Marketing Case Study: Real Choices at Frito Lay

418 Chapter | 14 One-to-One:

Trade Promotion, Direct Marketing, and Personal Selling A Decision Maker at Woodtronics Jeffrey Brechman is a principal at Woodtronics Inc., a company that de- signs and builds trading room furniture and command centers and network op- eration control centers for financial insti- tutions, the military, and police and fire departments. Jeffrey moved into his ca- reer in an unconventional way. After a short stint in college, he started a paint- ing business and wasn’t thrilled about what he was doing. He got into a con- versation about his career aspirations with a woman whose house he was painting. She, in turn, set up a meeting with her husband, who happened to be president of a company that manufactured and sold trading room console furniture. Trading room furniture is a very specialized niche business. It needs to accommodate a lot of electronic equipment to let bro- kers monitor the market, but also to take up a minimum amount of space so that brokerage houses can fit as many brokers as is comfortably possible in expensive floor space. Jeffrey’s Info What do I do when I’m not working? A) Spend time with my family and play golf. First job out of school? A) Telemarketer for American Automobile Association. Career high? A) Telling my family about the first deal I won, not the actual win itself. Business book I’m reading now? A)Secrets of the Millionaire Mind: Mastering the Inner Game of Wealth by T. Harv Eker. My hero? A) My grandfather. My motto to live by? A) Treat everyone as an equal. What drives me? A) To be able to provide not only for my family but the employees that work for me. My management style? A) I let the situation drive my style . . . stern when needed. Profile Info Jeffrey Brechman Real People Profiles + B A R R O W , L O R I 7 4 7 7 B U ISBN 1-256-36591-2 Marketing: Real People, Real Choices , Seventh Edition, by Michael Copyright Jeffrey landed his first job as a sales executive in New York after that meeting. He worked hard to prove himself to this firm and he became its top salesperson in his very first year. He worked at that first company for four years, but then a competing company approached him to revitalize its business in the New York metro- politan area. This new company was losing money and was not a major com- petitor in the industry because it was not managed properly and it wasn’t making sales it should have been winning. Jeffrey believed he could turn the company around, so he swallowed hard and moved to the competitor—Woodtronics.

Within two years the company’s sales had tripled, and it’s now one of the leading man- ufacturers in the trading desk furniture in- dustry. The turnaround came by carefully examining each area of the business and building on employees’ strengths as well as improving products and customer service. In 2006, Woodtronics also opened an office in London to allow the growing company to ex- pand its business overseas. An architect had a client in Chicago who was using one of Woodtronics’ best- selling trading desk products. The architect liked the product so much that he recom- mended it to another important client in Jer- sey City who would also be installing trading desks. Of course, Jeffrey was thrilled with the referral; this new client represented a major sale for Woodtronics. However, in the mean- time the company had developed a prototype of a new model it called Evo- lution that Jeffrey believed would provide an even better solution for this new client. The Evolution technology platform is specifically designed for high-density technology trading environments; it maximizes work-surface area, allows for easier integration of new flat screen technology into the fur- niture, features a high-volume integrated heat removal system to increase the comfort for users, and also offers innovative designs to hide cumber- some computer cables, yet still provides access to them when needed. Woodtronics really preferred to sell this new product, but the architect was hesitant to recommend it because he had used the older product in a prior project and it had worked out well for him. And this project would be the first large-scale installation, so he was afraid that his client would be a “guinea pig” by taking a chance on a product without a proven track record. To complicate the issue, the Jersey City client had shown a lack of enthusiasm for the original product because it didn’t exactly meet his pro- ject’s needs. As a principal of the company, Jeffrey is personally involved in every one of its major sales. He had described the new product to the Jersey City client who was interested in learning more—but the architect was still resisting.

Jeffrey had to make a critical sales decision or risk losing out completely on this large sale. Which product should he try to sell? See what option Jeffrey chose and its success on page 439 You Choose Which Option would you choose, and why ? 1. YES NO 2. YES NO 3. YES NO 419 Here’s my problem. . . Real People, Real Choices Jeffrey considered his Options 1•2•3 Push the original product even though this was not the best solution for the client. This approach would maintain the important relationship Jeffrey already had with the architect.

But the new client wasn’t satisfied with the current product, so the company’s reputation was at risk if it offered a product it knew was not completely in line with the client’s needs.

Sell the client using the prototype of the Evolution plat- form, arguing that this alternative would better meet his needs in terms of both price and functionality. This option would let Jeffrey lead with his best, state-of-the-art product. But he would risk alienating the architect who had been so helpful in bringing new business to Woodtronics.

Concentrate on raising the architect’s comfort level with the new Evolution product and hope that he would be persuaded to recommend it to the new client instead. This option would deliver the right solution to the client and of course deliver a major sale to Woodtronics. If it succeeded, Jef- frey might even further boost the architect’s confidence in Woodtronics to deliver the best solutions for his other clients down the road.

But the architect was set on using the tried-and-true product; there was a real risk he would walk away from Woodtronics and find a competitor that didn’t want to “field-test” a new product on one of his clients. Now, put yourself in Jeffrey’s shoes: Which option would you choose, and why?

Option Option Option Things to remember Woodtronics operates solely in business-to-business contexts, so the company relies primarily on personal selling to get and retain clients.

Jeffrey has both an ethical and a financial responsibility to do what’s best for the client. He needs to recommend the Woodtronics product solution that will be most likely to meet the client’s needs rather than just generating more business down the road with other clients. B A R R O W , L O R I 7 4 7 7 B U ISBN 1-256-36591-2 Marketing: Real People, Real Choices , Seventh Edition, by Michael Copyright Trade Sales Promotion:

Targeting the B2B Customer In Chapter 13 you learned about a variety of sales pro- motion techniques aimed directly at consumers. Now, we turn our attention to a different type of approach to sales promotion in which the consumer is decidedly not the primary target. Here, the target is the B2B customer—located somewhere within the supply chain. Such entities are traditionally referred to as “the trade.” Hence, trade promotions focus on members of the supply chain, which include distribution channel members, such as retail salespeople or wholesale distributors with whom a firm must work to sell its products.

(We’ll discuss these and other distribution channel members in more detail in Chapters 15 and 16.) Trade promotions take one of two forms: (1) those designed as discounts and deals, and (2) those designed to increase industry visibility. Let’s take a look at both types of trade promotions in more detail. To help you follow along, Figure 14.1 portrays several of the most important types of trade sales promotion approaches, and Table 14.1 provides more details about each approach. You will note that some of the techniques, although primarily tar- geted to the trade, also appeal to consumers. 420 PART FOUR |COMMUNICATE THE VALUE PROPOSITION Objective Outline 1. Identify the sales promotion elements for B2B.

TRADE SALES PROMOTION: TARGETING THE B2B CUSTOMER (p. 420) 2. Understand the elements of direct marketing.

DIRECT MARKETING (p. 423) 3. Appreciate the important role of personal selling and how it fits into the promotion mix.

PERSONAL SELLING: ADDING THE PERSONAL TOUCH TO THE PROMOTION MIX (p. 427) 4. Identify the different types of sales jobs.

THE LANDSCAPE OF MODERN PERSONAL SELLING (p. 431) 5. List the steps in the creative selling process.

THE CREATIVE SELLING PROCESS (p. 433) 6. Explain the role of sales management.

SALES MANAGEMENT (p. 436) (pp. 436–439) (pp. 433–436) (pp. 431–433) (pp. 427–431) (pp. 423–427) (pp. 420–423) Check out chapter 14 Study Map on page 440 Chapter 14 Trade Sales Promotions Allowances, discounts, and deals Co-op advertising Trade shows Promotional products Point of purchase (POP) displays Incentive programs Push money Figure 14.1 Snapshot |Trade Sales Promotions Trade sales promotions come in a variety of forms. Some are designed as discounts and deals for channel members and some are designed to increase industry visibility. 1 OBJECTIVE Identify the sales promotion elements for B2B.

(pp. 420–423) trade promotions Promotions that focus on members of the "trade," which include distribution channel members, such as retail salespeople or wholesale distributors, that a firm must work with in order to sell its products.

B A R R O W , L O R I 7 4 7 7 B U ISBN 1-256-36591-2 Marketing: Real People, Real Choices , Seventh Edition, by Michael Copyright CHAPTER 14 |ONE-TO-ONE: TRADE PROMOTION, DIRECT MARKETING, AND PERSONAL SELLING 421 Discount Promotions Discount promotions (deals) reduce the cost of the product to the distributor or retailer or help defray its advertising expenses. Firms design these promotions to encourage stores to stock the item and be sure it gets a lot of attention.

