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Marketing
Final Exam Study Guide
CH 18 , 15 , 17 , 19 , 20 , 8 , 16
CH 18 INTEGRATED MARKETING COMMUNICATIONS AND DIRECT MARKETING
Promotional mix- A combination of one or more communication tools including advertising, personal selling, sales promotion, public relations and direct marketing, Used to:
- Inform prospective buyers about the benefits of the product
- Persuade them to try it
- Remind them later about the benefits they enjoyed while using the product Integrated marketing communications (IMC)- the concept of designing a program that coordinates all promotional activities to provide a consistent message across all audiences
LO1: Discuss IMC and the communication process
Communication- the process of conveying a message to others; requires 6 elements:
- Source- Company or person who has information to convey
- Message- Information sent by the source
- Channel of communication- Conveys the message
- Receiver- Consumers who read, hear, or see the message
- Encoding- the process of having a sender transform an idea into a set of symbols
- Decoding- the process of having the receiver take a set of symbols (the message) and transform them back into an idea Performed by receivers according to their own frame of reference: attitudes, values and beliefs Errors- Idea not adequately used in effective symbols by source, sent through wrong channel and doesn’t make it to receiver, receiver doesn’t properly transform symbols into idea, and feedback may be delayed or distorted Field of experience- a similar understanding and knowledge applied to message by both sender and receiver Response- (feedback loop) the impact the message had on the receiver’s knowledge, attitudes or behaviors Feedback- the sender’s interpretation of the response and indicates whether the message was decoded and understood as intended Noise- extraneous factors that can work against effective communication by distorting a message or the feedback receive
LO2: Describe the promotional mix and the uniqueness of each component
Mass selling- used with groups of perspective buyers: advertising, public relations, sales promotions Customized interaction- between a seller and perspective buyer: personal selling, direct marketing Advertising- any paid form of nonpersonal communication about an organization, good, service or idea by an identified sponsor Mass Fees paid for space and time Advantages: Efficient means for reaching large numbers of people, attention getting, communicates specific product benefits, company has control Disadvantages: High absolute costs, difficult to receive feedback Personal Selling- the two-way flow of communication between buyer and seller designed to influence a person’s or group’s purchase decision, usually face-to-face Publicity- a nonpersonal, indirectly paid presentation of an organization, good or service (ie news story, editorial, or public announcement) Customized Fees paid to salespeople as salaries or commissions Advantages: Immediate feedback/can gage reaction and modify message if needed, very persuasive, can select and audience, can give complex information Disadvantages: Extremely expensive per exposure, messages may differ between salespeople
Public Relations- Form of communication management that seeks to influence the feelings, opinions or beliefs held by customers, prospective customers, stockholders, suppliers, employees, and other publics about a company and its products or services Mass No direct payment to media Advantages: Often very credible to consumer Disadvantages: Difficult to get media cooperation Sales Promotion- A short-term inducement of value offered to arouse interest in buying a good or service Mass Wide range of fees paid, depending on selected promotion Advantages: Effective at changing short run behavior, very flexible Disadvantages: Easily abused, can lead to promotion wars, easily duplicated, customers may question value of product, customers may delay purchase until they have a coupon Direct Marketing- Uses direct communication with customers to generate a response in the form of an order, a request for further information, or a visit to a retail outlet Customized Cost of communication through mail, telephone or computer Advantages: Messages and be prepared quickly, facilitates relationship with customer Disadvantages: Declining customer response, database management is expensive
LO3: Select promotional approach appropriate
Developing promotional mix considerations:
- Balance of elements must be considered The Target Audience The Product Life Cycle: o Introduction stage- informing consumers in an effort to increase their level of awareness o Growth stage- persuade consumer to buy the product o Maturity stage- the need is to maintain existing buyers, remind buyers of product’s existence o Decline stage- period of phase out, little money is spent on promotion Product Characteristics o Complexity- technical sophistication of product and understanding required to use it o Risk- assessed in terms of financial risk, social risk, and physical risk o Ancillary Services- the degree of service or support required after sale Stages of Buying Decision o Pre purchase stage- advertising more helpful, informs; sale promos, gain low risk trial o Purchase stage- personal selling highest, advertising lowest, promotions can encourage demand, direct marketing o Post purchase stage- more personal contact, the higher the satisfaction of customer, need to assure buyer of purchase Channel Strategies o Push strategy- directing the promotional mix channel members to gain their cooperation in ordering and stocking the product, personal and promotions important o Pull strategy- directing promotional mix at ultimate consumers to encourage them to ask the retailer for a product
