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Chapter 16
Personal Selling
and Direct
Marketing
Copyright © 2008 Pearson Education Canada
Principles of Marketing, Seventh Canadian Edition
Learning Goals
1.
2.
3.
4.
5.
Discuss the role of a company’s salespeople in creating
value for customers and building customer
relationships
Identify and explain the six major sales force
management steps
Discuss the personal selling process, distinguishing
between transaction-oriented marketing and
relationship marketing
Define direct marketing and discuss its benefits to
customers and companies
Identify and discuss the major forms of direct
marketing
Copyright © 2008 Pearson Education Canada
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Principles of Marketing, Seventh Canadian Edition
Case Study
CDW Canada Inc.
• CDW Canada serves
businesses and public sector
customers
• CDW’s direct marketing
model combines high-touch
personal selling with modern
high-tech web presence to
build lasting customer
relationships.
• Highly devoted to customer
with “Circle of Service”
philosophy
• Nearly 2000 account
managers are responsible for
building and maintaining
customer relationships
Copyright © 2008 Pearson Education Canada
• Account managers work closely
with customers.
• Salespeople are highly
knowledgeable
• Training is extensive
• Nine technology teams with
more than 150 specialists
support salespeople’s customer
problem solving efforts.
• Account managers are energetic
and passionately customer
focused
• CDW account managers
succeed by helping customers,
assessing their needs, and
solving their problems
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Principles of Marketing, Seventh Canadian Edition
Learning Goals
1.
2.
3.
4.
5.
Discuss the role of a company’s salespeople in creating
value for customers and building customer
relationships
Identify and explain the six major sales force
management steps
Discuss the personal selling process, distinguishing
between transaction-oriented marketing and
relationship marketing
Define direct marketing and discuss its benefits to
customers and companies
Identify and discuss the major forms of direct
marketing
Copyright © 2008 Pearson Education Canada
16-4
Principles of Marketing, Seventh Canadian Edition
Personal Selling
• The Nature of Personal Selling
– Salesperson covers a wide range of positions
from order taker to order getter responsible
for relationship building
Copyright © 2008 Pearson Education Canada
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Principles of Marketing, Seventh Canadian Edition
Personal Selling
• Salespeople have many names
–
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–
–
–
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–
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Agents
Sales consultants
Sales Representatives
Account
Executives
Sales Engineers
District Managers
Marketing representatives
Account Development
Representatives
Copyright © 2008 Pearson Education Canada
16-6
Principles of Marketing, Seventh Canadian Edition
Personal Selling
• The Role of the Sales Force
– Two-way personal communication
– More effective than advertising in complex
selling situations
– The sales force plays a major role in most
companies
– The sales force works to represents the
company to customers
– They also represent the customers to the
company
Copyright © 2008 Pearson Education Canada
16-7
Principles of Marketing, Seventh Canadian Edition
Learning Goals
1.
2.
3.
4.
5.
Discuss the role of a company’s salespeople in creating
value for customers and building customer
relationships
Identify and explain the six major sales force
management steps
Discuss the personal selling process, distinguishing
between transaction-oriented marketing and
relationship marketing
Define direct marketing and discuss its benefits to
customers and companies
Identify and discuss the major forms of direct
marketing
Copyright © 2008 Pearson Education Canada
16-8
Principles of Marketing, Seventh Canadian Edition
Major Steps in
Sales Force Management
• Pharmaceutical companies
have extensive sales forces
which visit/sell to
physicians.
• What would be the
challenges in each step of
sales force management
for the sales force of a
pharmaceutical like
Viagra?