Allowances, Discounts, and Deals One form of trade promotion is a short-term price break . A manufacturer can reduce a chan- nel partner ’s costs with a sales promotion that discounts its products. For example, a man- ufacturer can offer a merchandising allowance to reimburse the retailer for in-store support of a product, such as when a store features an off-shelf display for a brand. Another way in which a manufacturer can reduce a channel partner ’s cost is with a case allowance that pro- vides a discount to the retailer or wholesaler during a set period based on the sales volume of a product the retailer or wholesaler orders from the manufacturer. However, allowances and deals have a downside. As with all sales promotion activi- ties, the manufacturer expects these to be of limited duration, after which the distribution channel partner will again pay full price for the items. Unfortunately, some channel mem- bers engage in a practice the industry calls forward buying : They purchase large quantities of the product during a discount period, warehouse them, and don’t buy them again until the manufacturer offers another discount. Some large retailers and wholesalers take this to an extreme when they engage in diverting . This describes an ethically questionable practice where the retailer buys the product at the discounted promotional price and warehouses it.

Then, after the promotion has expired, the retailer sells the hoarded inventory to other re- tailers at a price that is lower than the manufacturer ’s nondiscounted price but high enough Table 14.1 | Characteristics of Trade Sales Promotion Approaches Technique Primary Target Description Example Allowances, discounts, and deals Trade Retailers or other organizational customers receive discounts for quantity purchases or for providing special merchandising assistance. Retailers get a discount for using a special Thanksgiving display unit for Pepperidge Farm Stuffing Mix. Co-op Advertising Trade and consumers Manufacturers pay part of the cost of advertising by retailers who feature the manufacturer’s product in their ads. Toro pays half of the cost of Brad’s Hardware Store newspaper advertising that features Toro lawn mowers. Trade shows Trade Many manufacturers showcase their products to attendees. The National Kitchen and Bath Association trade shows allow manufacturers to display their latest wares to owners of kitchen and bath remodeling stores. Promotional products Trade and consumers A company builds awareness and reinforces its image by giving out “premiums” with its name on them. Coors distributors provide bar owners with highly sought-after “Coors Light” neon signs.

Caterpillar gives customers caps with the Caterpillar logo. Point-of- purchase (POP) displays Trade and consumers In-store exhibits attract consumers’ attention.

Many POP displays also serve a merchandising function. The Behr’s paint display in Home Depot stores allow consumers to select from over 1,600 colors including 160 Disney colors. Incentive programs Trade A prize is offered to employees who meet a prespecified sales goal or who are top performers during a given period. Mary Kay cosmetics awards distinctive pink cars to its top-selling representatives. Push money Trade A particular type of incentive program in which salespeople are given a bonus for selling a specific manufacturer’s product. A retail salesperson at a cosmetics counter gets $5 every time she sells a bottle of Glow perfume by JLo. merchandising allowance Reimburses the retailer for in-store support of the product.

case allowance A discount to the retailer or wholesaler based on the volume of product ordered. B A R R O W , L O R I 7 4 7 7 B U ISBN 1-256-36591-2 Marketing: Real People, Real Choices , Seventh Edition, by Michael Copyright 422 PART FOUR |COMMUNICATE THE VALUE PROPOSITION to turn a profit. Obviously, both forward buying and diverting go against the manufac- turer ’s intent in offering the sales promotion.

Co-op Advertising Another type of trade allowance is co-op advertising . These programs offer to pay the re- tailer a portion, usually 50 percent, of the cost of any advertising that features the manufac- turer ’s product. Co-op advertising is a win–win situation for manufacturers because most local media vehicles offer lower rates to local businesses than to national advertisers. Both the retailer and the manufacturer pay for only part (normally half) of the advertising, plus the manufacturer gets the lower rate. Normally the amount available to a retailer for co-op advertising is limited to a percentage of the purchases the retailer makes during a year from the manufacturer.

Sales Promotion Designed to Increase Industry Visibility Other types of trade sales promotions increase the visibility of a manufacturer ’s products to channel partners within the industry. Whether it is an elaborate exhibit at a trade show or a coffee mug with the firm’s logo it gives away to channel partners, these aim to keep the com- pany’s name topmost when distributors and retailers decide which products to stock and push. These forms of sales promotion include the following:

• Trade shows: The thousands of industry trade shows in the United States and around the world each year are major vehicles for manufacturers to show off their product lines to wholesalers and retailers. Usually large trade shows are held in big convention centers where many companies set up elaborate exhibits to show their products, give away samples, distribute product literature, and troll for new business contacts. Today we also see more and more online trade shows that allow potential customers to preview a man- ufacturer ’s products remotely. This idea is growing in popularity, though many indus- try people find it a challenge to “schmooze” in cyberspace (it’s also a little harder to collect all the great swag [promotional products] they give out at real-life shows!). An im- portant benefit of traditional trade shows is the opportunity to develop customer leads that the company then forwards to its sales force for follow-up. • Promotional products: We have all seen them: coffee mugs, visors, T-shirts, ball caps, key chains, refrigerator magnets, and countless other doodads emblazoned with a company’s logo. They are examples of promotional products . Unlike licensed mer- chandise we buy in stores, sponsors give away these goodies to build awareness for their organization or specific brands. In many industries, companies vie for the most impressive promotional products and offer their business customers and channel partners upscale items such as watches, polar fleece jackets, and expensive leather desk accessories. • Point-of-purchase (POP) displays : Point-of-purchase materials include signs, mobiles, banners, shelf ads, floor ads, lights, plastic reproductions of products, permanent and temporary merchandising displays, in-store television, and shopping card advertise- ments. Manufacturers spend over $17 billion annually on POP displays because it keeps the name of the brand in front of the consumer, reinforces mass-media advertis- ing, calls attention to other sales promotion offers, and stimulates impulse purchasing.

Generally, manufacturers must give retailers a promotion allowance for use of POP ma- terials. For retailers, the POP displays are useful if they encourage sales and increase revenues for the brand. It’s a challenge for marketers to come up with new and innovative POP displays that will grab attention, such as the now classic promotion Bausch & Lomb ran in Spain some years ago. The company wanted to encourage consumers with good vision to buy contact lenses that changed their eye color. By letting shoppers upload their pictures to a computer co-op advertising A sales promotion where the manufacturer and the retailer share the cost.

trade shows Events at which many companies set up elaborate exhibits to show their products, give away samples, distribute product literature, and troll for new business contacts.

promotional products Goodies such as coffee mugs, T-shirts, and magnets given away to build awareness for a sponsor. Some freebies are distributed directly to consumers and business customers; others are intended for channel partners such as retailers and vendors.

Point-of-purchase (POP) displays In-store displays and signs.

B A R R O W , L O R I 7 4 7 7 B U ISBN 1-256-36591-2 Marketing: Real People, Real Choices , Seventh Edition, by Michael Copyright CHAPTER 14 |ONE-TO-ONE: TRADE PROMOTION, DIRECT MARKETING, AND PERSONAL SELLING 423 in the store and digitally altering the photos, the promotion allowed people to see how they would look with five different eye colors without actually inserting the contacts. 1 • Incentive programs: In addition to motivating distributors and customers, some promo- tions light a fire under the firm’s own sales force. These incentives, or push money , may come in the form of cash bonuses, trips, or other prizes. Mary Kay Corporation—the in- home party plan cosmetics seller—is famous for giving its more productive distributors pink cars to reward their efforts. Another cosmetics marketer that uses a retail store sell- ing model, Clinique, provides push money to department store cosmeticians to demon- strate and sell the full line of Clinique products. This type of incentive has the nickname SPIF for “sales promotion incentive funds.” Even Starbucks has gotten into the incen- tive program business by offering gift cards that companies can purchase and provide for their salespeople to give clients as a small “thank you” for closing a sale. Direct Marketing Are you one of those people who love to get lots of catalogs in the mail, pore over them for hours, and then order just exactly what you want without leaving home? Do you download music from iTunes or order books from Amazon.com ? Have you ever responded to an infomercial on TV? All these are examples of direct marketing, the fastest-growing type of marketing communication. Direct marketing refers to “any direct communication to a con- sumer or business recipient that is designed to generate a response in the form of an order, a request for further information, or a visit to a store or other place of business for purchase of a product.” 2The Direct Marketing Association (DMA) reports that direct-marketing-driven sales represent about 10 percent of the total U.S. gross domestic product (GDP)—an astounding figure! Spending on direct marketing is increasing, while at the same time spending on traditional advertising has declined—especially fueled by ad cutbacks during the recent economic downturn. And the projections for growth in outlays on direct marketing during the decade beginning in 2010 are very bullish. 3 Clearly, direct marketing has the potential for high impact. Let’s look at the four most popular types of direct marketing as portrayed in Figure 14.2: mail order (including cat- alogs and direct mail), telemarketing, direct-response advertising, and M-commerce. We’ll start with the oldest—buying through the mail—which is still incredibly popular!

