Fundamentals of Selling
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Transcript Fundamentals of Selling
2-1
Relationship Marketing:
Where Personal Selling Fits
McGraw-Hill/Irwin
Chapter
2
Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved.
Chapter
2
2-3
Main Topics
What Is the Purpose of Business?
What Is Marketing?
Customer Orientation’s Evolution
Marketing’s Importance in the Firm
Essentials of a Firm’s Marketing Effort
Relationship Marketing
Relationship Marketing and the Sales Force
Levels of Relationship Marketing
Chapter
2
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Main Topics
Partnering with Customers
The New Consultative Selling
E-Selling: Technology and Information Build Relationships
What’s a Salesperson Worth?
The Key to Success
Chapter
2
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In Chapter 2 We Will See What is Meant by
the Terms...
Business
Marketing
Product, Price, Place, Promotion
Personal Selling
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The Purpose of Business is to:
Increase the general well being of humankind
through the sales of goods and services
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This Requires
Making a profit in order to operate the
business and to provide beneficial products
to the marketplace
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Profit is a Means to an End
Profit is needed to serve humankind
Profit is needed to operate the business
Profit is needed to provide products to the
marketplace
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The Two Basic Functions
of Business
Production of goods or creation of services
Marketing those goods and services
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What is Marketing?
Marketing is a process of planning:
The conception, pricing, promotion, and
distribution of goods, services, and ideas
To create exchanges that satisfy individual and
organizational objectives
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Customer Orientation’s Evolution
The production concept
The selling concept
The marketing concept
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The Production Concept
Companies were production oriented
We know what
people want – they
want our product.
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The Selling Concept
Characterized by product demonstrations and
unsophisticated sales techniques
Emphasis on the product
Product created and then sold
Management is sales-volume oriented
Stresses needs of the seller
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The Marketing Concept
Emphasis is on customer’s wants
Customer’s wants drive production
Management is profit-oriented
Planning is long-term
Stresses wants of buyers
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Exhibit 2-1: The Difference Between
Selling and Marketing Concepts
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Marketing’s Importance in the Firm
Marketers have four main objectives:
Maximize the sales for existing products in
existing markets
Develop and sell new products
Develop new markets for existing or new products
Provide quality service to ensure repeat business
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Exhibit 2-2: The Marketing Group is the Link
Between Customers and the Organization
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Product: It’s More Than You Think
A good is a physical object that can be
purchased
A service is an action or activity performed
for a fee
Value-added refers to benefits received that
are not included in the purchase price of a
good or service
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Exhibit 2-3: Four Elements of the Marketing
Mix and Four Promotion Activities
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Exhibit 2-4: Examples of
Business-To-Business Value-Adding
Help customer reduce process costs
Improve yields
Reduce waste (through recycling, etc.)
Reduce rework
Reduce direct labor
Reduce indirect labor (inspection, handling)
Reduce energy costs
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Exhibit 2-4: Examples of
Business-To-Business Value-Adding
Help customer reduce inventory
Consignment
Just-in-time delivery
Reduced cycle time
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Exhibit 2-4: Examples of
Business-To-Business Value-Adding
Help customer reduce administrative costs
Simplify billing
Improve tractability
Use electronic data interchange
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Exhibit 2-4: Examples of
Business-To-Business Value-Adding
Improve safety for customer and his
employees
Reduce price to the customer
Substitute certain product components
Improve company processes and supplier
processes
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What is Meant by the Term “Product?”