- Coordinating a consistent promotional effort
LO4: Describe elements of the promotion decision process
Developing an IMC program Planning
- Identify target audience To the extent that time and money permit, the target audience is the target market The more a firm knows about the market, the easier it is to develop program
- Specify promotion objectives
o Offers more privacy o Don’t have to go to store o Can shop 24 hours a day o Saves time o Avoid hassles from salespeople o Save money o Provides excellent customer service Direct orders- the result of offers that contain all the information necessary for a prospective buyer to make a decision to purchase and complete the transaction Lead generation- the result of an offer designed to generate interest in a product or service and a request for additional information Traffic generation- the outcome of an offer designed to motivate people to visit a business Technological, Global and Ethical issues in Direct Marketing Information technology and databases key elements, customer profiles, demographics Mandatory ‘opt in’- customers must give permission to include name on list for direct marketing solicitations Need for improved reliability and security in countries has slowed growth of direct marketing Different forms of payment create alternatives around the world Privacy concerns- do-not-call/do-not-mail registries
CH 15 MANAGING MARKETING CHANNELS AND WHOLESALING
LO1: Explain what is meant by a marketing channel of distribution and why intermediaries are
needed
Marketing channel- consists of individuals and firms involved in the process of making a product or service available for use or consumption by consumers or industrial users, make possible the flow of goods from a producer, through intermediaries, to a buyer Intermediaries: Middleman- any intermediary between manufacturer and end-user markets Agent or broker- and intermediary with legal authority to act on behalf of the manufacturer o Do not take title to merchandise and perform fewer channel functions o Profits made from commissions or fees paid for services o Manufacturer’s agent or manufacturer’s representative- work for several producers and carry noncompetitive, complementary merchandise in an exclusive territory, principally responsible for the transactional channel functions, primarily selling o Selling agents- represent a single producer and are responsible for the entire marketing function of that producer o Brokers- independent firms or individuals whose principal function is to being buyers and sellers together to make sales, usually have no continuous relationship with buyer or seller, but negotiate a contract between the two parties and then move on to another task Wholesaler- any intermediary who sells to other intermediaries, usually to retailers; term usually applies to consumer markets o Merchant wholesaler- independently owned firms that take title to the merchandise they handle Full service: General merchandise (full-line) wholesalers, perform all channel functions Full service: Specialty merchandise (limited-line) wholesalers, perform all functions Limited service: Rack jobbers, furnish racks or shelves that display merchandise in retail stores, perform all functions and sell on consignment (retain the title to products displayed and bill retailers for merchandise sold) Limited service: Cash and carry wholesalers, take title to merchandise but sell only to buyers who call on them, pay cash for merchandise, and furnish their own transportation, carry limited product assortment, don’t make deliveries, extend credit or supply market information
Limited service: Drop shippers or desk jobbers, own the merchandise they sell but don’t physically handle stock or deliver it, they solicit orders from retailers and other wholesalers and have the merchandise shipped directly from a producer to a buyer, used for bulky products sold in large quantities Limited service: Truck jobbers, small wholesalers with small warehouses, handle limited assortments for fast moving fast perishable items sold directly from trucks with original packaging Retailer- any intermediary who sells to consumers Distributor- an imprecise term, usually used to describe intermediaries who perform a variety of distribution functions, including selling, maintaining inventories, extending credit, and so on; a more common term in business markets buy may also be used to refer to wholesalers Dealer- a more imprecise term than distributor that can mean the same as a distributor, retailer, wholesaler, and so forth Manufacturer’s branches and offices- wholly owned extensions of the producer that perform wholesaling activities when there are no intermediaries to perform these actions, customers are few in number, and are geographically concentrated, or orders are large and require specific attention o Branch office- carries producers inventory and performs functions of a full-service wholesaler o Sales office- does not carry inventory, performs only sales function and serves as an alternative to agents or brokers Value of intermediaries: Makes selling goods and services