week 10 - sales + promotions + negotiation

direct sales force

full- or part-time paid employees who work exclusively for the company.

contractual sales force

manufacturers’ reps, sales agents, and brokers, who earn a commission based on sales.

when to use territorial structure

A company that sells one product line to one end-using industry with customers in many locations would use a ___ structure.

product or market structure.

company that sells many products to many types of customers might need a ___ structure.

sales force

professionals hired to locate prospects, develop them into customers and grow business

designing the sales force - roles

1. Deliverer:

2. Order taker:

3. Missionary:

4. Technician or sales engineer:

5. Demand creator:

6. Solution vendor:

deliverer role in sales force

major task is the delivery of a product.

order taker role in sales force

An inside order taker (standing behind the counter) or outside order taker (most engineering services).

missionary role in sales force

build goodwill or educate the actual or potential user

technician or sales engineer role in sales force

high level of technical knowledge.

demand creator role in sales force

relies on creative methods for selling products.

solution vendor role in sales force

expertise in solving a customer’s problem, often with a system of the company’s products and services.

what to do before company designs sales force

company must develop sales force objectives, strategy, structure, size, and compensation.

sales force - customer database - role of salespeople`

perform one or more specific tasks including:

1. Prospecting:

2. Targeting:

3. Communicating:

4. Selling: approaching,

5. Negotiating:

6. Servicing

7. Information gathering:

8. Allocating:

customer database - prospecting

1. searching for prospects or leads.

customer database - targeting

1. allocating their time among prospects and customers.

customer database - communicating

1. providing information about the products and services.

customer database - selling

1. approaching, presenting, answering questions, overcoming objections, and closing sales

customer database - negotiating

1. Discussions to reach agreement to close sales

customer database - servicing

1. providing various services to the customers - consulting on problems, rendering technical assistance, arranging financing, expediting delivery

customer database - information gathering

1. doing market research and collecting intelligence

customer database - allocating

1. Deciding which customers will get scarce products during product shortages

sales reps costs

• one of the company’s most productive and expensive assets

• increasing their number increases costs.

workload approach to establish sales force size

establish number of customers it wants to reach, use workload approach to establish sales force size

✓ Customers are grouped into size classes
✓ Desirable call frequencies are established
✓ Number of accounts in each size class multiplied by call frequency

✓ Average number of calls possible per year established
✓ Number of reps equal to total annual calls required divided by

✓number possible

sales force compensation types

fixed amount (salary), variable amount, expense allowance, benefits

managing a sales force - catergories

includes agents, dealers, own work force

recruiting + selecting, training + supervising, motivating, evaluating

managing a sales force - recruiting and selecting

sales performance does not depend on background, experience, lifestyle, personality, attitudes or skills.

managing a sales force - training + supervising

training and supervision are critical to successful sales performance.

managing a sales force - motivating

use intrinsic and extrinsic rewards: most effective is pay, followed by promotion, personal growth and a sense of accomplishment. Some firms prefer to set sale quotas.

managing a sales force - evaluating

measure sales performance (net sales, quotas, profits, expenses, new customers, lost customers, etc.)

personal selling questions

spin - situation, problem implication, need-payoff

situation questions

ask about facts or explore the buyer’s present situation.

• “What system are you using to invoice your customers?”

• historical reason why you would buy this

problem questions

ask about problems, difficulties, and dissatisfactions the buyer is experiencing

• “What parts of the system create errors?”

• how often does this break down eg.

implication questions

ask about the consequences or effects of a buyer’s problems, difficulties, or dissatisfactions

• “ How does this problem affect your people’s productivity?”

need-payoff questions

ask about the value or usefulness of a proposed solution. For example, “How much would you save if our company could help reduce errors by 80 percent?”

steps of personal selling

1. identify and qualify prospects

   1. learn as much as possible about prospect company and its buyers

2. tells the product “story” to the buyer, using a features, advantages, benefits, and value (FABV) approach

3. handle objections - salesperson maintains positive approach, asks buyer to clarify objection, questions in such a way that the buyer answers his own objection, denies the validity of the objection, or turns it into a reason for buying.

4. Negotiations - salespeople engage in discussions to reach a mutually agreeable conclusion. Includes prices, discounts, contract terms, delivery schedules, payment terms, delivery timelines.