A product is a bundle of tangible and
intangible attributes, including package, color,
and brand, plus the services and even the
reputation of the seller
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The Term “Product” May Refer to a Good
or Service
Examples
Goods - a physical object for sale
Automobile
Cell phone
Prescription medicine
Services - an action or activity done for others
for a fee
Automobile repair
Wireless phone plan
Health insurance
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The Good and the Service:
Automobile - repair services
Cell phone - wireless phone plane
Prescription medicine - health insurance
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We Will Use the Terms Follow-up and
Service. What do They Mean?*
Follow-up refers to maintaining contact with a
customer in order to evaluate the
effectiveness of the product and the
satisfaction of the customer (More on this in
Chapter 14)
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The Term “Service” May Refer to A:
Product, as insurance and advertise which is
sold by someone
Service, as customer service which is an
activity offered by a seller in conjunction with
the purchase of a product, such as delivery,
repair, credit cards accepted, 800 telephone
number, web site, salesperson available to
help customer (More on this in Chapter 14)
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Customer Service by the Salesperson
Include:
Salesperson goes to customer’s business to
help:
Resell products
Customer use product
Handling complaints
Return damaged products
Provide samples
Suggest further business opportunities
(Above discussed in Chapter 1)
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People Buy More Than the Product
People buy want-satisfaction as
Image of owning as a
Polo shirt vs. Wal-Mart shirt
Dodge Viper* vs. Volkswagen Vanagon*
What the product will do
Its quality
*products and associated images used for illustrative purposes only
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There Are Two General Types of Products Consumer and Industrial Products
What is a consumer product?
A consumer product is produced for, and
purchased by, households or end consumers
for their personal use
What is an example of a consumer product?
Toothpaste
Television
Clothes
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There Are Two General Types of Products Consumer and Industrial Products
What is industrial product?
An industrial product is sold primarily for use
in producing other products. Industrial users
are profit nonprofit organizations that buy
good and services for one of three purposes*
1.To make other goods and services
2.To sell to consumer or other industrial users
3.To conduct the organization’s operations*
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The Key Phrases That Differentiate Between
Consumer and Industrial Products are:
Consumer product - personal use
Industrial product - producing other products
What is an example of an industrial product?
Airlines purchase airplanes
Boeing sells their airplanes to airlines
University buys computers
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What Is Another Name for an Industrial
Product?*
Business product
Organizational product
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Price: It’s Important to Success
Price refers to the value or worth of a product
that attracts the buyer to exchange money or
something of value for the product
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Distribution Moves
Products to Customers
Three Customer Groups
A household refers to a decision-making unit that
buys for personal use
A firm is an organization that produces goods and
services
A government is an organization that has two
functions:
The provision of goods and services to households and
firms
The redistribution of income and wealth
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Consumer and Industrial Products are
Often Distributed Through Resellers
What are Resellers?
Resellers, such as wholesalers or retailers,
purchase products and then sell to
organizations and/or individuals
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What Is a Wholesaler? The Wholesaler
(May Be Referred to as a Distributor)
Primarily engaged in buying, taking title to,
usually storing and physically handling goods
in large quantities, and reselling the goods,
usually in smaller quantities to
Retailers
Wholesalers
Manufacturers
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Exhibit 2-5: Examples of Distribution Channels
for Consumer and Industrial Products
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Promotion Tells People
Promotion increases sales by communicating
product information to potential customers
The four basic components of a firm’s
promotional effort are: (PAPS)
Personal selling
Advertising
Publicity
Sales promotion
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Exhibit 2-6: Promotion Activities
Personal Selling is…
personal communication of information to persuade
Advertising is…
non-personal communication of information paid for
by an identified sponsor such as an individual or an
organization (Methods include TV, newspapers,
catalogs and the radio)
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Exhibit 2-6: Promotion Activities
Publicity is…
non-personal communication of information that is
not paid for by an individual organization.
Information appears in media such as television,
radio and newspapers
Sales promotion involves…
activities or materials used to create sales for goods
or services
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Exhibit 2-6
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Exhibit 2-6: Promotion Activities
Two types of sales promotion
Consumer - includes free samples, coupons,
contests, and demonstrations to consumers
Trade - encourages wholesalers and retailers to
purchase and to sell aggressively using devices
such as sales contests, displays, special purchase
prices, and free merchandise
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Exhibit 2-7: Examples of Each Marketing
Mix Element
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Relationship Marketing
Relationship marketing is the
creation of customer loyalty
Targets a major customer
that it wants to sell to now
and in the future
Establishes a long-term
collaborative relationship
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Relationship Marketing and
the Sales Force
Four basic questions used as guidelines in
defining the role of the sales force:
1.How much selling effort is necessary to gain and
hold customers?