Mail Order In 1872, Aaron Montgomery Ward and two partners put up $1,600 to mail a one-page flyer that listed their merchandise with prices, hoping to spur a few more sales for their retail store. 4The mail-order industry was born, and today consumers can buy just about anything through the mail. Mail order comes in two forms: catalogs and direct mail. Acatalog is a collection of products offered for sale in book form, usually consisting of product descriptions accompanied by photos of the items. Catalogs came on the scene within a few decades of the invention of movable type over 500 years ago, but they’ve come a long way since then. 5 The early catalogs Montgomery Ward and other innovators such as Sears and JC Penney pioneered targeted people in remote areas who lacked access to stores. Today, the catalog cus- tomer is likely to be an affluent career woman with access to more than enough stores but without the time or desire to go to them. According to the DMA, over two-thirds of U.S. adults order from a catalog at least once a year. 6Catalog mania extends well beyond clothing and cosmetics purchases. PC marketers HP and Dell both aggressively send out promotional cat- alogs that feature their own products along with accessories from a variety of manufacturers. direct marketing Any direct communication to a consumer or business recipient designed to generate a response in the form of an order, a request for further information, and/or a visit to a store or other place of business for purchase of a product.

catalog A collection of products offered for sale in book form, usually consisting of product descriptions accompanied by photos of the items. 2 OBJECTIVE Understand the elements of direct marketing.

(pp. 423–427) push money A bonus paid by a manufacturer to a salesperson, customer, or distributor for selling its product. B A R R O W , L O R I 7 4 7 7 B U ISBN 1-256-36591-2 Marketing: Real People, Real Choices , Seventh Edition, by Michael Copyright 424 PART FOUR |COMMUNICATE THE VALUE PROPOSITION M-commerce Direct-response Advertising Mail Order • Catalogs • Direct mail Telemarketing Key Forms of Direct Marketing Figure 14.2 Snapshot |Key Forms of Direct Marketing Key forms of direct marketing are mail order (including catalogs and direct mail), telemarketing, direct-response advertising, and M-commerce. Many stores use catalogs to complement their in-store efforts—Neiman-Marcus is fa- mous for featuring one-of-a-kind items like diamond-encrusted bras or miniature working versions of Hummers in its mailings as a way to maintain the store’s image as a purveyor of unique and upscale merchandise. These upscale features change regularly, and avid Neiman’s fans love to get the new catalog to find out what the next one is. A catalog strategy allows the store to reach people in the United States who live in ar- eas too small to support a store. But also, more and more U.S. firms use catalogs to reach overseas markets as well. Companies like Lands’ End and Eddie Bauer do brisk sales in Eu- rope and Asia, where consumers tend to buy more goods and services through the mail in the first place than do Americans. Lands’ End opened a central warehouse in Berlin and at- tacked the German market with catalogs. The company trained phone operators in cus- tomer service and friendliness and launched an aggressive marketing campaign to let consumers know of the Lands’ End lifetime warranty (German catalog companies require customers to return defective merchandise within two weeks to receive a refund). Although local competitors protested and even took the company to court, the case was settled in the American company’s favor, and the Yankee invasion continues. Catalog Choice started in 2007 as a Web site that enabled consumers to opt out of re- ceiving catalogs by big companies (much like a “do not call” list for telemarketers). By 2010 the Web site ( www.catalogchoice.org ) claimed to be used by over 1.2 million people in com- municating with nearly 3,000 catalogers! Part of the site’s motivation is to reduce the waste unwanted paper catalogs create. Back when the 2007 holiday season came around, many catalog marketers initially didn’t heed the requests of the consumers who signed up at Cat- alog Choice and mailed to them anyway. Since then, additional pressure has been put on the catalogers to comply and the Direct Marketing Association (DMA) itself has begun an ini- tiative to help firms better police their own practices. 7 Direct Mail Unlike a catalog retailer that offers a variety of merchandise through the mail, direct mail is a brochure or pamphlet that offers a specific good or service at one point in time. A direct mail offer has an advantage over a catalog because the sender can personalize it. Charities, political groups, and other not-for-profit organizations also use a lot of direct mail. direct mail A brochure or pamphlet that offers a specific good or service at one point in time.

B A R R O W , L O R I 7 4 7 7 B U ISBN 1-256-36591-2 Marketing: Real People, Real Choices , Seventh Edition, by Michael Copyright CHAPTER 14 |ONE-TO-ONE: TRADE PROMOTION, DIRECT MARKETING, AND PERSONAL SELLING 425 Just as with e-mail spamming, many Americans are overwhelmed with direct-mail offers—“junk mail”—that mostly end up in the trash. Traditional direct mail marketers are finding it increasingly difficult to get their promotional pieces to rise above the din of competitors’ offers. A perfect example of overwhelming direct mail was the seemingly endless offers for new credit cards that bombarded consumers earlier in the 2000s, often resulting in the receipt of multiple promotional letters the same week (or even the same day!). However, this trend was cut short by the tightened credit markets and new regula- tions of the financial markets that followed the recession that began in 2008. The direct- mail industry constantly works on ways to monitor what companies send through the mail and provides some help when it allows consumers to “opt out” of at least some mail- ing lists.

Telemarketing Telemarketing is direct marketing an organization conducts over the telephone (but why do they always have to call during dinner?). It might surprise you to learn that telemarketing actually is more profitable for business markets than for consumer markets. When business- to-business marketers use the telephone to keep in contact with smaller customers, it costs far less than a face-to-face sales call, yet still lets small customers know they are important to the company. The Federal Trade Commission (FTC) established the National Do Not Call Registry to al- low consumers to limit the number of telemarketing calls they receive. The idea is that tele- marketing firms check the registry at least every 31 days and clean their phone lists accordingly. Consumers responded very positively to the regulation, and over 100 million have posted their numbers on the Registry to date. Some direct marketers initially chal- lenged this action; they argued that it would put legitimate companies out of business while unethical companies would not abide by the regulation and continue to harass consumers.

However, the National Do Not Call Registry, along with similar operations at the state level, now is an accepted part of doing business through direct marketing. The FTC maintains a list of violators on its Web site. 8 The major issue on the horizon for telemarketers is whether they will be able to access cell phone numbers, as many consumers fear. In fact, rumors crop up from time to time that it’s now necessary to place your cell number on the Do Not Call lists to avoid telemarketing calls (so far, that’s not true). Especially for many young people, their cell phone often is their only phone, which makes the lack of penetration of this media a glaring hole in a telemar- keting strategy. 9 Direct-Response Advertising Direct-response advertising allows the consumer to respond to a message by immediately contacting the provider to ask questions or order the product. This form of direct marketing can be very successful. Although for many companies the Internet has become the medium of choice for direct marketing, this technique is still alive and well in magazines, newspa- pers, and television. As early as 1950, the Television Department Stores channel brought the retailing envi- ronment into the television viewer ’s living room when it offered a limited number of prod- ucts the viewer could buy when he or she called the advertised company. Television sales picked up in the 1970s when two companies, Ronco Incorporated (you may have seen Ron Popeil on TV) and K-Tel International began to hawk products such as the Kitchen Magi- cian, Pocket Fisherman, Mince-O-Matic, and Miracle Broom on television sets around the world. 10And who can forget the late Billy Mays’ enthusiastic hawking of Oxy Clean, Jupiter Jack, and nearly 20 other products on TV? Make a simple phone call and one of these won- ders could be yours. Direct-response TV (DRTV) includes short commercials of less than two minutes, 30-minute or longer infomercials, and the shows home shopping networks such as telemarketing The use of the telephone to sell directly to consumers and business customers.

