PERSONAL SELLING EXAM 1

chapters 1-4

RELATIONSHIP SELLING

The focus of selling is the communication process between the buyer and & seller. The two parties are engaged in an ongoing, mutually-beneficial exchange that occurs over time and has an implied future.

TRANSACTIONAL SELLING

The focus of selling is transaction to transaction. Nothing exists between the two parties. There is no shared history and no accumulation of trust or commitment. (MONETARY EXCHANGE)

CUSTOMER ORIENTATION

Firms that have a high level of customer orientation:

• Focus on understanding the customer’s requirements

• Generate an organization-wide understanding of the marketplace

• Respond effectively with innovative products & services

THE 9 MISTAKES TO ALWAYS AVOID (THINKING LIKE A CUSTOMER)

1. Failing to do it the customer’s way and doing it YOUR way

2. Focusing on YOUR objectives, not the customers 

3. Pushing for a client meeting as if it is the end game 

4. Pushing the customer 

5. Failing to listen

6. Keeping your sales strategy a secret 

7. Making the sale the goal

8. Giving too many or too few options

9. Writing off customers too soon

INITIAL BASE SALE

To convert a PROSPECTIVE customer into a BUYER

• This serves as the BASE OF FOUNDATION with the account

• The sales organization is NOT FOCUSED ON PROFIT at the initial base sale

• The goal is not just to simply close the base sale; this is just the beginning. The followup after this base sale begins the relationship between the buyer and seller

• At the initial base sale (T1), the buyer many not have bought as many services, they did not know the sales organization well, and they did not have a high level of trust & commitment.

• If the buyer was satisfied with the services of the base sale (T1), they may be inclined to buy more at T2.

• It will not cost the sales organization as much at T2 than at T1 to service this customer, and the profit will be higher

• *THE SALES ORGANIZATION IS MOTIVATED BY THE BELIEF THAT IN GOOD RELATIONSHIPS, THE PROFIT AT T3 WILL BE SIGNIFICANTLY HIGHER THAN THE PROFIT AT T1

IMPORTANT INGREDIENTS IN RELATIONSHIP SELLING

1. Genuine Trust

2. The Principle of Reciprocity - the seller will give the prospective buyer something of value to create an obligation for the buyer to return the favor & purchase the product or service

3. Customer-Centric Approach - places the customer at the center to understand their needs & goals

4. Long-Term Perspective - establishing a relationship between the buyer and & seller

5. Value Creation - adding value for a customer beyond the transaction

• To create value is to know the difference between transactional & relationship selling

BOUNDARY SPANNERS

Sales people are “boundary-spanners” they leave the boundaries of their organizations and go out into the marketplace to gather MARKET INTELLIGENCE.

• From listening to the marketplace from both current & prospective customers, they learn the NEEDS OF THE MARKET 

• They return to their organizations & share this information with others in their organizations, which prepares the sales organization to RESPOND EFFECTIVELY

BOUNDARYLESSNESS

The sales organization must find some way to organization so departments are not separated or “siloed,” operating as their own entities to better serve customers

CROSS SELLING

the buyer purchases something related to the base sale from the seller, but for a different need

UPSELLING

The buyer purchases something higher-end/premium than previously bought at the base sale

MARKET SHARE

the percentage/portion of a market’s total sales, revenue, or customer base that is controlled by a particular company or product

• a key metric to assess a company’s competitive position within an industry or market segment

MARKET SEGMENTATION

Dividing a large & broad market into smaller, more manageable segments of consumers with shared characteristics

INTERSEGMENT HETEROGENEITY

customers or groups between different segments that differ, and require different sales strategies, not a “one-size fits all” approach

INTRASEGMENT HOMOGENEITY

customers within a single segment are as similar as possible (ex. size)

Marketing Segmentation helps to avoid the MAJORITY FALLACY - what is this?