Copyright © 2008 Pearson Education Canada
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Principles of Marketing, Seventh Canadian Edition
Managing the Sales Force
• Designing Sales Force Strategy and
Structure
– Sales Force Structure
•
•
•
•
Territorial sales force structure
Product sales force structure
Customer sales force structure
Complex sales force structure
Copyright © 2008 Pearson Education Canada
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Principles of Marketing, Seventh Canadian Edition
Managing the Sales Force
• Sales Force Strategy and Structure
– Sales Force Size
• Many companies use the workload
approach to set sales force size
– Other Issues
• Outside and inside sales forces
• Team selling
Copyright © 2008 Pearson Education Canada
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Principles of Marketing, Seventh Canadian Edition
Managing the Sales Force
• Recruiting and Selecting Salespeople
– Careful recruiting can:
• Increase overall sales force performance
• Reduce turnover
• Reduce recruiting and training costs
• Traits of Successful Salespeople
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Intrinsic motivation
Disciplined work style
The ability to close a sale
Ability to build relationships with customers
Copyright © 2008 Pearson Education Canada
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Principles of Marketing, Seventh Canadian Edition
Managing the Sales Force
• Training Salespeople
– Training period can be anywhere from a few
weeks to a year or more
– Training is expensive, but yields strong
returns
– Many companies are adding Web-based sales
training programs
Copyright © 2008 Pearson Education Canada
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Principles of Marketing, Seventh Canadian Edition
Managing the Sales Force
• Training Salespeople
– Training programs have many goals
• Identify with the company and its products
• Know about customers and competitors
• The basics of the selling process
Copyright © 2008 Pearson Education Canada
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Principles of Marketing, Seventh Canadian Edition
Managing the Sales Force
• Compensating Salespeople
– Compensation elements: salary, bonuses,
commissions, expenses, and fringe benefits
– Basic compensation plans:
• Straight salary
• Straight commission
• Salary plus bonus
• Salary plus commission
– Compensation plans should direct the sales force
toward activities that are consistent with overall
marketing objectives.
Copyright © 2008 Pearson Education Canada
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Principles of Marketing, Seventh Canadian Edition
Managing the Sales Force
• Compensating Salespeople
– Compensation elements: salary, bonuses,
commissions, expenses, and fringe benefits
– Basic compensation plans:
•
•
•
•
Straight salary
Straight commission
Salary plus bonus
Salary plus commission
– Compensation plans should direct the sales force
toward activities that are consistent with overall
marketing objectives.
Copyright © 2008 Pearson Education Canada
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Principles of Marketing, Seventh Canadian Edition
Managing the Sales Force
• Supervising Salespeople
– Supervision is used to direct and motivate salespeople
– Companies will vary in how closely they supervise their
salespeople; will vary depending on the skill level and maturity
of the sales force, and type of selling
• Tools used:
– Annual call plans and time-and-duty analysis can help provide
direction
– Sales force automation systems assist in creating more efficient
sales force operations
– The Internet is the fastest-growing sales technology tool
Copyright © 2008 Pearson Education Canada
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Principles of Marketing, Seventh Canadian Edition
Managing the Sales Force
• Supervising Salespeople
– Effective supervisors also motivate the sales
force
• Organizational climate
• Sales quotas
• Sales meetings
• Positive incentives
– Sales meetings, sales contests, honors, etc.
Copyright © 2008 Pearson Education Canada
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Principles of Marketing, Seventh Canadian Edition
Managing the Sales Force
• Evaluating Salespeople
– Several tools can be used
• Sales reports
• Call reports
• Expense reports
Copyright © 2008 Pearson Education Canada
16-19
Principles of Marketing, Seventh Canadian Edition
Learning Goals
1.
2.
3.
4.
5.