direct-response advertising A direct marketing approach that allows the consumer to respond to a message by immediately contacting the provider to ask questions or order the product.

direct-response TV (DRTV) Advertising on TV that seeks a direct response, including short commercials of less than two minutes, 30-minute or longer infomercials, and home shopping networks. B A R R O W , L O R I 7 4 7 7 B U ISBN 1-256-36591-2 Marketing: Real People, Real Choices , Seventh Edition, by Michael Copyright 426 PART FOUR |COMMUNICATE THE VALUE PROPOSITION Ripped from the Headlines Ethical/Sustainable Decisions in the Real World Every once in a while in most Web surfers’ lives, a suggestion pops up on the screen that leads them to wonder: How did they know that about me? The mo- ment can seem magical, and a bit creepy. Consider this one. A female shopper at the retail site FigLeaves.com takes a close look at a silky pair of women’s slippers. Next a recommendation appears for a man’s bathrobe. This could seem terribly wrong—unless, of course, it turns out to be precisely what she wanted. This type of surprising connection will happen more often as e-mark eters adopt a new generation of predictive technology fueled by grow- ing rivers of behavioral data, from mouse clicks to search queries—all crunched by ever more powerful computers. So, why the bathrobe? The e-commerce data cruncher for FigLeaves has found that certain types of female shoppers at certain times of the week are likely to be shopping for men. As mar- keters scrutinize shoppers in greater detail, they’re edging closer to their ulti- mate goal: teaching computers to blend data smarts with something close to the savvy of a flesh-and-blood sales clerk. Just as in the customer’s first five minutes in a store when the salesperson is observing the customer’s body lan- guage and tone of voice, now machines are being taught to pick up those same insights from movements online. This dissection of online shopping comes amid growing fears about in- vasions of privacy online and especially concerns about social media sites like Facebook’s access to our personal data and online behaviors. But unlike the most controversial advertising technology, which tracks Web surfers’ wanderings from site to site, many of these “preference prediction” meth- ods limit their scrutiny to behavior on a retailer’s own Web page. Much of the analysis looks simply at the patterns of clicks, purchases, and other vari- ables, without including personal information about the shopper. In most cases, personal details are incorporated only if a customer registers on the site and supplies them. QVC and HSN broadcast. Top-selling DRTV product categories include exercise equipment, self-improvement products, diet and health products, kitchen appliances, and music. The primitive sales pitches of the old days have largely given way to the slick infomercials we all know and love (?) today. These half-hour or hour-long commercials re- semble a talk show, often with heavy product demonstration and spirited audience partici- pation, but of course they really are sales pitches. Although some infomercials still carry a low-class, sleazy stereotype, in fact, over the years numerous heavyweights from Apple Computer to Volkswagen have used this format.

M-Commerce One final type of direct marketing is m-commerce. The “m” stands for “mobile,” but it could also stand for massive—because that’s how big the market will be for this platform.

M-commerce refers to the promotional and other e-commerce activities transmitted over mobile phones and other mobile devices, such as smartphones and personal digital assis- tants (PDAs). With over 4.5 billion mobile phones in use worldwide—more and more of them Internet-enabled—it makes sense that marketers would want to reach out and touch this large audience. 11In fact, nearly 70 percent of the world’s population has a mobile phone today! In Russia there are far more mobile phones in use than there are people! The top five countries in total mobile phones in use are (the second number is the percentage of popula- tion with a mobile phone):

1. China—786 million, 59.6 percent 2. India—636 million, 53.8 percent 3. United States—286 million, 91.0 percent 4. Russia—214 million, 147.3 percent 5. Brazil—185 million, 96.6 percent 12 M-commerce through text messages (such as an ad for a concert or a new restaurant) is known as short-messaging system (SMS) marketing. In terms of unwanted “junk mail,” m-commerce has the same potential dark side as other forms of direct marketing such as snail mail and e-mail. And the rise of the all-in-one smartphone on which the user engages in 24/7 social net- working has created an up-and-coming industry of social networking activity tracking and infomercials Half-hour or hour-long commercials that resemble a talk show but actually are sales pitches.

m-commerce Promotional and other e-commerce activities transmitted over mobile phones and other mobile devices, such as smartphones and personal digital assistants (PDAs).

ETHICS CHECK: Find out what other students taking this course would do and why on www .mypearsonmarketinglab .com Should firms be able to use your online activities to attempt to predict your buying behavior? Does “being watched” (virtually at least) make you feel uncomfortable?

YES NO B A R R O W , L O R I 7 4 7 7 B U ISBN 1-256-36591-2 Marketing: Real People, Real Choices , Seventh Edition, by Michael Copyright CHAPTER 14 |ONE-TO-ONE: TRADE PROMOTION, DIRECT MARKETING, AND PERSONAL SELLING 427 analytics such as Google Analytics and similar programs. The feature on ethics and sustain- ability highlights the new-age science of predicting Web buying behavior. Personal Selling: Adding the Personal Touch to the Promotion Mix We saw in Chapter 13 that companies increasingly supplement tradi- tional advertising with other communication methods, such as public relations campaigns and various forms of social media, as they work harder and harder to cut through the clutter of competitors’ marketing communications. In this chapter, so far we’ve looked at two other forms of promotion—trade-directed sales promotion and direct marketing. Now we turn our attention to one of the most visible, and most expensive, forms of market- ing communication—personal selling. Personal selling occurs when a company representative interacts directly with a cus- tomer or prospective customer to communicate about a good or service. This form of pro- motion is a far more intimate way to talk to customers. Another advantage of personal selling is that salespeople are the firm’s eyes and ears in the marketplace. They learn which competitors talk to customers, what they offer, and what new rival goods and services are on the way—all valuable competitive intelligence. Many organizations rely heavily on personal selling because at times the “personal touch” carries more weight than mass-media material. For a business-to-business market situation, the personal touch translates into developing crucial relationships with clients. Also, many in- dustrial goods and services are too complex or expensive to market effectively in impersonal ways (such as through mass advertising). An axiom in marketing is the more complex, technical, and intangible the product, the more heavily firms tend to rely on personal selling to promote it . Personal selling has special importance for students (that’s you ) because many grad- uates with a marketing background will enter professional sales jobs. The U.S. Bureau of Labor Statistics estimates job growth of 9 percent for sales representatives in manufactur- ing and wholesaling between 2006 and 2016. For technical and scientific products, the growth projection rises to 10 percent. Overall, sales job growth ranks high among all occu- pations surveyed. 13Jobs in selling and sales management often provide high upward mo- bility if you are successful, because firms value employees who understand customers and who can communicate well with them. The old business adage “nothing happens until something is sold” translates into many firms placing quite a bit of emphasis on personal selling in their promotion mixes. And the sales role is even more crucial during tricky eco- nomic times, when companies look to their salespeople to drum up new business and to maintain the business they already have. Sold on selling? All right, then let’s take a close look at how personal selling works and how professional salespeople develop long-term relationships with customers.

The Role of Personal Selling in the Marketing Mix When a woman calls the MGM Grand Hotel in Vegas’ 800 number to book a room for a little vacation trip and comes away with not just a room but with show tickets, a massage booking at the hotel spa, and a reservation for dinner at Emeril’s, she deals with a salesperson. When she sits in on a presentation at work by a Web site renewal consultant who proposes a new content management system for her firm’s Web site, she deals with a salesperson. And when that same woman agrees over lunch at a swanky restaurant to invest some of her savings with a financial manager ’s recommended mutual fund, she also deals with a salesperson. personal selling Marketing communication by which a company representative interacts directly with a customer or prospective customer to communicate about a good or service. 3 OBJECTIVE Appreciate the important role of personal selling and how it fits into the promotion mix.