more efficient because they minimize the number of sales contacts necessary to reach a target market Reduced total number of industry transactions = lower producer cost = benefits customers Four utilities: Time- having product when you want it Place- having product or service available where consumers want it Form- enhancing product or service to make it more appealing to buyers Possession- entails efforts by intermediaries to help buyers take possession of a product or service Important functions performed by intermediaries: Make possible the flow of products from producers to buyers by these functions; all three functions must be performed in channel, though each channel member may not participate in all three: Transactional function o Buying- purchasing- products for resale or as an agent for supply of a product o Selling- contacting potential customers, promoting products, and seeking orders o Risk taking- assuming business risks in the ownership of inventory that can become obsolete or deteriorate Logistical function o Assorting- creating product assortments from several sources to serve customers o Storing- assembling and protecting products at a convenient location to offer better customer service o Sorting- purchasing in large quantities and breaking into smaller amounts desired by customers o Transporting- physically moving a product to customers Facilitating function o Financing- extending credit to customers o Grading- inspecting, testing, or judging products, and assigning then quality grades o Marketing information and research- providing information to customers and suppliers, including competitive conditions and trends
LO2: Distinguish among traditional and electronic marketing channels and different types of
vertical marketing systems
Marketing channels for consumer goods and services: As the number of intermediaries increases, the channel length increases
Vertical marketing systems- professionally managed and centrally coordinated marketing channels designed to achieve channel economies and maximum marketing impact Corporate systems- the combination of successive stages of production and distribution under a single ownership o Forward integration- a producer might own the intermediary at the next level down in the channel o Backward integration- a retailer might own a manufacturing operation o Companies seeking to reduce distribution costs and gain greater control over supply sources or resale of their products pursue forward and backward integration, both cause increased capital investment and fixed costs Contractual systems- independent production and distribution firms integrate their efforts on a contractual basis to obtain greater functional economies and marketing impact than they could achieve alone, most popular vertical system o Wholesaler-sponsored voluntary chains- involve wholesaler that develops a contractual relationship with small, independent retailers to standardize and coordinate buying practices, merchandising programs and inventory management efforts o Retailer-sponsored cooperatives- small, independent retailers form an organization that operates a wholesale facility cooperatively, member retailers concentrate their buying power through the wholesaler and plan collaborative promotional and pricing activities o Franchising- a contractual agreement between a parent company (franchisor) and an individual or firm (franchisee) that allows the franchisee to operate a certain type of business under an established name and according to specific rules, can be manufacturer or service sponsored franchise or wholesale systems Administered systems- achieve coordination at successive stages of production and distribution by the size and influence of one channel member rather than through ownership Channel partnerships- consists of agreements and procedures among channel members for ordering and physically distributing a producer’s products through the channel to the ultimate consumer, collaborative use of information and communication technology to better serve customers and reduce time and cost of performing channel functions
LO3: Describe the factors and considerations that affect a company’s choice and management
of a marketing channel
Factors: Environmental- changing family lifestyles advances in technology, regulatory factors, etc. Consumer- characteristics, who are they? Where do they buy? When do they buy? How do they buy? What do they buy? Product- sophistication, stage in life cycle, standardization, unit value Company- financial, human or technological capabilities Considerations: Target market coverage- best coverage requires attention to density o Intensive distribution- firm tries to place its products and services in as many outlets as possible, usually chosen for convenience products or services o Exclusive distribution- only one retailer in a specified geographical area carries firm’s products, chosen for specialty products or services o Selective distribution- a firm selects a few retailers in a specific geographical area to carry its products, most common form Satisfying buyer requirements o Information- important when buyers have limited knowledge or desire specific data about a product or service o Convenience- proximity, time and hassle o Variety- buyer’s interest in having numerous competing and complementary items of which to choose, breadth and depth of products and brands o Pre- or post-sale services- delivery, installation, credit, etc.