5. Closing sales and ensuring product is delivered according to terms.

6. Follow-up and maintenance: follow-up call after delivery to ensure proper installation, instruction, and servicing and to detect any problems.

modes of marketing communications

advertising

sales promotion

events + experiences

public relatiins + publicity

online + social media marketing

mobile marketing

direct and database marketing

personal selling

advertising

1. paid form of non-personal presentation and promotion of ideas

sales promotion

any variety of short-term incentives to encourage trial or purchase of a product or service.

events and experiences

1. company-sponsored activities and programs to create interactions with consumers.

public relations and publicity

1. variety of programs directed internally to employees of the company or externally to consumers, other firms, the government, and media

online and social media marketing

online activities and programs designed to engage customers or prospects.

mobile marketing

special form of online marketing that uses mobile phones, smartphone or tablets

direct and database marekting

use of emails, mail, telephone to communicate directly with customers.

personal selling

1. face-to-face interaction with one or more prospective purchasers for the purpose of making presentations, answering questions, and procuring orders.

cognitive stage

learn about the product

affective stsage

feel – like /dislike/evaluate

behaviour stage

do – buy it again/ never buy it again

steps of developing an effective communication program

1. Identify target audience

2. Determine objectives

3. Design communications

4. Select channels

5. Establish budget

6. Decide on media mix

7. Measure results

8. Manage Integrate Marketing Communications

communication objectives

• establish category need

• build brand awareness

• build brand attitude

• influence purchase intention

communications objectives - establish category need

1. establishing a product or service category to remove or satisfy a perceived discrepancy between a current motivational state and a desired emotional state

communications objectives - build brand awareness

1. build brand awareness such that the consumer’s ability torecognize or recall the brand within the category, in sufficient detail to make a purchase

communications objectives - build brand attitude

1. help consumers evaluate the brand’s perceived ability to meet a currently relevant need

communications objectives - influence purchase intention

1. move consumers to decide to purchase the brand or take purchase-related action.

designing the communications

Formulating the communications to achieve the desired response requires solving three problems:

• Message Strategy (what to say)

• Creative Strategy (how to say it)

• Message Source (who should say it)

designing communicaitons - creative message strategies

• Communications effectiveness depends on how a message is being expressed, as well as on its content.

• Creative strategies

  • –  Informational appeal

  • –  Transformational appeal

• informational appeal = straightforward giving facts – to solve problem or providing information about attributes or produce a comparison

  • rational, acute need, routine

• A transformational -stir up emotions to motivate purchase

  • ego, social, sensory

designing communicaitons - message source

3 important aspects for your message to be well received:

• Expertise - specialised knowledge the communicator possesses to back the claim.

  • features expert to explain product and benefits

• Trustworthiness - how objective and honest the source is perceived to be

  • citing independent research studies

• Likability - describes the source’s attractiveness

  • includes popular figure from domain who is well-liked in target market

selecting communications channels

personal channels

• advocate channels

• expert channels

• social channels

non-personal channels

selecting communications channels - personal channels

derive their effectiveness from individualised presentation and feedback, which let two or more persons communicate face-to-face or person-to- audience, including direct and interactive marketing, word-of-mouth marketing, and personal selling.

➢ Advocate channels consist of company salespeople contacting buyers in the target market.
➢ Expert channels consist of independent experts making statements to target buyers.
➢ Social channels consist of neighbours, friends, family members, and associates talking to target buyers.

selecting communications channels - non-personal channels

communications directed to more than one person and include advertising, sales promotions, events and experiences, and public relations.

establishing the budget key steps

affordable method

percent sales method

competitive parity method

objective-and-task method

establish the product - affordable method

• set budget at what the company can afford. The affordable method completely ignores the role of promotion as an investment and the immediate impact of promotion on sales volume.

establish the budget - percent sales method

• set expenditures at a specified percentage of current or anticipated sales or of the sales price.

establish the budget - competitive parity method

• set budget to achieve share-of-voice parity with competitors (Share of voice -

  proportion of the company’s advertising to the total advertising in the market)

establish the budget - objective and task method

• calls upon marketers to develop communication budgets by defining specific objectives, determining the tasks that must be performed to achieve these objectives, and estimating the costs of performing them.

characteristics of communications mix - advertising

• Pervasive as it permits the seller to repeat a message many times. It also allows the buyer to compare the messages of various competitors.

• Amplified expansiveness - showcases a brand through visuals, sound, colour, storytelling, and emotion.

• Control – choose exactly what aspects of their brand or product to emphasise

characteristics of communication mix - sales promotion tools

offer three distinctive benefits:
➢They draw attention and may lead the product.
➢They incorporate some concession, inducement, or contribution that gives value to the consumer. ➢They include a distinct invitation to engage in the transaction now.

Examples of sales promotion tools—coupons, contests, premiums, and the like—to draw a stronger and quicker buyer response, including short-run effects such as highlighting product offers and boosting sagging sales.

characteristics of communications mix - public relations and publicity

based on three distinctive qualities:

✓ high credibility
✓ ability to reach hard-to-find buyers
✓ dramatisation

characteristics of communications mix - events and experiences

have the following characteristics:

✓ relevant
✓ engaging
✓soft implicit sell

characteristics of communications mix - online and social media marketing

1. Rich in content

2. Interactive

3. Up to date – can be prepared or updated quickly.

characteristics of communications mix - mobile marketing

Increasing popularity of mobile communication

1. Timely – time sensitive and can even reveal where a customer is

2. Influential

3. Pervasive – consumers typically carry smartphones or tablets everywhere

factors in setting communication mix

Type of Market: Firms in consumer markets rely more on advertising and sales promotion while business markets rely more on personal selling.