(pp. 427–431) B A R R O W , L O R I 7 4 7 7 B U ISBN 1-256-36591-2 Marketing: Real People, Real Choices , Seventh Edition, by Michael Copyright 428 PART FOUR |COMMUNICATE THE VALUE PROPOSITION Factors that Influence a Firm’s Emphasis on Personal Selling If the decision maker has a higher status within the organization If the purchase is a “new task” for the customer If the product is highly technical or complex If the customer is very large If the product is expensive If the product is a custom good or personalized service If there are trade-in products If negotiation is required If a push strategy is used Figure 14.3 Snapshot |Factors That Influence a Firm’s Emphasis on Personal Selling A variety of factors influence whether personal selling is a more or less important element in an organization’s overall promotion mix. For many firms, some element of personal selling is essential to land a commitment to purchase or a contract, so this type of marketing communication is a key to the success of their overall marketing plan. To put the use of personal selling into perspective, Figure 14.3 illustrates some of the factors that make it a more or less important element in an organiza- tion’s promotion mix. In general, a personal selling emphasis is more important when a firm engages in a push strategy , in which the goal is to “push” the product through the channel of distribution so that it is available to consumers. As a vice president at Hallmark Cards once observed, “We’re not selling tothe retailer, we’re selling through the retailer. We look at the retailer as a pipeline to the hands of consumers.” 14 Personal selling also is likely to be crucial in business-to-business contexts where the firm must interact directly with a client’s management to clinch a big deal—and often when intense negotiations about price and other factors will occur before the customer signs on the dotted line. In consumer contexts, inexperienced customers may need the hands-on as- sistance that a professional salesperson provides. Firms that sell goods and services con- sumers buy infrequently—houses, cars, computers, lawn mowers, even college educations—often rely heavily on personal selling. ( Hint: Your school didn’t pick just any student at random to conduct campus tours for prospective attendees.) Likewise, firms whose goods or services are complex or very expensive often need a salesperson to explain, justify, and sell them—in both business and consumer markets. If personal selling is so useful, why don’t firms just scrap their advertising and sales pro- motion budgets and hire more salespeople? There are some drawbacks that limit the role per- sonal selling plays in the marketing communication mix. First, when the dollar amount of individual purchases is low, it doesn’t make sense to use personal selling—the cost per con- tact with each customer is very high compared to other forms of promotion. Analysts esti- B A R R O W , L O R I 7 4 7 7 B U ISBN 1-256-36591-2 Marketing: Real People, Real Choices , Seventh Edition, by Michael Copyright CHAPTER 14 |ONE-TO-ONE: TRADE PROMOTION, DIRECT MARKETING, AND PERSONAL SELLING 429 mate that in 2010 the average total cost for a sales call with a consultative (problem-solving) approach to selling was about $350, and this cost will continue to increase at a rate of 5 percent per year. And, of course this figure is an average —depending on the industry, some sales calls are much more expensive to make. The per-contact cost of a national television commercial is minuscule by compari- son. A 30-second prime-time commer cial may run $300,000 to $500,000 (or even around $3 million during the Super Bowl), but with millions of viewers, the cost per contact may be only $10 or $15 per 1,000 viewers. 15For low-priced consumer goods, personal selling to end users simply doesn’t make good financial sense. Ironically, consumer resistance to telemarketing gives a powerful boost to a form of selling that has been around for a long time: direct selling. Direct selling is not the same thing as direct marketing . Direct sellers bypass channel inter- mediaries and sell directly from manufacturer to consumer through personal, one-to-one contact. Typically, indepen- dent sales representatives sell in person in a customer ’s home or place of business. Tupperware, Avon, Mary Kay, and the Pampered Chef are some well-known examples.

Many direct selling firms use a party plan approach where salespeople demonstrate products in front of gr oups of neighbors or friends. Direct selling is on a big upswing, with domestic sales volume doubling in the past 10 years to over $30 bil- lion annually. We’ll discuss direct selling in more detail in Chapter 16. 16 Technology and Personal Selling Personal selling is supposed to be, well, “personal.” By definition, a company uses personal selling for marketing communications in situations when one person (the salesperson) in- teracts directly with another person (the customer or prospective customer) to communicate about a good or service. All sorts of technologies can enhance the personal selling process, and clearly today the smartphone is the communication hub of the relationship between salesperson and client. However, as anyone making sales calls knows, technology itself can- not and should not replace personal selling. As we’ll discuss later in this chapter, today a key role of personal selling is to manage customer relationships —and remember, relationships occur between people, not between computers (as much as you love your Facebook friends or checking in on Foursquare). However, there’s no doubt that a bevy of technological advancements makes it easier for salespeople to do their jobs more effectively. One such technological advance is customer relationship management (CRM) software . For years now, account management software such as ACT and GoldMine has helped salespeople manage their client and prospect base. These programs are inexpensive, easy to navigate, and they allow salespeople to track all aspects of customer interaction. Currently, many firms turn to cloud computing CRM applications, which are more customizable and integrative than ACT or GoldMine, yet are less expensive than major companywide CRM installations. A market leader in such products is SalesForce .com , which is particularly user-friendly for salespeople. A key benefit of cloud computing versions of CRM systems is that firms “rent” them for a flat fee per month (at SalesForce .com, monthly prices are as low as $20 per user) so they avoid major capital outlays. 17Re- cently, some sales organizations have turned to a new-generation system called partner re- lationship management (PRM) that links information between selling and buying firms. PRM Salespeople—even the really energetic types—can make only so many calls a day. Thus, reliance on personal selling is effective only when the success ratio is high. Telemarketing, sometimes called teleselling, involves person-to-person communication that takes place on the phone. Because the cost of field salespeople is so high, telemarketing continues to grow in popularity (much to the dismay of many prospects when calls interrupt their dinner). Of course, as we’ve seen, no-call legislation and do-not-call lists at the state and federal levels have given consumers a powerful weapon to ward off unwanted telephone selling. Dmitriy Shironosov/Shutterstock B A R R O W , L O R I 7 4 7 7 B U ISBN 1-256-36591-2 Marketing: Real People, Real Choices , Seventh Edition, by Michael Copyright 430 PART FOUR |COMMUNICATE THE VALUE PROPOSITION differs from CRM in that both supplier and buyer firms share at least some of their databases and systems to maximize the usefulness of the data for decision-making purposes. Firms that shar e information are more likely to work together toward win–win solutions. Beyond CRM and PRM, numerous other technology applications en- hance personal selling, including teleconferencing, videoconferencing, and improved corporate Web sites that offer FAQ (frequently asked questions) pages to answer customers’ queries. Many firms also use intranets and blogs to facilitate access to internal and external communication. Voice-over Internet protocol (VoIP) —systems that rely upon a data net- work to carry voice calls—get a lot of use in day-to-day correspondence be- tween salespeople and customers. With VoIP, the salesperson on the road can just plug into a fast Internet connection and then start to make and receive calls just as if she is in the office. Unlike mobile phones, there are no bad re- ception areas, and unlike hotel phones there are no hidden charges. One popular VoIP product is Skype, whose tagline is “The whole world can talk for free.” According to its Web site, Skype “is a little piece of software that al- lows you to make free calls to other Skype users and really cheap calls to or- dinary phones.” Skype even offers bargain rates to fixed lines and cell phones outside the United States. 18 Thanks to Skype, webcams, instant messaging, and the like, customers of all types are becoming more comfortable with the concept of doing busi- ness with a salesperson who is not actually in the same room. As such, a good portion of the future of face-to-face sales calls may occur on your own com- puter screen. Consider the following hypothetical transaction related to buy- ing a set of solar panels for your roof—a complex and expensive purchase: The sales consultant calls at an appointed time. You open her e-mail message, click a link to start the presentation, and a picture of your roof appears, courtesy of satellite imag- ing. Colorful charts show past electricity bills and the savings from a solar-panel system. A series of spreadsheets examine the financing options available—and these are dynamic doc- uments, not static images, so the salesperson can tinker with the figures right before your eyes. Would more panels be justified? A few keystrokes later, new charts displayed the costs and savings. Could they be shifted to another part of the roof? With a mouse, she moves some black panels from the east to the west side. How about more cash upfront? She scrolls to the spreadsheets, highlights three payment options, and computes the numbers over the next 15 years. In less than an hour, the exchange is over. Perhaps for a few days or a week you mull over the choices and study the fine print in the contract, but the sale was essentially closed by the time you hung up the phone. You de- cided to make a major, complex purchase, worth thousands of dollars, without ever meet- ing anyone in the flesh and without holding any product in your hands. And unlike many purchases, you had no buyer’s remorse despite the fact it was done online—or maybe because it was online. 19 For years now, all of us have been shopping online, taking in the bargains and wide selection, usually for relatively straightforward products and services and without any human contact unless a problem arises with the ordering technology itself. The brave new world of virtual selling adds another dimension and is yet another example of how the Internet transforms business and remakes job descriptions. These more sophisticated virtual selling capabilities won’t replace all face-to-face salesperson/client encounters any more than e-commerce replaced brick-and-mortar retailers. But smart sales organi- zations can find the right blend of technology and personal touch, tailored to their par- ticular clientele and product offerings, that makes the most of building strong customer relationships. Salesforce.com is a popular CRM application. By permission, Salesforce.com B A R R O W , L O R I 7 4 7 7 B U ISBN 1-256-36591-2 Marketing: Real People, Real Choices , Seventh Edition, by Michael Copyright CHAPTER 14 |ONE-TO-ONE: TRADE PROMOTION, DIRECT MARKETING, AND PERSONAL SELLING 431 The Landscape of Modern Personal Selling Given what you’ve read about personal selling so far, you can begin to see why professional salespeople have very dynamic career opportuni- ties. In this section you’ll get a feel for what today’s jobs are like and two distinct ways salespeople approach their role. Types of Sales Jobs There are several different types of sales jobs from which you can choose, each with its own unique characteristics. Maybe you aspire to work in sales someday, or perhaps you’ve al- ready held a sales job at some point. Let’s look more closely at some of the different types of sales positions. Figure 14.4 summarizes the most important types. As you might imagine, sales jobs vary considerably. The person who processes a Dell computer purchase over the phone (if anybody orders them by phone anymore instead of online) is primarily an order taker —a salesperson who processes transactions the customer initiates. Many retail salespeople are order takers, but often wholesalers, dealers, and distrib- utors also employ salespeople to assist their business customers. Because little creative sell- ing is involved in order taking, this type of sales job typically is the lowest-paid sales position. In contrast, a technical specialist contributes considerable expertise in the form of prod- uct demonstrations, recommendations for complex equipment, and setup of machinery. The technical specialist provides sales support rather than actually closing the sale. She promotes the firm and tries to stimulate demand for a product to make it easier for colleagues to ac- tually seal the deal. Then there is the missionary salesperson whose job is to stimulate clients to buy. Like technical specialists, missionary salespeople promote the firm and encourage demand for its goods and services but don’t actually take orders. 21Pfizer salespeople do missionary sales work when they call on physicians to influence them to prescribe the latest and great- est Pfizer medications instead of competing drugs. However, no sale actually gets made un- til doctors call prescriptions into pharmacies, which then place orders for the drug through their wholesalers. 4 OBJECTIVE Identify the different types of sales jobs.

