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Sales Promotion and Personal Selling Chapter 16 Prepared by Deborah Baker Texas Christian University Chap. 16 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 1 Learning Objectives 1. Define and state the objectives of sales promotion. 2. Discuss the most common forms of consumer sales promotion. 3. List the most common forms of trade sales promotion. Chap. 16 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 2 Learning Objectives (continued) 4. Describe personal selling. 5. Discuss the key differences between relationship selling and traditional selling. 6. List the steps in the selling process. 7. Describe the functions of sales management. Chap. 16 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 3 1 Learning Objective On Line http://www.nba.com/mavericks http://www.mavs.com Define and state the objectives of sales promotion. Chap. 16 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 4 1 Sales Promotion On Line http://www.onlineclothingstores.com http://www1.coolsavings.com Marketing communication activities, other than advertising, personal selling, and public relations, in which a short-term incentive motivates a purchase. Chap. 16 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 5 1 Sales Promotion Targets Consumer Sales Promotion Chap. 16 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Trade Sales Promotion 6 1 Uses of Sales Promotion Immediate purchases Increase trial Boost consumer inventory Encourage repurchase Increase ad effectiveness Encourage brand switching Encourage brand loyalty Chap. 16 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 7 1 Objectives of Sales Promotion Type of Buyer Desired Results Sales Promotion Examples Loyal Customers • Reinforce behavior •Loyalty marketing • Increase consumption •Bonus packs • Change timing Competitor’s Customers • Break loyalty • Persuade to switch •Sampling •Sweepstakes, contests, premiums Brand Switchers • Persuade to buy your brand more often •Price-lowering promotion •Trade deals Price Buyers • Appeal with low prices • Supply added value •Coupons, price-off packages, refunds •Trade deals Chap. 16 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 8 2 Learning Objective Discuss the most common forms of consumer sales promotion. Chap. 16 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 9 Tools for Consumer Sales Promotion 2 Coupons and Rebates Premiums Loyalty Marketing Programs Contests & Sweepstakes Sampling Point-of-Purchase Promotion Chap. 16 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 10 Tools for Consumer Sales Promotion 2 Coupon A certificate that entitles consumers to an immediate price reduction. Rebate A cash refund given for the purchase of a product during a specific product. Premium An extra item offered to the consumer, usually in exchange for some proof of purchase. Chap. 16 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 11 Tools for Consumer Sales Promotion 2 Loyalty Marketing Program A promotional program designed to build long-term, mutually beneficial relationships between a company and key customers. Frequent Buyer Program A loyalty program in which loyal consumers are rewarded for making multiple purchases. Chap. 16 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 12 Tools for Consumer Sales Promotion 2 On Line http://www.sweepstakesonline.com Contest Promotions that require skill or ability to compete for prizes. Sweepstakes Promotions that depend on chance or luck, with free participation. Chap. 16 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 13 Tools for Consumer Sales Promotion 2 Sampling A promotional program that allows the consumer the opportunity to try a product or service for free. Chap. 16 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 14 2 Sampling Direct mail Methods of Sampling Door-to-door delivery Packaging with another product Retail store demonstration Chap. 16 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 15 Tools for Consumer Sales Promotion 2 Build traffic Advertise the product Goals of Point-of-Purchase Displays Chap. 16 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning Induce impulse buying 16 2 On Line http://www.burgerking.com http://www.philipmorris.com http://www.upromote.com Effective Types of On-Line Sales Promotion Tools for Consumer Sales Promotion Free merchandise Sweepstakes Free shipping Coupons Chap. 16 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 17 3 Learning Objective List the most common forms of trade sales promotion. Chap. 16 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 18 3 Tools for Trade Sales Promotion Trade Allowances Push Money Training Free Merchandise Store Demonstration Conventions & Trade Shows Chap. 16 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 19 3 Trade Allowance A price reduction offered by manufacturers to intermediaries, such as wholesalers and retailers. Chap. 16 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 20 3 Push Money Money offered to channel intermediaries to encourage them to “push” products-that is, to encourage other members of the channel to sell the products. Chap. 16 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 21 The Role of Trade Sales Promotion 3 Gain new distributors Obtain support for consumer sales promotions Build or reduce dealer inventories Improve trade relations Chap. 16 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 22 4 Learning Objective Describe personal selling. Chap. 16 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 23 4 Advantages of Personal Selling Provides a detailed explanation or demonstration of product Message can be varied to fit the needs of each prospective customer Can be directed to specific qualified prospects Costs can be controlled by adjusting sales force size Most effective method to obtain sales and gain satisfied customers Chap. 16 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 24 4 Personal Selling Personal Selling is more important if... Advertising & Sales Promotion are more important if... Product has a high value Product has a low value Product is custom made Product is standardized Product is technically complex Product is simple to understand There are few customers