Profitability- determined by margins earned for each channel member and for the channel as a whole, channel cost is critical Global dimensions- understand traditions, customs, geography and economic history, but basic marketing functions must still be performed
LO4: Recognize how conflict, cooperation, and legal considerations affect marketing channel
relationships
Channel conflict- arises when one channel member believes another member is engaged in behavior that prevents it from achieving its goals, vertical or horizontal It is necessary to secure cooperation among marketing channels Channel captain- channel member that coordinates, directs and supports other channel members, has ability to influence others behavior due to economic influence, expertise, identification with a particular channel member or a legitimate right to direct the behavior of other members Must consider legal considerations Clayton act o Vertical integration o Tying arrangements o Exclusive dealing o Refusal to deal o Dual distribution Sherman act o Dual distribution o Resale restrictions
CH 17 RETAILING
Retailing- includes all activities involved in selling, renting, and proving products and services to the ultimate consumers for personal, family, or household use (where the customer meets the product)
LO1: Identify retailers in terms of the utilities they provide
To consumers, the value of retailing is in the form of utilities provided Consumer utilities offered by retailing, offered by all retailers in various degrees but one is often emphasized more than others: Time (Sports Authority) Place (Wells Fargo) Form (Ralph Lauren) Possession (Saturn)
LO2: Explain the alternative ways to classify retail outlets
Form of ownership- distinguished retail outlets based on whether individuals, corporate chains, or cont6ractual systems own the outlet Independent retailer- most common, owner can be own boss, offers convenience, personal service and lifestyle compatibility to customers Corporate chain- multiple outlets under common ownership, centralization in decision making, size has advantage in working with manufacturers, buying power, multiple buying outlets with consistent merchandised and management policies for consumers Contractual system- independently owned stores that act like a chain (see Ch. 15) Level of service- used to describe the degree of service provided to the customer Self-service- customers perform many functions and little is provided by the outlet, make consumers co- creators of the value they receive Limited service- provide some services, but not others Full service- includes specialty stores and department stores, provide many services to customers Merchandise line- describes how many different types of products a store carries and in what assortment Depth of product line- store carries a large assortment of each item (i.e. running shoes, dress shoes and children’s shoes)
o Consumer marketing at retail (CMAR)- research and analyzing data to identify shopper problems, translating the data into mix actions, executing friendly in-store programs and monitoring performance of the merchandise o Marketing metrics used to assess the effectiveness of a store or retail format: Measures related to customers- number of transactions per customer, average transaction size per customer, number of customers per day or hour, average length of store visits Measures related to products- number of returns, inventory turnover, inventory carrying cost, average number of items per transaction Financial measures- gross margin, sales per employee, return on sales, markdown percentage Most popular- sales per square foot and same store sales growth
LO5: Explain changes in retailing with the wheel of retailing and the retail life cycle concepts
Wheel of retailing- describes how new forms of retail outlets enter the market Usually enter as low-status, low-margin stores Gradually outlets add fixtures and establishments to increase attractiveness to customers Prices and status rise with editions Cycle repeats itself with new retail outlets Leads to new products and services Retail life cycle- process of growth and decline that retail outlets, like products, experience Early growth in stage of emergence- with a sharp departure from existing competition, market share gradually rises, profits low due to startup costs Accelerated development- market share and profit reach greatest growth rates, multiple outlets established, focus on distribution element, later competitors may enter, establish dominant position and fight for market share Maturity stage- some competitors drop out, try to maintain market share, price discounting occurs Decline stage- market share and profit fall rapidly, encourage customers to not move to other outlets Multichannel retailers- utilize and integrate a combination of traditional store formats and non-store formats such as catalogs, television, home shopping, and online retailing Makes shopping simpler and more convenient Broader profile of customers Benefit from synergy of sharing information among different channel operations
CH 19 ADVERTISING, SALES PROMOTION, AND PUBLIC RELATIONS
Advertising- any paid form of nonpersonal communication about an organization, a good, a service, or an idea ny an identified sponsor
LO1: Explain the differences between product advertising and institutional advertising and the
variations within each type