(pp. 431–433) The Cutting Edge When Your Salesperson Is an Avatar Spend some time on the Web site of Tekno Bubbles ( www.teknobubbles .com ), and you are sure to encounter Dr. Funk. An aging hippie with wild hair and a penchant for tie-dyed clothes, the doctor is a key member of the com- pany’s sales force. He greets visitors and describes the company’s soap bub- bles, which glow when exposed to black light. “We can get you hooked up with some bub bles so you can check them out for yourself,” Dr. Funk says as he directs visitors to the site’s online store. There, he will suggest complemen- tary items that can be found on the site, such as bubble-blowing machines and remote-con trolled timers. Dr. Funk doesn’t work in Tekno Bubbles’ St. Louis office—or, for that mat- ter, in any physical location. His sales pitch is exclusively online. That’s because Dr. Funk is an avatar , an animated online character used to represent a person or brand. Broad public awareness of just what an avatar is took a quantum leap with the success of its namesake movie directed by James Cameron, and now even many fuddy-duddy Baby Boomers understand. Originally confined to vir- tual worlds such as Second Life, avatars are increasingly making their way onto commercial Web sites as businesses seek new ways to interact with customers.

By performing tasks such as greeting visitors and fulfilling orders, avatars can enhance a Web site’s sales and service, reduce the costs of live customer sup- port and, as with Dr. Funk, provide a sense of personality and playfulness. In the first six months after Dr. Funk’s debut online sales have increased from 30 percent of Tekno Bubbles’ gross revenue to 50 percent. The company has also begun integrated marketing communication by using images of Dr. Funk in offline promotions, including trade show displays. The key is that he’s able to effectively touch the market the firm wants to touch. Still, avatars aren’t for everyone. They tend to work best when the Web site is a company’s main venue for purchases, lead gathering, or customer assistance. At least so far, they have been better suited for companies that sell to consumers rather than to other businesses. 20 order taker A salesperson whose primary function is to facilitate transactions that the customer initiates.

technical specialist A sales support person with a high level of technical expertise who assists in product demonstrations.

missionary salesperson A salesperson who promotes the firm and tries to stimulate demand for a product but does not actually complete a sale. B A R R O W , L O R I 7 4 7 7 B U ISBN 1-256-36591-2 Marketing: Real People, Real Choices , Seventh Edition, by Michael Copyright 432 PART FOUR |COMMUNICATE THE VALUE PROPOSITION Sales Jobs Missionary salesperson New- business salesperson Technical specialist Order getter Team selling Order taker Figure 14.4 Snapshot |Types of Sales Jobs A wide range of different types of sales jobs are available, each of which has different job requirements and responsibilities. The new-business salesperson is responsible for finding new customers and calls on them to present the company’s products. As you might imagine, gaining the business of a new customer usually means that the customer stops doing business with one of the firm’s competitors (and they won’t give up without a fight). New-business selling requires a high degree of creativity and professionalism, so this type of salesperson is usually very well paid. Once a new-business salesperson establishes a relationship with a client, he or she of- ten continues to service that client as the primary contact as long as the client continues to buy from the company. In that long-term-relationship-building role, this type of salesperson is an order getter . Order getters are usually the people most directly responsible for a par- ticular client’s business; they may also hold the title of “account manager.” 22 More and more, firms find that the selling function works best via team selling . A sell- ing team may consist of a salesperson, a technical specialist, someone from engineering and design, and other players who work together to develop products and programs that satisfy the customer ’s needs. When the company includes people from a range of areas it often calls this group a cross-functional team . Two Approaches to Personal Selling Personal selling is one of the oldest forms of marketing communication. Unfortunately, over the years smooth-talking pitchmen who will say anything to make a sale have tarnished its image.

Pulitzer Prize–winning playwright Arthur Miller ’s famous character Willie Loman in Death of a Salesman —a must-read for generations of middle- and high-school students—didn’t help. Willie Loman (as in “low man” on the totem pole—get it?) is a pathetic, burned-out peddler who leaves home for the road on Monday morning and returns late Friday evening selling “on a smile and a shoeshine.” His personal life is in shambles with two dysfunctional sons and a disaffected wife who hardly knows him. Great public relations for selling as a career, right? Fortunately, personal selling today is nothing like Miller ’s harsh portrayal. Selling has moved from a transactional, hard-sell approach to an approach based on relationships with customers. Let’s see how.

Transactional Selling: Putting on the Hard Sell Willy Loman practiced a high-pressure, hard-sell approach. We’ve all been exposed to the pushy electronics salesperson that puts down the competition when she tells shoppers that if they buy elsewhere they will be stuck with an inferior home theater system that will fall new-business salesperson The person responsible for finding new customers and calling on them to present the company’s products.

order getter A salesperson who works to develop long-term relationships with particular customers or to generate new sales.

team selling The sales function when handled by a team that may consist of a salesperson, a technical specialist, and others.

B A R R O W , L O R I 7 4 7 7 B U ISBN 1-256-36591-2 Marketing: Real People, Real Choices , Seventh Edition, by Michael Copyright CHAPTER 14 |ONE-TO-ONE: TRADE PROMOTION, DIRECT MARKETING, AND PERSONAL SELLING 433 apart in six months. Or how about the crafty used car salesman who plays the good cop/bad cop game: She gives you an awesome price, but then sadly informs you her boss, the sales manager, won’t go for such a sweet deal. These hard-sell tactics reflect transactional selling , an approach that focuses on making an immediate sale with little concern for developing a long-term relationship with the customer. As customers, the hard sell makes us feel manipulated and resentful, and it diminishes our satisfaction and loyalty. It’s a very short-sighted approach to selling. As we said earlier in the book, constantly finding new customers is much more expensive than getting repeat business from the customers you already have. And the behaviors transactional selling pro- motes (that is, doing anything to get the order) contribute to the negative image many of us have of salespeople as obnoxious and untrustworthy. Such salespeople engage in these be- haviors because they don’t care if they ever have the chance to sell to you again. This is re- ally bad business!

Relationship Selling: Building Long-Term Customers Relationship selling is the process by which a salesperson secures, develops, and maintains long-term relationships with profitable customers. 23Today’s professional salesperson is more likely to practice relationship selling than transactional selling. This means that the salesperson tries to develop a mutually satisfying, win–win relationship with the customer.