Discuss the role of a company’s salespeople in creating
value for customers and building customer
relationships
Identify and explain the six major sales force
management steps
Discuss the personal selling process, distinguishing
between transaction-oriented marketing and
relationship marketing
Define direct marketing and discuss its benefits to
customers and companies
Identify and discuss the major forms of direct
marketing
Copyright © 2008 Pearson Education Canada
16-20
Principles of Marketing, Seventh Canadian Edition
The Personal Selling Process
• The goal of the personal selling process is
to find new customers and sell them
something
• Most salespeople spend their time
maintaining existing accounts and
building long-term customer relationships
• Not all steps required in every sale
Copyright © 2008 Pearson Education Canada
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Principles of Marketing, Seventh Canadian Edition
The Personal Selling Process
• Prospecting and Qualifying
– Identifying customers that may have a need for the
product or service being sold
– Only a small number of prospects become customers
– Prospecting requires effort, time, and commitment
Copyright © 2008 Pearson Education Canada
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Principles of Marketing, Seventh Canadian Edition
The Personal Selling Process
• Preapproach:
– Learn as much about the prospective customer as
possible, prior to approaching them to ask for a
meeting
– Use all resources to learn before meeting
– Setting call objectives is important to being
productive and not wasting the customer’s time
Copyright © 2008 Pearson Education Canada
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Principles of Marketing, Seventh Canadian Edition
The Personal Selling Process
• Approach:
– Meeting and greeting the customer for the first time
– Involves salesperson’s appearance, opening lines, and
the follow-up remarks
– Listening to the customer is crucial
Copyright © 2008 Pearson Education Canada
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Principles of Marketing, Seventh Canadian Edition
The Personal Selling Process
• Presentation and demonstration:
– What happens during the sales call
– Purpose is to uncover needs and then attempt to
satisfy them
– Questioning and listening skills are important
– Technology can help or get in the way
– Customers value empathy, honesty, punctuality,
reliability, thoroughness, and follow through
Copyright © 2008 Pearson Education Canada
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Principles of Marketing, Seventh Canadian Edition
The Personal Selling Process
• Handling objections:
– The salesperson seeks out, clarifies, and overcomes
customer objections to buying the product or service
– Customers object for different reasons: no need, lack
of information, product limitation, or as a negotiating
tactic
– Handling objections is important, but preventing
them is more effective; need to look at qualifying
skills and use of features, advantages, and benefits
Copyright © 2008 Pearson Education Canada
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Principles of Marketing, Seventh Canadian Edition
The Personal Selling Process
• Closing the sale:
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Asking the customer to buy (order) the product
The only step that produces revenue; most important
Fear of rejection makes this step the most difficult
Keep it simple, honest, and direct; different types of
closing techniques make assumptions that can be
dangerous if used improperly
Copyright © 2008 Pearson Education Canada
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Principles of Marketing, Seventh Canadian Edition
The Personal Selling Process
• Follow-up:
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What takes place after the sale
To ensure customer satisfaction
To keep the door open for repeat business
Ask for referrals
Copyright © 2008 Pearson Education Canada
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Principles of Marketing, Seventh Canadian Edition
Personal Selling and Customer
Relationship Management
• The principals just described are transactionoriented
• Companies want to encourage repeat
purchasing because it is more efficient than
trying to replace lost customers
• It takes different skills to build relationships
with customers
• Mutually profitable relationships are built on
creating value, offering packaged solutions to
problems, and improving products and
processes
Copyright © 2008 Pearson Education Canada
16-29
Principles of Marketing, Seventh Canadian Edition
Learning Goals
1.
2.
3.
4.
5.
Discuss the role of a company’s salespeople in creating
value for customers and building customer
relationships
Identify and explain the six major sales force
management steps
Discuss the personal selling process, distinguishing
between transaction-oriented marketing and
relationship marketing
Define direct marketing and discuss its benefits to
customers and companies
Identify and discuss the major forms of direct
marketing
Copyright © 2008 Pearson Education Canada
16-30
Principles of Marketing, Seventh Canadian Edition
Direct Marketing
• Direct Marketing consists of direct one-toone connections with carefully targeted
individual consumers to both obtain an
immediate response and cultivate lasting
customer relationships.
Copyright © 2008 Pearson Education Canada
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Principles of Marketing, Seventh Canadian Edition
Direct Marketing
• The new Direct Marketing Model
– Direct Marketing is both, a direct marketing
channel and an element of the marketing
communications mix
– Technology has made of direct marketing a
new and complete model for doing business.