2.Is the sales force the best marketing tool?
3.What type of sales activity will be necessary?
4.Can the firm gain strength relative to its
competition with its sales force?
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Relationship Marketing and
the Sales Force
Personal selling builds relationships!
Two main functions of personal selling are to:
Generate revenue
Provide services to satisfy customers
Flexible in operation
Focused on prospective customers
Results in actual sales
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Relationship Marketing and
the Sales Force
Salespeople
implement
relationship
marketing
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Summary of Relationship Marketing
and the Sales Force
What is the role of the sales force in the
marketing effort?
Personal selling builds relationships
Salespeople implement relationship marketing
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Exhibit 2-8: Examples of Various Marketing and Sales Methods
Used to Sell Mid-Sized Computers Business-To-Business
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Three Levels of Relationship Marketing
Transaction selling
Relationship selling
Partnering
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Three Levels of Relationship Marketing
Transaction selling: customers are sold to
and not contacted again
Relationship selling: the seller contacts
customers after the purchase to determine if
they are satisfied and have future needs
Partnering: the seller works continually to
improve its customers’ operations, sales, and
profits
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Exhibit 2-9: Dependence Increases as
Relationships become More Important
Relationships
High
Low
Low
Dependence
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High
Partnering with Customers
Encourages both the
buyer and seller to
share information
Two companies work
toward the same
objective
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Partnering, cont…
Components of partnering include:
Individual excellence
Importance
Interdependence
Investment
Information
Integration
Institutionalization
Integrity
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Exhibit 2-10
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Consultative Selling
The process of helping the customer achieve
strategic short and long-term goals through
the use of the seller’s goods and/or services
A highly interactive dialogue between a
salesperson and a customer
A balanced exchange of information
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Three Consultative Selling Roles for the
21st Century
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Three Roles of Consultative Selling
The Team Leader
Coordinates all of the information, resources, and
activities needed to support customers before,
during, and after the sale
The Business Consultant
Gives advice and service. Uses internal and
external resources to gain an understanding of the
customer’s business and marketplace
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Three Roles of Consultative Selling
The Long-Term Ally
Creates a “win–win” situation. As the customer’s
sales and profits grow, so do the salesperson’s
The ability of a salesperson to fulfill the role of
long-term ally is a pivotal factor in determining
whether a sales transaction is just a transaction
or the beginning of a relationship
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The Customer-Seller Relationship Gap
May occur when the salesperson’s interest in
the customer declines
Usually after the sale
Yet the customer’s interest increases after
the sale
This is one reason why service after the
sales is so important
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What’s a Salesperson Worth?
“Worth” is dependent upon at least three
factors:
What the salesperson costs
How much he/she sells
The profit margin
Salespeople make a valuable contribution to
the success of their employer
Selling closes deals and generates the
revenue to keep the organization in business
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The Key to Success
Knowing and satisfying target customers with
competitively superior products and service
Marketing is the company function that
defines customer targets and the best way to
satisfy their needs and wants competitively
and profitably
Marketing’s main customer contacts are
salespeople
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Exhibit 2-13: Marketing and Personal
Selling Provide Service to Customers
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Summary
Selling is only one part of the overall
marketing activities of the firm
Marketing is an exchange process between
buyers and sellers
The marketing concept is based upon a
firm’s desire to increase sales while
anticipating and satisfying consumer needs
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Summary, cont…
The marketing mix is comprised of four
variables:
Product
Distribution
Promotion
The role of the salesperson is considered
carefully in the firm’s determination of the
promotional aspect of its marketing mix
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Summary, cont…
Consultative selling focuses on the
salesperson’s ability to provide customer
satisfaction by adding value to the sales
transaction
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