Product advertisements- focused on selling a good or service Pioneering (informational)- used in introductory stage of PLC, tell people what a product is, what it can do, and where it can be found, key objective is to inform target market, found to be interesting, convincing and effective Competitive (persuasive)- promotes a specific brand’s features and benefits, objective is to persuade target market to select the firm’s brand rather than that of a competitor o Comparative advertising- shows one brand’s strengths relative to those of competitors, attract attention and increase perceived quality of advertiser’s brand, need market research to support claims Reminder- used to reinforce previous knowledge of a product, good for products that have achieved a well-recognized position and are in the mature phase of their product life cycle o Reinforcement ad- used to assure current users they have made the right choice
Institutional advertisements-objective is to build goodwill or an image for an organization rather than promote a specific good or service, builds confidence in company name, used to support the public relations plan or counter adverse publicity Advocacy advertisements- state the position of a company on an issue or organizations make a request related to a particular action or behavior Pioneering institutional advertisements- used for announcements about what a company is, what it can do, or where it is located, informs people about the company and its products Competitive institution advertisements- promote the advantages of one product class over another and are used in markets where different product classes compete for the same buyers (i.e. Got milk? Ads) Reminder institutional advertisements- like product form they being that company’s name to the attention of the target market again (i.e. army ads reminding potential recruits about opportunities within the army)
LO2: Describe the steps used to develop, execute, and evaluate an advertising program
Identifying the target audience o All aspects of an advertising program arelikely to be influenced by the characteristics of the prospective consumer (lifestyles, attitudes, and demographics) Specifying advertising objectives o Helps advertisers with other choices in the promotion decision process such as selecting media and evaluating a campaign o Factors such as product category, brand and consumer involvement in the purchase decision may change in importance and possible the sequence of the stages of the hierarchy of effects Setting the advertising budget o Most alternatives represent substantial financial commitments and require a formal budgeting process Designing the advertisement o Usually focus on key benefits of the product that are important to a prospective buyer in making trial and adoption decisions, depends on general form or appeal used in the ad and the actual words included in the ad o Message content- make up of both informational and persuasive elements so intertwined it is difficult to tell them apart Fear appeals suggest to consumer that he or she can avoid some negative experience through the purchase and use of a product or service, a change in behavior, or a reduction in the use of a product advertiser must be sure the appeal is strong enough to get the audience’s attention and concern but not so strong that it will lead them to turn out the message Sex appeals suggest to the audience that the product will increase the attractiveness of the user found in almost every product category sex appeals increase attention by helping advertising stand out in today’s cluttered media environment does not always lead to change in recall, retention or purchase intent content is most effective when there is a strong fit between the use of sex appeal in the ad and the image and positioning of the brand Humorous appeals Imply either directly or subtly that the product is more fun or exciting than competitor’s offering Found it many product categories Advertiser’s believe humor improves effectiveness of ads, although studies suggest humor wears out quickly, losing interest of consumers
Magazines o Advantages- narrowly targets highly defined audiences, high-quality color, long life ads, can be clipped and saved, can convey complex information, specialized medium, more “trustworthy”, “inspirational”, and engaging than other media o Disadvantages- long time needed to place ad, relatively high cost, competes for attention with other magazine features, infrequency (weekly at best, often monthly or even longer), consumer interests can be difficult to translate into a magazine theme Newspapers o Advantages- excellent coverage of local markets, ads placed and changed quickly, ads can be saved, quick consumer response, low cost, daily publication allows for focus on specific current events o Disadvantages- ads compete for attention with other newspaper features, short lifespan, poor color, customers rarely save, o trends in: dramatic decline of circulation and advertising revenue Growth of online newspapers Growth in new types of new organizations (covering entertainment, media, living, business, politics, etc.) Yellow Pages o Advantages- excellent coverage of geographic segments, long use period, available 24hours/ days, inexpensive, let people know where purchases can be made after other media have created awareness and demand o Disadvantages- proliferation of competitive directories in many markets, difficult to keep up-to- date, limited accountability and ROI metrics, many yellow pages customers migrating to the web Internet o Advantages- video and audio capabilities, animation can capture attention or entertain, can be interactive (rich media) and link to advertiser, reaches younger consumers o Disadvantages- animation and interactivity can require large files and more time to load, effectiveness is still uncertain, difficult to measure impact, technical and administrative standards for formats are still evolving due to newness o Paid search, display (banner) ads, classified ads, video Outdoor o Advantages- low cost, local market focus, high visibility, opportunity for repeat exposures, shown to increase purchase rates, good supplemental reinforcement for well-known products, flexible, o