– Firms employing this direct-marketing model
(such as Dell Computer) use it as the only
approach
Copyright © 2008 Pearson Education Canada
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Principles of Marketing, Seventh Canadian Edition
How Dell Changed an Industry
• Dell computers revolutionized an industry
• Previously, companies built computers for inventory, sold through
retail distribution network
• Biggest challenge: fast pace of technological change in computer
components created obsolete inventory
• Dell’s big idea: only build computers to order, sell direct to
customers, use just in time inventory management to eliminate
obsolescence
• Selling direct lowers costs and prices
• The challenge: providing the levels of customer sales assistance and
service that were previously given by retailers
• Result: Dell market share of PC market is now 31%; dominates the
industry
Copyright © 2008 Pearson Education Canada
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Principles of Marketing, Seventh Canadian Edition
Forms of Direct Marketing
• Telephone marketing: outbound and inbound, suffers
from consumer burnout, technology to block calls
• Direct mail marketing: flexible, personalized, but suffers
from junk mail image
• Catalogue marketing: the big winners in the rise of the
Internet; huge cost efficiencies by moving catalogue
offering online
• Direct-response television marketing: infomercials work,
despite a poor reputation
• Kiosk marketing: going where the customers are
Copyright © 2008 Pearson Education Canada
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Principles of Marketing, Seventh Canadian Edition
Benefits of Direct Marketing
• For buyers:
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Convenient
Easy to use
Private
Access to a wealth of information
Immediate
Interactive
Copyright © 2008 Pearson Education Canada
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Principles of Marketing, Seventh Canadian Edition
Benefits of Direct Marketing
• For Sellers
– Powerful tool for building relationships
– Allows for targeting of small groups or individuals
with customized offers in a personalized fashion
– Can be timed to reach prospects at the right time
– Offers access to buyers that couldn’t be reached via
other channels
– Low-cost, effective alternative for reaching specific
markets
Copyright © 2008 Pearson Education Canada
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Principles of Marketing, Seventh Canadian Edition
Customer Databases and
Direct Marketing
• Customer database: organized collection of
comprehensive data about individual customers or
prospects, including geographic, demographic,
psychographic, and behavioral data
– Databases include comprehensive data including geographic,
demographic, psychographic and behavioral
– Databases can be used to identify prospects, tailor products, and
maintain customer relationships
– Database marketing requires substantial investment in
hardware, software, personnel
– Build customer loyalty by tailoring new offers to their specific
interests
Copyright © 2008 Pearson Education Canada
16-37
Principles of Marketing, Seventh Canadian Edition
Learning Goals
1.
2.
3.
4.
5.
Discuss the role of a company’s salespeople in creating
value for customers and building customer
relationships
Identify and explain the six major sales force
management steps
Discuss the personal selling process, distinguishing
between transaction-oriented marketing and
relationship marketing
Define direct marketing and discuss its benefits to
customers and companies
Identify and discuss the major forms of direct
marketing
Copyright © 2008 Pearson Education Canada
16-38
Principles of Marketing, Seventh Canadian Edition
Direct Marketing
• Integrated Direct Marketing
– Direct marketing campaigns that use coordinated,
multiple promotional vehicles and multiple stages to
improve response rates and profits
– Avoids confusing the customer
– Generates leverage of monies spent
– Suits today’s media-obsessed consumer
Figure 16.5
Copyright © 2008 Pearson Education Canada
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Principles of Marketing, Seventh Canadian Edition
Direct Marketing
• Public Policy and Ethical Issues
– Irritation, Unfairness, Deception, and Fraud
– Invasion of Privacy
– Personal Information Protection and Electronic
Documents Act (2004):
• Consumer consent
• Limitations
• Accuracy
• Right to access
Copyright © 2008 Pearson Education Canada
16-40
Principles of Marketing, Seventh Canadian Edition
Learning Goals
1.
2.
3.
4.
5.
Discuss the role of a company’s salespeople in creating
value for customers and building customer
relationships
Identify and explain the six major sales force
management steps
Discuss the personal selling process, distinguishing
between transaction-oriented marketing and
relationship marketing
Define direct marketing and discuss its benefits to
customers and companies
Identify and discuss the major forms of direct
marketing
Copyright © 2008 Pearson Education Canada
16-41
Principles of Marketing, Seventh Canadian Edition