Securing a customer relationship means converting an interested prospect into someone who is convinced that the good or service holds value for her. Developing a customer rela- tionship means ensuring that you and the customer work together to find more ways to add value to the transaction. Maintaining a customer relationship means building customer sat- isfaction and loyalty—thus, you can count on the customer to provide future business and stick with you for the long haul. And if doing business with the customer isn’t profitable to you, unless you’re a charitable organization you would probably like to see that customer go somewhere else. The Creative Selling Process Many people find selling to be a great profession, partly because some- thing different is always going on. Every customer, every sales call, and every salesperson is unique. Some salespeople are successful primarily because they know so much about what they sell. Others are successful because they’ve built strong relationships with customers so that they’re able to add value to both the customer and their own firm—a win–win approach to selling. Successful salespeople understand and engage in a series of activities to make the sales encounter mutually beneficial. A salesperson’s chances of success increase when she undergoes a systematic series of steps we call the creative selling process . These steps require the salesperson to seek out po- tential customers, analyze their needs, determine how product attributes provide benefits, and then decide how best to communicate this to prospects. As Figure 14.5 shows, there are seven steps in the process. Let’s take a look at each.

Step 1: Prospect and Qualify Prospecting is the process by which a salesperson identifies and develops a list of prospects or sales leads (potential customers). Leads come from existing customer lists, telephone di- rectories, commercially available databases, and of course through diligent use of Web search engines like Google. The local library usually owns directories of businesses (including transactional selling A form of personal selling that focuses on making an immediate sale with little or no attempt to develop a relationship with the customer. 5 OBJECTIVE List the steps in the creative selling process.

(pp. 433–436) Prospecting and Qualifying Prospect and Qualify Preapproach Approach Sales Presentation Handle Objections Close Follow-up Figure 14.5 Process |Steps in the Creative Selling Process In the creative selling process, salespeople follow a series of steps to build relationships with customers. relationship selling A form of personal selling that involves securing, developing, and maintaining long-term relationships with profitable customers.

creative selling process The process of seeking out potential customers, analyzing needs, determining how product attributes might provide benefits for the customer, and then communicating that information.

prospecting A part of the selling process that includes identifying and developing a list of potential or prospective customers. B A R R O W , L O R I 7 4 7 7 B U ISBN 1-256-36591-2 Marketing: Real People, Real Choices , Seventh Edition, by Michael Copyright 434 PART FOUR |COMMUNICATE THE VALUE PROPOSITION those state and federal agencies publish) and directories of association memberships. Some- times companies generate sales leads through their advertising or sales promotion when they encourage customers to request more information. As you learned earlier in this chapter, trade shows also are an important source of sales leads, as are visits to your company’s Web site by potential customers. Accela Communica- tions is one company that tracks these responses for its clients in order to generate leads.

Sales organizations turn to Accela to monitor, analyze, and summarize visitors to a com- pany’s Web site—in essence, to develop prospect lists. Accela then turns these lists over to salespeople for follow-up by phone or in person. 24 Another way to generate leads is through cold calling , in which the salesperson simply contacts prospects “cold,” without prior introduction or arrangement. It always helps to know the prospect, so salespeople might rely instead on referrals . Current clients who are satisfied with their purchase often recommend a salesperson to others—yet another reason to maintain good customer relationships. However, the mere fact that someone is willing to talk to a salesperson doesn’t guaran- tee a sale. After they identify potential customers, salespeople need to qualify these prospects to determine how likely they are to become customers. To do this they ask questions such as the following:

• Are the prospects likely to be interested in what I’m selling?

• Are they likely to switch their allegiance from another supplier or product?

• Is the potential sales volume large enough to make a relationship profitable?

• Can they afford the purchase?

• If they must borrow money to buy the product, what is their credit history?

Step 2: Preapproach In the preapproach stage, you compile background information about prospective cus- tomers and plan the sales interview. Firms don’t make important purchases lightly, and it’s often difficult even to get an appointment to see a prospect. It’s foolish for a salesperson to blindly call on a qualified prospect and risk losing the sale because of a lack of preparation.

Salespeople try to learn as much as possible about qualified prospects early on. They may probe a prospect’s prior purchase history, current needs, or, in some cases, even try to learn about their personal interests. Salespeople can draw information about a prospect from a variety of sources. In the case of larger companies, they can find financial data, names of top executives, and other information about a business from outlets such as Standard & Poor’s 500 Directory or Dun & Bradstreet’s Million Dollar Directory . They can also find a great deal of information for the preapproach on customers’ Web sites. And the inside scoop on a prospect often comes from informal sources such as noncompeting salespeople who have dealt with the prospect before. Of course, if the salesperson’s firm has a CRM system, she can use it to see whether the database includes information about the prospect. Say, for example, a salesperson at Mike’s Bikes plans to call on a buyer at Greg’s Vacation Rentals to see about selling some new bikes for guests to use at Greg’s various resort properties. If Mike’s has had a CRM system in place for some time, any contacts with customers and potential customers (prospects) are recorded in the database. The salesperson can simply run an inquiry about Greg’s Vacation Rentals and with luck, the CRM database will deliver information on the company, prior purchases from Mike’s, when and why customers stopped buying from the company, and perhaps even the preferences of the particular buyer. preapproach A part of the selling process that includes developing information about prospective customers and planning the sales interview.

B A R R O W , L O R I 7 4 7 7 B U ISBN 1-256-36591-2 Marketing: Real People, Real Choices , Seventh Edition, by Michael Copyright CHAPTER 14 |ONE-TO-ONE: TRADE PROMOTION, DIRECT MARKETING, AND PERSONAL SELLING 435 Step 3: Approach After the salesperson lays the groundwork with the preapproach, it’s time to approach , or contact, the prospect. During these important first minutes several key events occur. The salesperson tries to learn even more about the prospect’s needs, create a good impression, and build rapport. If the salesperson found prospect Anne Fahlgren through a referral, she will probably say so to Anne up front: “Melissa Sabella with Prentice Industries suggested I call on you.” During the approach, the customer decides whether the salesperson has something to offer that is of potential value. The old saying “You never get a second chance to make a good first impression” rings true here. A profes- sional appearance tells the prospect that the salesperson means business and is competent to handle the sale.

Step 4: Sales Presentation Many sales calls involve a formal sales presentation , which lays out the ben- efits of the product and its advantages over the competition. When possible and appropriate, salespeople should incorporate a great PowerPoint presen- tation integrated with some sound and media into their sales presentations to jazz things up. The focus of the sales presentation should always be on ways the salesperson, her goods and services, and her company can add value to the customer (and in a business-to-business setting, to the customer ’s com- pany). It is important for the salesperson to present this value proposition clearly and to invite the customer ’s involvement in the conversation. Let the customer ask questions, give feedback, and discuss her needs. Canned ap- proaches to sales presentations are a poor choice for salespeople who want to build long-term relationships. In fact, sales managers rate listening skills, not talking skills, as the single most important attribute they look for when they hire relationship salespeople. 25In a sales call, it’s a good idea to put the 80/20 rule to work—that is, spend 80 percent of your time listening to the client and assessing his needs and only 20 percent talking (note: this rule-of-thumb is a spinoff of the 80/20 rule for market segmentation we discussed in Chapter 7).