Disadvantages- message must be short and simple, low selectivity of audience, criticized as traffic hazard, good site depends on traffic patterns and sight lines o Billboards, transit advertising Direct Mail o Advantages- high selectivity of audience, can contain complex information and personalized messages, high-quality graphics o Disadvantages- high cost per contact, poor image as junk mail Other media (non-traditional) o Out-of-home advertising (place-based media)- messages placed in locations that attract a specific target audience Scheduling the advertising 3 factors to consider: o Buyer turnover- how often new buyers enter the market to buy the product o Purchase frequency- the more frequent the purchases, the less repetition is required o Forgetting rate- speed with which buyers forget the brand if advertising is not seen Approaches companies follow based on understanding of how market behaves: o Continuous (steady) schedule- when seasonal factors are unimportant, advertising is run at a continuous or steady schedule throughout the year (i.e. breakfast cereals)
o Flighting (intermittent) schedule- periods of advertising are schedule between periods of no advertising to reflect seasonal demand (i.e. snow skis and suntan lotion) o Pulse (burst) schedule- a flighting schedule is combined with a continuous schedule because of increases in demand, heavy periods of promotion, or introduction of a new product (i.e. toys or automobiles) Pre-testing the advertising- conducted before the advertisements are placed in any medium to determine whether the advertisement communicates the intended message or to select among alternate versions of the advertisement Portfolio tests- used to test copy alternatives, ad is placed in portfolio with several ads and stories and consumers are asked to read through portfolio and give impressions of the ads on several evaluative scales Jury tests- involve showing the ad copy to a panel of consumers and having them rate how they liked it, how much it drew their attention, and how attractive they thought it was, approach is similar to portfolio test in that consumer reactions are obtained, however ad is not hidden in other ads Theatre tests- most sophisticated, consumer invited to view new television shows or movies with test commercials, viewers register feelings about advertisements Carrying out advertising program- responsibility can be handled in one of three ways: Full-service agency- provides marker research, selects media, develops copy, produces artwork, coordinates integrated campaigns with all marketing efforts Limited-service agency-provides specialization in one aspect of the creative process, usually provides creative production work, buys previously un-purchased media space In-house agency- provides range of services (full or limited) depending on company needs, made up of company’s own advertising staff Assessing the advertising program Post-testing the advertising- done after it has been shown to the target market to determine whether it accomplished it’s intended purpose o Aided recall- after being shown an ad, respondents are asked whether their previous exposure to it was through reading, viewing or listening o Unaided recall- questions without any prompting to determine whether they saw or heard advertising messages o Attitude tests- respondents asked questions to measure changed in their attitudes after an advertising campaign o Inquiry tests- additional products information, samples or premiums are offered to an ad’s readers or viewers, ads generating the most inquiries are presumed to be the most effective o Sales tests- studies such as controlled experiments, consumer purchase tests, most sophisticated, allows manipulation of advertising variables Making needed changes
LO4: Discuss the strengths and weaknesses of consumer-oriented and trade-oriented sales
promotions
Consumer-oriented sales promotions (consumer promotions)- sales tools used to support a company’s advertising and personal selling directed to ultimate consumers Coupons- usually offer a discounted price to consumer, often key element of IMC program o Objectives- stimulate demand o Advantages- encourage retailer support o Disadvantages- consumers delay purchases Deals- short-term price reductions o Objectives-increase trial, retaliate against competitor’s actions o Advantages- reduce consumer risk, makes competitor’s introduction more difficult o Disadvantages-consumers delay purchases, reduce perceived product value Premiums- merchandise offered free or at significant savings over its retail price, price charged to consumer often just covers cost of the item
Finance allowance- paying retailers for financing costs or financial losses associates with consumer sales promotions, floor stock protection program, freight allowances Cooperative advertising- programs by which a manufacturer pays a percentage of the retailer’s local advertising expense for advertising the manufacturer’s products Training of distributors’ sales forces- manufacturer helps
LO5: Recognize public relations as an important form of communication
Publicity tools- methods of obtaining nonpersonal presentation of an organization, good, or service without direct cost, such as news releases, news conferences, and public service announcements Increasing value of promotion Building strong relationships Self-regulation o Facilitates the development of new promotional methods o Minimizes regulatory constraints and restrictions o Helps consumers gain confidence in the communication efforts used to influence their purchases
CH 20 PERSONAL SELLING AND SALES MANAGEMENT
LO1: Discuss the nature and scope of personal selling and sales management in marketing