There are many customers Customers are concentrated Customers are geographically dispersed Chap. 16 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 25 5 Learning Objective Discuss the key differences between relationship selling and traditional selling. Chap. 16 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 26 5 Relationship Selling A sales practice that involves building, maintaining, and enhancing interactions with customers in order to develop longterm satisfaction through mutually beneficial partnerships. Chap. 16 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 27 Relationship Selling vs. Traditional Selling 5 Traditional Personal Selling Relationship Selling Sell products Sell advice, assistance, counsel Focus on closing sales Focus on customer’s bottom line Limited sales planning Sales planning is top priority Discuss product Assess “Product-specific” needs “Lone wolf” approach Build problem-solving environment Conduct discovery in scope of operations Team approach Profit impact and strategic benefit focus Long-term sales follow-up 28 Pricing/product focus Short-term sales follow-up Chap. 16 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 6 Learning Objective List the steps in the selling process. Chap. 16 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 29 6 Sales Process The set of steps a salesperson goes through in a particular organization to sell a particular product or service. Chap. 16 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 30 6 Steps in the Selling Process Generate Leads Qualify Leads Probe Customer Needs Develop Solutions Handle Objections Close the Sale Follow Up Chap. 16 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 31 Time Spent in Key Steps of Selling Process 6 Key Selling Steps Traditional Selling Relationship Selling Generate Leads High Low Qualify Leads Low High Probe Needs Low High Develop Solutions Low High Handle Objections High Low Close the sale High Low Follow-up Low High Chap. 16 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 32 6 On Line http://www.goleads.com http://www.zapdata.com Generating Leads Advertising Publicity Direct Mail/ Telemarketing Cold Calling Internet Web Site Referrals Networking Trade Shows/ Conventions Company Records Sources of Sales Leads Chap. 16 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 33 6 Cold Calling A form of lead generation in which the salesperson approaches potential buyers without any prior knowledge of the prospects’ needs or financial status. Chap. 16 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 34 6 Qualifying Leads On Line http://www.hoovers.com http://www.dnb.com Characteristics of Qualified Leads Receptivity & Accessibility Recognized Need Buying Power Chap. 16 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 35 6 Needs Assessment A determination of the customer’s specific needs and wants and the range of options a customer has for satisfying them. Chap. 16 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 36 6 Probing Needs Product or service Salesperson must know everything about... Customers and their needs Competition Industry Chap. 16 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 37 Developing and Proposing Solutions 6 Sales Proposal Sales Presentation Chap. 16 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 38 6 Handling Objections View objections as requests for information Handling Objections Anticipate specific objections Use the objection to close the sale Chap. 16 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 39 6 Closing the Sale Look for customer signals Closing the Sale Keep an open mind Negotiate Chap. 16 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 40 6 Following Up Responsibilities in Following Up Ensure delivery schedules are met Goods or service perform as promised Employees are trained Chap. 16 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 41 7 Learning Objective Describe the functions of sales management. Chap. 16 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 42 7 Sales Management Responsibilities Define sales goals and sales process Determine sales force structure Tasks of Sales Management Recruit and train sales force Compensate and motivate sales force Evaluate sales force Chap. 16 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 43 7 Defining Sales Goals Clear Precise Sales Goals Should Be... Measurable Time Specific Chap. 16 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 44 7 Quota A statement of the individual salesperson’s sales objectives, usually based on sales volume alone but sometimes including key accounts. Chap. 16 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 45 7 Sales Force Structure Geographic Region Product Line Common Sales Organization Structures Marketing Function Market or Industry Individual client or account Chap. 16 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 46 7 Training the Sales Force Company policies and practice Selling techniques Training includes... Product knowledge Industry and customer characteristics Nonselling duties Chap. 16 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 47 Compensation Plans: Basic Methods 7 On Line http://www.marykay.com Commission Combination Plans Salary Chap. 16 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 48 7 Compensation Plans Straight Commission The salesperson is paid some percentage when a sale is made. Straight Salary The salesperson receives a salary regardless of sales productivity. Chap. 16 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 49 7 Effective Sales Leaders Effective Sales Leaders... Are assertive Possess ego drive Possess ego strength Take risks Are innovative Have a sense of urgency Are empathetic Chap. 16 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 50 Evaluating the Sales Force: Performance Measures 7 Sales Volume Contribution to Profit Calls per Order Sales or Profits per Call Call Percentage Achieving Goals Chap. 16 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 51 The Impact of Technology on Personal Selling 7 Laptop computer link Cell phones Pagers Personal data assistants Sales Force Automation E-Mail Internet Chap. 16 Marketing 7e Lamb Hair McDaniel ©2004 South-Western/Thomson Learning 52