The mistaken belief that the largest market will automatically be the most profitable to target

• targeting the largest market is often less profitable due to intense competition and can cause companies to lose more lucrative, niche segments

SHARE OF CUSTOMER/WALLET

Brand A’s Share of Customer X = $ Spent by Customer X on Brand A in Product Category Y/ Total $ spent by Customer X on all brands in Product Category Y

MARKETING MIX (4 P’s)

Strategic framework for a business’s marketing strategy

1) Product - the goods or services a company offers to meet customers’ needs & wants

2) Price - the cost a customer pays to acquire the product or service

3) Place (distribution) - where the product is made available to customers

4) Promotion - the marketing communication strategies used to create awareness & persuade potential customers

PRODUCT MIX

The entire range of products & services offered by a company, encompassing all individual product lines & variations

• width - the number of product lines

• length - the total number of products

• depth - variations within a product line

COMPONENTS OF THE INTERNAL ENVIRONMENT If any of this is off, it throws off the buyer-seller interaction/relationship

1) Goals, objectives, culture 

2) Production & supply chain capabilities 

3) Personnel 

4) Financial resources 

5) Service capabilities 

6) R&D and tech capabilities

COMPONENTS OF THE EXTERNAL ENVIRONMENT If any of this is off, it throws off the buyer-seller interaction/relationship

1) Legal & Political

2) Technological

3) Social & Cultural

4) Natural

5) Economic

CHALLY REPORT: 3 MAJOR CUSTOMER EXPECTATIONS

1) Customers wish to focus on their core competencies & outsource the rest of their business needs

2) They seek suppliers that understand the customers business well enough to provide solutions, not just products & services

3) Suppliers must prove they add value

CHALLY REPORT: 2 MAJOR CUSTOMER COMPLAINTS

1) Salesperson effectiveness was cited as more important to the customer’s business than the features & quality of the products purchased 

2) Salesperson's failure to understand the customer’s business continues to be a major complaint

CHALLY REPORT: 10 THINGS MOST IMPORTANT TO CUSTOMERS (RANKED IN ORDER OF IMPORTANCE)

1) Responsiveness to need & problems - service

10) Competitive Price

• Competitive price was seen as the least important compared to responsiveness to the customer’s needs & problems/ overall service quality

CHALLY REPORT: 8 BEST PRACTICES OF WORLD CLASS SALES ORGANIZATIONS

1. Establishing a customer-driven culture

2. Segmenting the market

3. Adapting to the market

4. Using information technology

5. Soliciting feedback and measuring satisfaction

6. Providing sales, service, and technical support

7. Recruiting and selecting salespeople

8. Training and development

TYPES OF B2B SALES JOBS 

1) Trade Servicer - Increase business from current & potential customers - retailers and distributors, by offering merchandising and promotional assistance 

• Example: P&G rep selling to retail stores

2) Missionary Seller - Provide product information and do not take orders from customers directly, but persuade customers to buy their firm’s products from distributors or other wholesale suppliers 

• Example: Pharma detailers call on doctors 

3) Technical Seller - Provide technical and engineering information and assistance 

• Example: G.E. rep calls on Boeing 

4) New Business Seller - Identify and obtain business from new customers, securing and building the customer relationship 

salespeople spend a majority of their time completing administrative tasks and waiting/traveling instead of working directly with customers 

THE BUYING CENTER

all of the people who participate in purchasing or influencing the purchase of a product

• In some organizations, some roles may be played by the same person

• Includes 7 roles: initiator, user, influencer, gatekeeper, buyer, decider, and controller

THE 7 ROLES OF THE BUYING CENTER

1) Initiator - the person who first recognizes the need for a new product or service

2) User - the individual or group who will actually use the product or service purchased

3) Influencer - someone with technical expertise or opinions who helps shape the product’s specifications and the decision-making process

4) Gatekeeper - the individual who controls the flow of information, preventing unwanted vendors or proposals from reaching others in the buying center

5) Buyer - the person responsible for negotiating terms and executing the purchase order

6) Decider - the person with the authority to approve the final purchase decision

7) Controller - an internal advocate who actively promotes the purchase within the organization and helps it move forward

3 TYPES OF BUSINESS PURCHASES

1. New-Task Purchase: a customer is buying a relatively complex and extensive product or service for the first time

2. Modified Rebuy: the customer wants to modify the product specifics, prices, or other terms it has been receiving from an existing supplier, & will consider new suppliers

3. Straight Rebuy: a customer is reordering an item that has been purchased many times. A routine, repeat purchase.

7 STEPS IN THE BUYING PROCESS

In the cases of new-task purchases and modified rebuys, the buyer typically follows a multi-stage buying process

1. Stage One: Recognition of a problem or need

2. Stage Two: Determination of the traits and quality of the needed items

3. Stage Three: Search for and qualification of potential suppliers

4. Stage Four: Acquisition of proposals and bids

5. Stage Five: Evaluation of proposals and selection of suppliers

6. Stage Six: Selection of order routine

7. Stage Seven: Performance evaluation and feedback

DEFINING VALUE

value is perceptual - whether or not something is valuable is in the eyes of the customer 