Personal selling- involves two-way flow of communication between a buyer and seller, often in a face-to-face encounter, designed to influence a person’s or group’s purchase decision Advances in telecommunications allow personal selling to also take place over the phone, through video conferencing, and internet-enabled links between buyers and sellers, although it still remains highly human-intensive Sales management- involves planning the selling program and implementing and evaluating the personal selling effort of the firm. Tasks include: setting objectives, organizing the sales force, recruiting, selecting, training and compensating sales people, and evaluating the performance of individual sales people Personal selling serves 3 major roles in marketing efforts: Sales people are critical link between the firm and its customers Sales people are the company in the consumer’s eyes May play dominant role in a firm’s marketing program (push marketing) Sales people create value by: Being close to customer can identify creative solutions to problems By easing the customer buying process By sales people who follow through after the sale Relationship selling- the practice of building ties to customer’s based on a salesperson’s attention and commitment to customer needs over time, involves mutual respect and trust, focus on long-term customers not one time sale Partnership selling (enterprise selling)- buyers and sellers combine their expertise and resources to create customized solutions, commit to joint planning, and share customer, competitive, and company information for their mutual benefit and ultimately the consumer, relies on cross-functional business specialists
LO2: Identify the different types of personal selling
Order taker- processes routine orders or reorders for products that were already sold by the company, primary responsibility is to preserve an ongoing relationship with existing customers and maintain sales o Outside order takers- visit customers and replenish inventory stocks of resellers, such as retailers or wholesalers, often provide assistance in arranging displays o Inside order takers (order clerks or sales clerks)- typically answer simple questions, take orders, and complete transactions with customers Inbound telemarketing- the use of a toll-free telephone number that customers can call to obtain information about products or services and make purchases Order getter- sells in a conventional sense and identifies prospective customers, provides customers with information, persuades customers to buy, closes sales, and follows up on customer’s use of product or service, involves high creativity and customer empathy, typically required for selling complex or technical products with many options
o Outbound telemarketing- is the practice of using the telephone rather than personal visits to contact current and prospective customers Customer sales support personnel- segment the selling efforts of order getters by performing a variety of services o Missionary salespeople- do not directly solicit orders but rather concentrate on performing promotional activities introducing new products o Sales engineer- salesperson who specializes in identifying, analyzing, and solving customer problems and brings in know-how and technical expertise to the selling situation but does not actually sell products or services o Team selling- cross functional, the practice of using aan entire team of professionals in selling and servicing major customers, used when specialized knowledge is needed to satisfy the different interests of individuals in a customer’s buying center o Conference selling- a salesperson and other company resource people meet with buyers to discuss problems and opportunities o Seminar selling- a company team conducts an educational program for a customer’s technical staff, describing the state-of-the-art developments
LO3: Explain the stages in the personal selling process
Personal selling process: Prospecting- the search for and qualification of potential customers o Generated through advertising, referrals, and cold canvasing (or cold calling, sales person contacts through a directory) o Lead- the name of the person who may be a possible customer o Prospect- a customer who wants or needs the product o Qualified prospect- want to buy, can afford to buy it, and is the decision maker Pre-approach- involves obtaining further information on the prospect and deciding on the best method of approach o Important in situations where customs dictate protocol o Info sources include personal observation, other customers, and own salespeople Approach- involves the initial meeting between the salesperson and prospect, objectives are to gain the prospect’s attention, stimulate interest, and build the foundation for sales presentation itself and the basis for a working relationship o First impression is critical o Gain attention and interest through reference to common acquaintances, a referral, or product demonstration Presentation- core of order taking process, objective to convert a prospect into a customer by creating a desire for the product or service o Involving the customer in the product or service through attention to needs is critical o Important to deal professionally and ethically with prospect skepticism, indifference, or objections o Stimulus-response presentation- assumes that given the appropriate stimulus by a salesperson, the prospect will buy, tries one appeal after another hoping to hit the right one o Formula selling presentation- format based on the view that a presentation consists of information that must be provided in an accurate thorough, and step-by-step manner to inform the prospect, treats every prospect the same Advantageous when differences between prospects are unknown or with novice salespeople who are less knowledgeable about the product and selling process than experienced salespeople Lacks flexibility and spontaneity, does not provide feedback o Need-satisfaction presentation- emphasizes the probing and listening by the salesperson to identify the needs and interests of prospective buyers, presentation then tailored to highlight product benefits valued by prospect