Buyer Readiness

Product Life-Cycle stage:

• Introduction stage – events, publicity, advertising

• Growth stage – word of mouth and interactive marketing

• Maturity stage – all of the above

• Decline – sales promotion and all others reduced

measuring results in communications

• Firms should know the outcomes and revenues resulting from their communications investments.

• Firms need to measure intermediate outputs such as reach and frequency (the percentage of target market exposed to a communication and the number of exposures), recall and recognition scores, persuasion changes, and cost-per-thousand calculations.

• Ultimately, behavior-change measures capture the real payoff.

• Firms need to review the effectiveness of the communication mix, integrate the effective programs, implement integrated communication and evaluate again.

advertising

Advertising is any paid form of non-personal presentation and promotion of ideas, goods, or services by an identified sponsor.

advertising objectives

a specific communications task and achievement level to be accomplished with a specific audience in a specific period of time.

• informative advertising - create brand awareness and knowledge of new products or new features of existing products.

• persuasive advertising - create liking, preference, conviction, and purchase of a product or service.

• reminder advertising - stimulate repeat purchase of products and services.

• reinforcement advertising - convince current purchasers that they made the right choice.

setting advertising budget steps

1. stage in product life cycle

2. market share and consumer base

3. competition and clutter

4. advertising frequency

5. product substitutability

setting advertising budget - stage in product life cycle

1. New products = merit larger advertising budgets (build awareness + gain consumer trial)

setting advertising budget - market share and consumer base

1. High-market-share brands = less advertising expenditure as a percentage of sales to maintain share. To build share by increasing market size requires larger budget.

setting advertising budget - competition and clutter

1. In a market with a large number of competitors and high advertising spending, a brand must advertise more heavily.

setting advertising budget - advertising frequency

1. The number of repetitions needed to put the brand’s message across to consumers.

setting advertising budget - product substitutiability

1. Brands in less-differentiated or commodity-like product classes require heavier advertising to establish a unique image.

developing the advertising campaign

• In designing and evaluating an ad campaign, marketers employ both art and science to develop the message strategy or positioning of an ad.

• What the ad attempts to convey about the brand—and its creative strategy—how the ad expresses the brand claims.

  • For persuasive communications, it is important to design message using a scientific model of consumer behaviour or behaviour change theory.

  • Advertisers go through three steps:
  1. message generation and evaluation 2. creative development and execution 3. social responsibility review.

print ad criteria

• Is the message clear at a glance?

• Is the benefit in the headline?

• Does the illustration support the headline?

• Does first line of copy support or explain the headline and illustration?

• Is the ad easy to read and follow?

• Is the product easily identified?

• Is the brand or sponsor clearly identified?

print ads - notes

Researchers studying print advertisements report that the picture, headline, and copy (written text) matter in that order.
The picture must be strong enough to draw attention. The headline must reinforce the picture and lead people to read the copy.

The copy must be engaging and the brand’s name sufficiently prominent.

print ads advantages + disadvantages

Advantages

✓Detailed product information ✓Communicate imagery ✓Flexibility
✓Able to segment

Disadvantages

X Passive medium
X Clutter
X Cannot demonstrate product use

television advantages + disadvantages

Advantages

✓Reaches broad spectrum of consumers
✓Low cost per exposure
✓Ability to demonstrate product use
✓Ability to portray image and brand personality

Disadvantages

➢Brief
➢Clutter
➢High cost of production

➢High cost of placement

➢Lack of attention by viewers

media selection

finding the most cost-effective media to deliver the desired number and type of exposures to the target audience.

exposure to ad message depends on

Exposure to the ad message depends on:

✓Reach ( R ): number of different persons or households exposed to a particular media schedule at least once during a specified time period. ( expressed in % of population)

✓Frequency ( F ): number of times within the specified time period that an average person or household is exposed to the message.

✓Impact (I) : qualitative value of an exposure through a given medium.

ad exposure calcualtons

trial awareness and exposure

objective and task method - steps

newspaper advantages disadvantages

television advantages disadvantages

direct mail advantages disadvantages

media types advantages disadvantages

advertising timing patterns

The chosen pattern should meet the communications objectives set in relationship to the nature of the product, target customers, distribution channels, and other marketing factors.

advertising timing patterns - macro-scheduling

decision relates to seasons and the business cycle; firm can vary its expenditures to follow the seasonal pattern, to oppose the seasonal pattern, or to be constant throughout the year.

advertising timing patterns - micro-scheduling

decision calls for allocating advertising expenditures within a short period to obtain maximum impact.

buyer turnover

rate at which new buyers enter the market; the higher this rate, the more continuous the advertising should be.