able to take
your classroom knowledge into the “real world” and apply what you have learned to the
companies and organizations in which you will work.
Glossary
(Module 4 terms only, add to other previous module terms
alphabetically)
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Term
Advertising
Direct Marketing
Integrated Marketing
Communications (IMC)
Marketing Concept
Noise
Non-store Retailing
Physical Distribution
Public Relations
Recall (Selective Retention)
Retailers
Sales Promotion
Selective Attention
Selective Distortion
(Perception)
Wholesalers
Definition
Non-personal mass communication with a target audience
through a medium.
When marketers go directly to the ultimate consumer
without going through middlemen.
Effectively using all of the elements of the marketing mix
to communicate a consistent message to the target
audience.
A philosophy of marketing that includes focusing on the
customer, integration of functions within the firm, and
profits.
Anything that interferes with the effective communication
of a message.
Retailers who operate outside a traditional fixed structure.
Examples include: e-marketing (the Internet), direct
marketing, and vending.
The process of moving goods through a channel from
manufacturing to the point of consumption.
The process of identifying an organization with a cause or
particular position in order to create a positive image for
that organization.
The ability to remember a message.
Those entities that sell products directly to the consumer;
may be store or non-store.
Temporary actions taken by firms to stimulate short-term
sales. May include contests, samples, coupons, point-ofsale displays, and price cuts.
Not attending to messages sent. If individuals do not hear
the message, they cannot be influenced by it.
Even when messages get through to the target audience,
they may distort the meaning or intent of the message to
make it more consistent with their feelings or positions.
Organizations that sell goods to others for re-sale to the
ultimate consumer.
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Self-Assessment
Format same as in first three modules.
(Bold text indicates the correct answer.)
DTP- show score and correct answer when Check Answer
button is clicked.
Directions: Test yourself on how well you know the material. You will get the correct
answers when you click the Check Answer button at the bottom. There are no grade
points for this online review.
Multiple choice: Select the best answer for each of the following:
1. Best Buy stores carry a wide assortment of the latest electronic gadgets. They offer buyers a
great deal of assistance and advice in making selections. Best Buy is an example of a
_______________.
a.) specialty store
b.) factory outlet
c.) department store
d.) superstore
e.) combination store
2. The fastest-growing segment of retailing is _______________.
a.) non-store retailing
b.) chain store retailing
c.) warehouse stores
d.) hypermarkets
e.) category killers
3. The most important retail marketing decision a retailer has to make is to _______________.
a.) choose a positioning strategy
b.) identify its target market
c.) choose the service level it wants to support
d.) select the product assortment
e.) develop an effective store atmosphere
4. _______________ includes all of the activities involved in selling goods or services to those
who buy for resale or business use.
a.) Retailing
b.) Wholesaling
c.) Bartering
d.) Purchasing
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e.) Distributing
5. Which of the following products is a rack jobber most likely to handle?
a.) Dell servers
b.) eggs and dairy products
c.) industrial shelving
d.) fresh tulips
e.) magazines
6. Marketing logistics _______________.
a.) is the process of getting goods to customers
b.) includes all the activities involved in the selling of goods and services directly to final
customers
c.) is also called materials management
d.) involves planning, implementing, and controlling the physical flow of materials and
final goods from point of origin to point of use
e.) is getting the right goods to the right places at the right time
7. Which of the following is true of market-logistics systems?
a.) So-called cross-docking systems are likely to add costs and value.
b.) They cannot simultaneously maximize customer service and minimize distribution
cost (they moderate).
c.) As long as a logistics strategy is in place, no specific tactics are necessary.
d.) Voluntary value chains tie distribution to production.
e.) Transportation is a part of logistics, but storage is not.
8. The first step in the development of effective communication is _______________.
a.) identifying the target audience
b.) determining the communication objectives
c.) designing the message
d.) setting the budget
e.) selecting the communication channels
9. Newspapers, magazines, and direct mail are all examples of which of the following types of
media?
a.) print media
b.) broadcast media
c.) electronic media
d.) display media
e.) intermittent media
10. If Ohana Surf, on the north shore of Oahu, Hawaii, wants to use the promotional tool that will
build the long-term image of the store and give the best cost per exposure, it should use
_______________.
a.) direct mail
b.) public relations and publicity
c.) advertising
d.) sales promotion
e.) personal selling
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11. The number of different people exposed to a particular media schedule at least once during
some specified time is the _______________ of an advertisement.
a.) iteration
b.) frequency
c.) reach
d.) impact
e.) gross rating points
12. _______________ is a key ingredient in many marketing campaigns and consists of a diverse
collection of incentive tools (mostly short term) designed to stimulate trial, or quicker or
greater purchase, of particular products or services by consumers or the trade.
a.) Advertising
b.) Public relations
c.) Sales promotion
d.) Personal selling
e.) Market segmentation
13. Which of the following is not generally a part of the salesperson’s job?
a.) using
b.) targeting
c.) communicating
d.) information gathering
e.) servicing
14. Which of the following is not part of typical sales force training topics?
a.) to know and identify with the company
b.) to know the customers’ characteristics
c.) to research the customers’ training needs
d.) to understand sales procedures
e.) to make effective sales presentations
15. The _______________ approach to selling is a method that trains salespeople in customer
problem solving in which the representative learns to listen and ask questions in order to identify
customer needs and come up with sound product solutions.
a.) customer-oriented
b.) relationship marketing
c.) sales-oriented
d.) transformational marketing
e.) negotiation-based
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