MRKT 257 EXAM 1

Personal Selling

a person to person business activity in which a salesperson uncovers and satisfies the needs of a buyer to the mutual, long-term benefit of both parties.

Creates economic exchange.

Seller Profit

Profit = Sales - COGS - Time and Effort

Buyer Profit

Personal Value Equation = Benefits received - (Selling price + Time and effort to purchase)

The text defines personal selling as a business activity involving a person-to-person communication process during which a seller:

Uncovers and satisfies the needs of a buyer to the mutual long-term benefit of both parties

Go-to-market strategies

Approaches used to approach customer as they add value

Ex/ Selling through the internet, field sales representatives, business partners, resellers, manufacturer agents, franchises, telemarketers.

Sales force-intensive organizations

Organizations who rely heavily on salespeople.

Multichannel Strategy

Using several strategies at the same time.

Flexibility

Even though personal selling is the most expensive method of communication on a per person reached basis, businesses continue to use personal selling because of advantages in:

Client Relationship Manager

Customercentric: Making the customer the center of everything the salesperson does.

24/7 Service: Selling firm to be available for 24 hours a day, 7 days a week.

Account Team Manager

Salespeople coordinate activities within firms to solve customer problems.

Team Selling

Salespeople

Eyes and ears of the company

Skillful at disseminating knowledge acquired from customers to other people in their companies.

Customer Relationship management system

Information transmitted electronically to the company, its salespeople, and its customers and is contained in this system.

How Salespeople Spend Their Time

Administrative Tasks (10-20%)
Travel Time (15-20%)
Servicing the Account (10-20%)
On-Site Contacts (33%)
Other Selling Contacts (22%)

35%

On average, salespeople spend approximately ___% of their time in face to face meetings with customers

Distribution Channel

Set of people and organizations responsible for the flow of products and service from the producer to the ultimate user

Trade Salespeople

Pacific Rim manufactures outdoor furniture and sells it to home and garden distributors. It's salespeople would be correctly called

Characteristics of Successful Salespeople

-Self-motivated
-Dependable and trustworthy
-Ethical sales behavior
-Customer and product knowledge
-Analytical skills
-Ability to use information technology
-Communication skills
-Flexibility and agility
-Creativity
-Confidence and optimism

Rewards In Selling

-Independence and responsibility
-Financial rewards
-Management opportunities

Ethics

Principles governing the behavior of an individual or group.
-Establish appropriate behavior, indicating what is right and wrong.

Ethical perceptions can vary from:
-Country to Country
-Industry to industry

Basic Necessary Principle

Customer remains free to make a choice.

Manipulation:

Eliminating or reducing a buyer's choice unfairly

Persuasion

The decision still remains the buyer's, with attempts made to influence it

Ethical Dilemmas

Change sales presentation and offer based on customer's financial position
-Adaptive selling (needs)

Manufacturer's rebate

High pressure sales approach
-when the product fits the buyer's needs.
-when you don't think the product fits the buyer's needs.

Factors influencing the ethical behavior of salespeople

Company Policies
-codes of ethics

Values of significant others
-Relatives and friends
-other salespeople
-sales managers

Laws

Rationalizations:

All salespeople behave "this way"

No one will be hurt by this behavior

This behavior is the lesser of two evils

This conduct is the price one has to pay for being in business

Deception

Deliberately presenting inaccurate information
-telling half truths
-withholding important information
--manipulative and unethical

Bribes

Payments made to buyers to influence their purchase decisions.

Kickbacks

Payments made to buyers based on the amount of orders placed

Backdoor Selling

Salespeople ignore the purchasing agent's policy and contact people directly involved in the purchasing decision

Salespeople engage in ___ when they ignore a purchasing agent's (PA) policy against contacting other employees without the PA's permission, go around the PA's back, and contact other people involved in the purchasing decision.

Backdoor selling

Warranty

Assurance by the seller that the products will perform as represented

Expressed Warranty

an oral or written statement by the seller

Implied Warranty

not actually stated but is still an obligation defined by law

Business Defamation

Unfair or untrue statements to customers about a competitor, its products or its salespeople

Reciprocity

Special relationship in which two companies agree to buy products from each other

Tying Agreement

Buyer is required to purchase one product in order to get another product

Conspiracy

An agreement between competitors before customers are contacted

Collusion

Competitors working together while the customer is making a purchase decision

Illegal Business Practices

-business defamation
-reciprocity
-tying agreements
-conspiracy
-collusion

___ is a special relationship in which two companies agree to buy products from each other

Reciprocity

Types of Customers

producers, resellers, government agencies, institutions, and consumers

Producers

buy products and services to manufacture and sell their products and services to customers

-types of buying situation
--products included in manufacturing
--products and services to support the manufacturing operation.

(a) Original Equipment Manufacturer
(b) End Users

Original Equipment Manufacturer (OEM)

Purchase goods to use in making their products

End Users

Producers who buy goods and services to support their own production and operations.

Resellers

buy finished products or services with the intention to resell them to businesses and consumers

-Profit Margin
-Turnover
-Effort

Maximize return on investment (ROI)

Profit Margin

How much they make on each sale?

Turnover

How quickly a product will sell?

Effort

How much effort it takes to sell the product?

Government Agencies

Goods and services valued at more than $1 trillion annually.

Institutions- Public and Private

Purchasing rules and procedures are as complex and rigid as those of government agencies.

