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Chapter 18 Personal Selling and Sales Management Personal selling is the personal communication of information to persuade someone to buy something. Personal selling is likely to be a part of promotional effort when: o The market is concentrated geographically in a few industries or in several large customers. o The value of the product is not readily apparent to the prospect. o The product has a high cost, is quite technical in nature, or requires a demonstration. o The product must be fitted into an individual customer’s needs (ex. Insurance) o The organization does not have enough money to sustain an adequate advertising campaign. Types of Personal Selling o Inside selling is where the customers come to the sales people (ex: retail) o Outside selling is when sales people go to the customer: Producers whose representatives sell directly to household customers (ex. Insurance companies) Representatives of retail organizations go to consumers’ homes to demonstrate a product, give advice, or provide an estimate (ex. Heating and cooling companies) Representatives of non-profit organizations (ex. Charity and religious) o A typical sales job includes 3 activities: order taking, customer support, and order getting. Range of sale jobs in 6 categories: Delivery-sales person – sales person delivers product Inside order taker – sale person takers orders and assists customer at the sellers place of business (ex. Retail clerk for JCPenney) Outside order taker – sales person goes to the customer in the field and requests an order (ex. John Deere calls farm equipment dealer) Missionary sales person – sales person that’s expected to provide information and other services for existing or potential customers, perform promotional activities, and build goodwill (ex. Detail sales person for pharmaceutical company – Merck) Sales engineer – emphasis on ability to explain the product to prospective customer and also adapt the product to customer’s needs Consultative sales person – involves creative selling of good and services. Requires the sales person to establish a relationship of trust with customer. o Specific sales jobs are tailored to the needs of the market and the sales o organization. Uniqueness of sales jobs: Largely responsible for coordinating a firm’s trade promotion with its market strategies. Most visible representative of their company. Limited direct supervision. Have more rejections than acceptances. Considerable traveling and time away from home. Generate the revenues. Changing Patterns is Personal Selling o o Selling center is a group of people representing a sales department as well as other functional areas in the firm brought together to meet the needs of a particular customer (sales team) Systems selling means selling a total package of related goods and services to solve a customer’s problem (ex. Xerox) Global sales teams is where a team of sales people is responsible for all of its company’s sales to an account anywhere in the world (ex. IBM) o Relationship selling is developing a mutually beneficial relationship with selected customers over time. Typically sales relationships require the parties to: Share information such as forecasts, product development and termination plans, and cost information that has historically been treated as confidential. Avoid opportunism, on using shared information for individual gain. Have similar organizational cultures when it comes to objectives such as short term profits versus long-term growth (P&G) o Telemarketing is the innovative use of telecommunications equipment and systems as part of the “going to the customer” category of personal selling (examples of selling activities that work nicely): Processing orders for standardized products Dealing with small-order customers, especially where seller would lose money if field calls were made. Improving relations with middlemen. o Internet selling, only business-to-business auction, qualifies as personal selling because of its interactive nature. Uses traditional auction or reverse auction. o Sales-force automation is the capability of using electronic tools to combine company and client information in real time to enhance the sales function. Personal selling process is a logical sequence of 4 steps that a sales person takes in dealer with prospective buyers. o Prospecting – 2 parts Identifying prospective customers Qualifying prospects – determine whether they have necessary willingness, purchasing power, and authority to buy. o Preapproach to individual prospects – learning all they can about the person or companies to whom they hope to sell to. o Presenting the sales message – Use AIDA approach AIDA is an acronym form by word Attention, Interest, Desire, and Action: Attention – first task is to attract the prospect’s attention and curiosity. Interest – the challenge is to hold prospect’s attention and stimulate… Desire - for the product with a sales presentation. Action – try to close the sale; action on the customer’s part. o Post sale service – try to reduce the customer’s postpurchase cognitive dissonance(anxiety that occurs after a significant buying decision) by: Summarizing the product’s benefits after the purchase Repeating why the product is better than alternatives not chosen Describing how satisfied other buyers have been with the product Emphasizing how satisfied the customer will be with the product o Staffing and Operating a Sales Force o Recruitment and Selection – 3 tasks o Determining the type of people needed by preparing a written job description. Recruiting an adequate number of applicants. Selecting the most qualified persons from among the applicants. Assimilating new sales people – after being hired, management should integrate them into the company. o o Training the sales force Motivating the sale force – determine what motivates the sales reps (Money, status, control, etc.) o Compensating the sales force – 3 types: straight salary, straight commission, or a combination plan. Supervising the sales force – ensure company policies are being carried out. Evaluating a Sales Person’s Performance o Quantitative bases have the advantage of being specific and objective. o Qualitative bases often reflect broader dimensions of behavior but are o limited by the subjective judgment of evaluators. Chapter 19 Advertising, Sales Promotion, and Public Relations Advertising, sales promotion, and public relations are the mass-communication tools available to