Customer sales organization- different sales force calls on each separate type of buyer or marketing channel o Specialized support and knowledge provided to buyers o Higher administrative costs, some duplication of selling effort because several sales forces used to represent same products o Key account management- practice of using team selling to focus on important customers so as it build mutually beneficial, long-term, cooperative relationships, results in “customer specialists” Product sales organization- when specific knowledge is required to sell certain types of products o Salespeople develop expertise with technical characteristics, applications and selling methods o High administrative costs, duplication of efforts as two company salespeople may call on the same customer How many company salespeople should be employed? Consider number of accounts served, frequency of calls on accounts, length of the average sales call, and the amount of time a salesperson can devote to selling
Workload method- formula-based, NS =^
NC ∗ CF ∗ CL
AST
o NS= number of salespeople o NC= number of customers o CF= call frequency necessary to service a customer each year o CL= length of average call o AST= average amount of selling time available per year o Developing account management policies Account management policies- specify whom salespeople should contact, what kinds of selling and customer service activities should be engaged in, and how these activities should be carried out Sales plan implementation: putting the plan into action o Sales force recruitment and selection- entails finding people who match the type of sales position required by the firm Job analysis- the study of a particular sales position, including how the job is to be performed and the tasks that make up the job Job description- a written document that describes job relationships and requirements that characterize each sales position, explains: To whom the salesperson reports How a salesperson interacts with other company personnel The customers to be called on Specific activities to be carried out The physical and mental demands of the job Types of products and services to be sold Statement of job qualifications- includes aptitudes, knowledge, skills and a variety of behavioral characteristics considered necessary to perform the job successfully, qualifications for order-getters mirror expectations for buyers and include: Imagination and problem solving ability Strong work ethic Honesty Intimate product knowledge Effective communication and listening skills Attentiveness reflected in responsiveness to buyer needs and customer loyalty and follow-up
Firms use: personal interviews, reference checks, background information on application forms Emotional intelligence- the ability to understand one’s own emotions and the emotions of people with whom one interacts on a daily basis Qualities are important for adaptive selling Difference for effective and ineffective order-getting salespeople o Sales force training- ongoing process, covers much more than selling practices, expensive to train new people On-the-job and individual instruction by experience people are most common Other forms: formal classes, seminars taught by sales trainers, computer-based training o Sales force motivation and compensation Ways to produce motivated workers: A clear job description Effective management practices A personal need for achievement Proper compensation, incentives, or rewards Straight salary compensation plan- salesperson is paid a fixed fee per week, month, or year Easy to administer, gives management large measure of control over effort allocation Provides little incentive to expand sales volume Used when salespeople engage in many non-selling activities Straight commission compensation plan- salesperson’s earnings are directly tied to the sales or profit generated Provides maximum selling incentive Can detract salespeople from providing customer service Common when non-selling activities are minimal Combination compensation plan- contains a specified salary plus a commission on sales or profit generated Most preferred by salespeople Attempts to build on the advantages of salary and commission plans while reducing potential shortcomings of each Used by majority Nonmonetary rewards- trips, honor societies, distinguished salesperson awards, letters of commedation Sales force evaluation: measuring results o Quantitative assessment- based on objectives set forth in the sales plan Measures actual activities performed Sales quota- contains specific goals assigned to a salesperson, sales team, branch sales office, or sales district for a stated time period o Behavioral evaluation- assessments of a person’s attitude, attention to customers, product knowledge, selling and communication skills, appearance, and professional demeanor Sometimes subjective Sales force automation (SFA)- the use of these technologies to make the sales function more effective and efficient, applies to wide range of activities including each stage of personal selling process and sales force management Sales force technology- salespeople supplied with laptops to process orders, plan time allocations, forecast sales, and communicate with personnel and customers, provide interactive presentations Sales force communication- facsimile, electronic mail, voice mail, allows people to exchange data, text and voice transmissions, internet, mobility
CH 8 MARKETING RESEARCH: FROM CUSTOMER INSIGHTS TO ACTIONS
LO1: Identify the reason for conducting marketing research