Consumers

Purchase products and service for use by themselves or by their families

Westex makes uniforms and overalls for employees in any industry where there is a potential for fire injury. It uses Indura Tuf Stuf fabric in all of the uniforms. Westex is an example of an

Original Equipment Manufacturer

Organizational Buying and Selling

Complexity of the organizational buying process
---Purchasing agents make purchase decisions
---Buying decisions involve extensive evaluations and negotiations
---Complexity is increasing as more customers become global businesses

Derived versus direct demand

Sales to OEMs and resellers are based on derived demand rather than direct demand

Derived Demand

Purchases made by the OEMs and resellers depend on the product demand

If there are less chemical workers to purchase uniforms. Then sales for Tuf Stuf Fabric will decline. This is called:

Derived Demand

Types of Organizational Buying Decisions

new tasks
modified rebuy
straight rebuy

New Tasks

Purchasing a product or service for the first time.

Modified Rebuys

Obtaining new information of a product or a similar product that was purchased in the past

Straight Rebuys

Buying the same product from the source it was bought previously

Organizational Needs and Criteria

economic criteria
quality criteria
service criteria

Economic Criteria

Life-Cycle costing: Method for determining the cost of equipment or supplies over their useful lives.

Quality criteria

Firms expect their suppliers to support their efforts to provide quality products.

Salespeople need to know what organizational buyers are looking for.

Service Criteria

Value analysis: suppliers and customers work together to reduce costs and still provide the required level of performance.

Individual Needs of Buying Center Members

Types of Needs
-Financial Security
-Self-Esteem
-Recognition

Risk Reduction
-Collect Additional Information
-Develop Vendor Loyalty
-Spread the Risk

Supply Chain Management

Strategy of managing inventory while containing costs

Just-in-Time (JIT) inventory control:

Minimizes the inventory by having frequent deliveries just in time for assembly into the final product.

Automatic Replenishment:

Form of JIT where the supplier manages inventory levels for the customers

Electronic data interchange:

Computer systems that share data across companies.

Multiattribute model of product evaluation and choice

Performance Evaluation of Characteristics
Importance Weights
Overall Evaluation
Value Offered
Supplier Selection

Implications For Salespeople

Approaches for changing perceived value
-increasing the performance rating for the product
-decreasing the rating for a competitive product
-increasing or decreasing an importance rate
-decreasing the price of the product

Two-Way Communication Process

encoding, decoding, feedback

Encoding

Translation of thoughts into words

Decoding

Interpreting the meaning of the received message.

Feedback

Reply to the message

Noise

Sounds (interference) unrelated to message being exchanged

Sending Verbal Messages Effectively

Choice of words

-use short words and phrases to
--demonstrate strength and force
--provide charm and grace

Avoid
-Trite words
-phrases that sound overeager
-off color language
-slang or foul language

Stories
-conflicts, trials and crisis
-help listener think through choices and outcomes of those decisions.

Word Picture
Analogy

Keep open lines of communication

Word Picture

graphic or vivid story designed to help the buyer easily visualize a point

Analogy

speaker attempts to draw a parallel between one thing and another

Levels of Listening

Hearing, passive listening, and active listening

Hearing

Tuning in and out, mainly paying attention to yourself, not responding to the speaker, and often just pretending to listen.

Passive Listening

- Not making a great effort to understand what the speaker is trying to convey
- Not listening to the deeper meaning of what the speaker is saying
- More concerned with content of the message than the speaker's feelings
- Speaker may think the listener is really listening

Active listening

Actively tries to put self in the speaker's place.
Sees things from the speakers point of view, including feelings.
Reading speakers body language carefully.
Avoids all distractions

80-20 Listening Rule

Listening - 80 percent of the time
Talking - 20 percent or less of the time

Speaking-Listening Differential

Difference between the rate at which people speak and listen

One way to define the ___ is to say Ned can listen to words at a rate more than 5X as fast as the rate at which Lousie can speak.

Speaking-Listening Differential

Suggestions for Active Listening

Repeating information
-To verify information being collected

Restating or rephrasing information
-To verify a customer's intent

Clarifying information
-To verify a customer's meaning

Summarizing the conversation
-to get a quick review

Tolerating silences
-to give customer time to think

Concentrating on the ideas being communicated
-to avoid getting distracted

Sabrina need to "bite her tongue" after asking the prospect a difficult question. Tolerating silence is often important to allow the customer ___

Time to think

Reading nonverbal messages from customers

• Body angle
• Face and eyes
• Arms
• Hands
• Legs

Sending Messages with Nonverbal Communication

Using body language
• Facial muscles - Involuntary, especially during stressful
situations
• Eye contact
• Gestures and hand shaking
• Posture and body movements

Role of Space and Physical Contact

Distance Zones
-Intimate zone
-personal zone
-social zone
-public zone

Intimate Zone

for a person's closest relationships

Personal Zone

For close friends and those who share special interests

Social Zone

For business transactions and other impersonal relationships

Public Zone

For speeches, teachers in classrooms, and passerby

Appearance

Priorities in dressing for business are:
-getting customers to notice you in a positive way
-getting customers to trust you

Proper attire and grooming give salespeople additional poise and confidence

Principles to Dress for Success

Consider geography, customers, corporate culture, aspirations, personal style

Communicating Via Technology

Salespeople communicate with customers by using different methods that vary in:
-Interactivity of the communications
-ability to use verbal and nonverbal communication channels
-quantity of information that can be conveyed

Response Time: Time between sending a message and getting a response to it.

Telephone Communications

Decide what to say before calling
Be polite, enthusiastic, and an active listener
Take notes and restate the message
Encourage two-way communication with verbal cues
Give customer opportunity to ask questions

Social Networking

Use of Web tools that allow users to:
-Share Content
-Interact
-Develop communities around similar interests
Salespeople use it to communicate with customers and prospects