marketers. Nature and scope of Advertising o All ads have 4 features: A verbal and/or visual message. An identified sponsor. Delivery through one or more media Payment by the sponsor to the medium carrying the message. o Advertising consists of all the activities involved in presenting through the media a non-personal, sponsor-identified, paid-for message about a product or organization. o Advertising is much cheaper than personal selling. o Advertising can be classified according to 3 classifications: The target audience – either consumers or business The objective sought – stimulation of primary or selective demand Primary-demand advertising is designed to stimulate demand for a generic category (ex. Coffee) Used in the intro stage of the product life cycle and throughout product life cycle Selective-demand advertising is intended to stimulate demand for individual brands (ex. Folders coffee) Essentially competitive advertising. o Comparison advertising is an ad the refers directly to one or more competitors (ex. Bud vs. Miller) What is being advertised – a product versus an institution Product advertising focuses on a particular product or brand – 2 subdivisions: o Direct-action seeks a quick response (ex. Specials for only a few days) o Indirect-action is designed to stimulate demand over a longer period of time (ex. Maytag Man) Institutional advertising presents information about the advertiser’s business or tries to create a favorable attitude towards the organization (ex. McDonalds – “I’m lovin’ It”) Firms try to stimulate word-of-mouth endorsements for advertising. Advertising campaign consists of all the tasks involved in transforming a theme into a coordinated advertising program to accomplish a specific goal for a product or brand. Established when management: identifies the target audience, establishes the overall promotional goals, sets the total promotional budget, and determines the overall promotional theme. Steps to developing an Ad Campaign: o o o o o Define objectives: Support personal selling. Improve dealer relations. Introduce and position a new product. Expand the use of a product. Reposition an existing product. Counteract substitution. Establish a budget Cooperative advertising is a joint effort by 2 or more firms intended to benefit each of the participants: Vertical involves firms on different levels of distribution. o Advertising allowance is a cash discount offered by a manufacturer to a retailer to encourage the retailer to advertise or prominently display a product. Horizontal is joint advertising in which 2 or more firms on same level of distribution share the costs. Creating a message The message has 2 elements, the appeal and execution. Appeal is the benefit that the individual will receive as a result of accepting the message. Execution is combining in a convincing, compatible way the feature or device that gets attention with the appeal (ex. Character – Energizer Bunny) Selecting media Factors that influence media choice: Objective of the ad Audience coverage Requirements of the message Time and location of the buying decision Media cost Types of media: Television Direct mail Newspapers Radio Yellow pages Magazines Out-of-home advertising Interactive media Evaluating the advertising effort Difficulty of evaluation factors: Different objectives – some ads may not be aimed at immediate results Effects over time – even ads for immediate impact may produce results weeks/months later Measurement problems – human motivation is too complicated to be explained by a single factor. Measuring effectiveness Direct tests compile the responses to an ad or campaign(ex. # of coupons used from an ad) Organizing for advertising There are 3 ways a firm can manage its advertising: Develop an internal advertising department. Many large retailers have their own ad departments. Use an outside advertising agency – an independent company that provides specialized advertising services. Used by producers. Use a combination of an internal department and outside agency. Sales promotion is demand-stimulating devices designed to supplement advertising and facilitate personal selling (ex. Coupons, premiums, in-store displays, etc.) o Two categories of sales promotion: trade promotion, directed to the members of the distribution channel, and consumer promotions, aimed at consumers. o Sales promotion popularity factors: short-term results competitive pressure buyers’ expectations – once offered incentives, you begin to expect it low quality of retail selling – only effective promotional tools available at point of purchase. o Sales objectives: Stimulating business user or household demand for a product. Improving the marketing performance of middlemen and sales people. Supplementing advertising and facilitating personal selling. o The sales promotion budget should be established as a specific part of the budget for the total promotional mix. o Factors that influence choice of promotional devices: Nature of target audience – loyal or competitive brand? Nature of product – product lend itself to sampling, demonstration, or multi-item purchase? Cost of device – large markets may e expensive Current economic conditions – good during recessions or inflation periods Public relations is a management tool designed to favorably influence attitudes towards an organization, its products, and its policies. o Publicity is any communication about an organization, its products, or policies through the media not paid for by the organization o Means for gaining good publicity: Prepare and distribute a story (ex. News release) Personal communication with a group (ex. Press conference) One-on-one personal communication; lobbying o Publicity can help accomplish any communication objective. It can be used to announce new products, publicize new policies, recognize employees, describe research breakthroughs, or report financial performance. o Other benefits of publicity are: lower cost, increased attention, more information, and timeliness. o Publicity has limitations: loss of control over the message, limited exposure, and publicity is not free. o Indirect tests are measures of something other than actual behavior. Most used is recall; 3 types of recall tests are: o Recognition – showing people an ad and asking if they’ve seen it before. o Aided recall – asking people if they can recall seeing any ads for a particular brand. o Unaided recall – asking people if they can remember seeing and ads within an identified product category.