• ratio of benefits to cost 

HOW CAN THE SALESPERSON INCREASE THE VALUE OF THE CUSTOMER OFFERING

• Raise benefits

• Reduce cost

• Raise benefits & reduce costs

• Raise benefits by more than the increase in costs

• Lower benefits by less than the reduction in costs

VALUE PROPOSITION (3 parts)

includes the whole bundle of benefits the company promises to deliver to the customer. This includes:

1. The benefits of the product/service itself

2. The benefits of doing business with the supplier firm itself

3. The benefits of doing business with the salesperson her/himself

THINGS SALESPEOPLE SHOULD EMPHASIZE IN COMMUNICATING VALUE TO THE CUSTOMER (12 THINGS)

1. Product Quality: performance, features, reliability, conformance, durability, serviceability, aesthetics, perceived quality

2. Channel Deliverables (supply chain)

3. Integrated Marketing Communications

4. Synergy between sales & marketing

5. Execution of Marketing Mix Programs

6. Quality of the Buyer-Seller Relationship (Trust)

7. Service quality

8. Salesperson Professionalism

9. Brand Equity

10. Corporate Image/Reputation

11. Application of Technology

12. Price

THE 5 DIMENSIONS OF SERVICE QUALITY

1. Reliability - dependably providing service

2. Responsiveness - readiness & willingness to help customers

3. Assurance - conveying confidence

4. Empathy - showing caring attitude

5. Tangibles - physical appearance of facilities, website, & communication materials

CUSTOMER SATISFACTION

determined by the extent to which the customer’s actual experience with the product/services compares with the customer’s expectations (GAP) 

• The salesperson must not overpromise & underdeliver

UNETHICAL BEHAVIORS: SALESPERSON-CUSTOMER INTERACTIONS

1. Dishonesty - deliberately providing false information to customers

• Impedes the trust building process

2. Gifts, Entertainment, and Bribes - gift induced sales

• Various gift policies for buyers & sellers in place

3. Unfair Treatment - preferential treatment for certain customers without cause

• If cause (like a customer who purchases a lot, then this is allowed)

4. Confidentiality Leaks - sharing sensitive information about one customer with another customer

UNETHICAL BEHAVIORS: SALESPERSON-SALES ORGANIZATION INTERACTIONS

1. Cheating - falsifying sales call reports, expense reports

• 60% of managers have caught a rep. cheating on an expense report 

2. Misuse of company resources - improper utilization of copy machines, fax machines, company-issued cell phones, automobiles, business travel

3. Inappropriate relationships - 57% of respondents personally witness romantic relationships between salespeople & co-workers 

UNETHICAL BEHAVIORS: SALESPERSON-SALES MANAGER INTERACTIONS

1. Excessive pressure on salespeople - managers should not set unrealistic goals for salespeople

2. Deception - managers should not mislead/misrepresent things to salespeople

3. Abuse of salesperson rights:

• Must follow policies related to terminating the employment of a salesperson

• Must maintain confidentiality of personal information

• Must create a work environment free of bias and discrimination

• Must follow procedures for performance appraisals, compensation, and benefits

4. Culture - must actively create an environment where ethical behavior is the norm (open communication)

5. Unfair corporate policies - judicious interpretation of company policies

ILLEGAL BUSINESS ACTIVITIES

1. Collusion - competing companies cannot get together to fix prices, divide up customers or territories, or act in a way to hurt a customer or competitor

2. Restraint of trade - forcing a dealer or channel member to stop carrying its competitiors products

3. Reciprocity - an arrangement where a company purchases from another company and also sells to them; not illegal, but if it shuts out other competitors it must be stopped

4. Competition obstruction - actively impeding competitors access to a customer

5. Competitor defamation - making unfair/untrue statements about competitiors 

6. Price discrimination - giving different prices to different customers who purchase the same quality and quantity of products/services

THE UNIFORM COMMERCIAL CODE (UCC)

Sets the rules for all business practices in the United States

• nine articles

• Article 2 specifically pertains to “sales”

Following this, the salesperson has responsibilities related to:

1. Representing the company

2. Oral vs. written commitments

3. Implied vs. express warranties

THE PURPOSE OF INSTITUTING A CODE OF ETHICS (3 MAJOR FUNCTIONS)

A written statement of ethics outlines acceptable & unacceptable behavior

Performs three major functions:

1. Serve as a framework for the company’s approach to doing business

2. Act as a point of reference to guide individual employee behavior

3. Signal to customers how the sales organization does business & what it might be like to do business with them