Step 5: Handle Objections It’s rare when a prospect accepts everything the salesperson offers without question. The ef- fective salesperson anticipates objections —reasons why the prospect is reluctant to make a commitment—and she’s prepared to respond with additional information or persuasive ar- guments. Actually, the salesperson should welcome objections because they show that the prospect is at least interested enough to consider the offer and seriously weigh its pros and cons. Handling the objection successfully can move a prospect to the decision stage. For ex- ample, the salesperson might say, “Ms. Bloom, you’ve said before that you don’t have room to carry our new line of trail bikes, although you mentioned that you may be losing some sales by carrying only one brand with very few different models. If we could come up with an estimate of how much business you’re losing, I’ll bet you’d consider making room for our line, wouldn’t you?” Step 6: Close the Sale The win–win nature of relationship selling should take some of the pressure off salespeople to make “the dreaded close.” But there still comes a point in the sales call at which one or the other party has to move toward gaining commitment to the objectives of the call—presumably A good salesperson is well groomed and wears appropriate business dress. She doesn’t chew gum, use poor grammar or inappropriate language, mispronounce the customer’s name, or seem uninterested in the call. Visible tattoos, body piercings, and the like are controversial in professional selling. approach The first step of the actual sales presentation in which the salesperson tries to learn more about the customer’s needs, create a good impression, and build rapport.

sales presentation The part of the selling process in which the salesperson directly communicates the value proposition to the customer and invites two-way communication. Susan Chiang/Shutterstock B A R R O W , L O R I 7 4 7 7 B U ISBN 1-256-36591-2 Marketing: Real People, Real Choices , Seventh Edition, by Michael Copyright 436 PART FOUR |COMMUNICATE THE VALUE PROPOSITION a purchase. This is the decision stage, or close . Directly asking the customer for her business doesn’t need to be painful or awkward: If the salesperson has done a great job in the previous five steps of the creative selling process, closing the sale should be a natural progression of the dialogue between the buyer and seller. There are a variety of approaches salespeople use to close the sale: •A last objection close asks customers if they are ready to purchase, providing the sales- person can address any concerns they have about the product: “Are you ready to order if we can prove our delivery time frames meet your expectations?” • An assumptive or minor points close mean the salesperson acts as if the purchase is in- evitable with only a small detail or two to be settled: “What quantity would you like to order?” •A standing-room-only or buy-now close injects some urgency when the salesperson sug- gests the customer might miss an opportunity if she hesitates: “This price is good through Saturday only, so to save 20 percent we should book the order now.” When making such closes, salespeople must be sure the basis they state for buying now is truthful or they’ll lose a valuable relationship for the price of a one-time sale! Step 7: Follow-up Understanding that the process doesn’t end after the salesperson earns the client’s business is basic to a relationship selling perspective that emphasizes the importance of long-term satisfaction. The follow-up after the sale includes arranging for delivery, payment, and pur- chase terms. It also means the salesperson makes sure the customer received delivery and is satisfied. Follow-up also allows the salesperson to bridge to the next purchase. Once a re- lationship develops, the selling process is only beginning. Even as one cycle of purchasing draws to a close, a good salesperson already lays the foundation for the next one. Sales Management Few, if any, firms succeed with just one star salesperson. Personal sell- ing is a team effort that requires careful planning to be sure that the or- ganization makes salespeople available when and where customers need them. Sales management is the process of planning, implement- ing, and controlling the personal selling function. Let’s review some of the major decisions sales managers who oversee this function must make as Figure 14.6 outlines. Set Sales Force Objectives Sales force objectives state what management expects the sales force to accomplish and when. Sales managers develop sales force performance objectives such as “acquire 100 new cus- tomers,” “generate $100 million in sales,” or even “reduce travel expenses by 5 percent.” Firms that engage in relationship selling also state objectives that relate to customer satis- faction, loyalty, and retention (or turnover). Other common objectives are new customer de- velopment, new product suggestions, training, reporting on competitive activity, and community involvement. Sales managers also work with their salespeople to develop individual objectives. There are two types of individual objectives. Performance objectives are readily measurable out- comes, such as total sales and total profits per salesperson. Behavioral objectives specify the actions salespeople must accomplish, such as the number of prospects she should identify, close The stage of the selling process in which the salesperson actually asks the customer to buy the product. 6 OBJECTIVE Explain the role of sales management.

(pp. 436–439) follow-up Activities after the sale that provide important services to customers.

sales management The process of planning, implementing, and controlling the personal selling function of an organization.

B A R R O W , L O R I 7 4 7 7 B U ISBN 1-256-36591-2 Marketing: Real People, Real Choices , Seventh Edition, by Michael Copyright CHAPTER 14 |ONE-TO-ONE: TRADE PROMOTION, DIRECT MARKETING, AND PERSONAL SELLING 437 the number of sales calls, and the number of follow-up contacts she should make.

Create a Sales Force Strategy A sales force strategy establishes important specifics such as the struc- ture and size of a firm’s sales force. Each salesperson is responsible for a set group of customers—his or her sales territory . The territory struc- ture allows salespeople to have an in-depth understanding of cus- tomers and their needs through frequent contact, both business and personal. The most common way to allot territories is geographic to minimize travel and other field expenses. The firm usually defines a geographic sales force structure according to how many customers reside in a given area. If the product line is diverse or technically complex, however, a better approach may be to structure sales territories in terms of different classes of goods and services; this approach enables the sales force to provide more focused product expertise to customers. Kraft Foods has separate sales forces for its major product areas, such as beverages, cheese and dairy, and grocery items. Still another sales structure is industry specialization in which salespeople focus on a sin- gle industry or a small number of industries. Firms often refer to such large clients as key ac- counts or major accounts . P&G uses cross-functional key account teams to focus on each of its major customers. For Lakeland, Florida–based Publix Supermarkets (one of the top 10 ranked supermarket chains in the United States by revenue), P&G fields a team of over 100 people headed by a top-level executive—customer managers, accountants, logistics people, and more—all of whom reside right in Central Florida to be right where the Publix action is. The idea behind this concentration on key accounts is the old 80/20 rule again —that is, if 20 per- cent of your customers account for 80 percent of your sales (and profits), those 20 percent deserve the bulk of your personal selling attention. Putting salespeople out into the field is a very expensive proposition that greatly im- pacts a company’s profitability. Remember, cost-per-customer-contact is higher by a wide margin for personal selling than for any other form of promotion. Thus, it’s really important to determine the optimal number of salespeople you put into the field. A larger sales force may increase sales, but at what cost? A smaller sales force will keep costs down. But this lean and mean approach could backfire if competitors move in with larger teams; they will be in a better position to develop strong customer relationships because each of their salespeople doesn’t have to call on as many customers.

Recruit, Train, and Reward the Sales Force Because the quality of a sales force can make or break a firm, a top priority for sales man- agers is to recruit and hire the right set of people to do the job. The ideal candidates exhibit good listening skills, effective follow-up skills, the ability to adapt their sales style from sit- uation to situation, tenacity (sticking with a task), and a high level of personal organiza- tion. 26Companies screen potential salespeople to reveal these skills, along with useful information about interests and capabilities. Pencil-and-paper tests determine quantitative skills and competencies in areas that interviews can’t easily assess. Are successful salespeople born or made? Probably elements of both inherent ability and trainable skills contribute to career success. Sales training teaches salespeople about the organization and its goods and services and helps them to develop the skills, knowledge, and attitudes they require to succeed. And training doesn’t end once a person “graduates” into the organization. Professional development activities continually prepare salespeople per- sonally and professionally for new challenges such as promotions and management respon- sibilities. They try to develop the salesperson more broadly than knowledge or skills training. Many sales organizations turn to outside consultants to help them develop sales Recruiting, Training, and Rewarding the Sales Force Set Sales Force Objectives Create a Sales Force Strategy Recruit, Train, and Reward the Sales Force Evaluate the Sales Force Figure 14.6 Process |The Sales Management Process Sales management includes four major areas of decision-making. sales territory A set of customers, often defined by geographic boundaries, for whom a particular salesperson is responsible. B A R R O W , L O R I 7 4 7 7 B U ISBN 1-256-36591-2 Marketing: Real People, Real Choices , Seventh Edition, by Michael Copyright force training and development programs. Sometimes a boost in creative thinking from the outside can do wonders to develop more productive salespeople. Today, with budgets tighter than ever, sales organizations expect identifiable returns on investments in training, and outside firms often deliver these quantifiable results. Of course, a good way to motivate salespeople is to pay them well. This can mean ty- ing compensation to performance. A straight commission plan is based solely on a percentage of sales the person closes. Under a commission-with-draw plan , earnings come from commis- sion plus a regular payment, or “draw,” that may be charged against future commissions if current sales are inadequate to cover the draw. With a straight salary plan , the salesperson is paid a set amount regardless of sales performance. Sometimes a company augments a straight salary plan with a quota-bonus plan , in which it pays salespeople a salary plus a bonus for her sales that exceed an assigned quota or if she sells certain goods and services that are new or relatively more profitable. Sales contests provide prizes (cash or otherwise) for selling specific goods and services during a specific period and can kick-start a short-term sales boost. Popular prizes for con- test winners include cruises, resort vacations, and products winners select from prize cata- logs. However, it’s easy for a firm to overuse sales contests; these incentives might motivate salespeople to simply wait to sell some goods and services until the contest period kicks in, so in reality there is no net increase in sales. Although many salespeople like to work independently, supervision is essential to an effective sales force. Sales managers often require salespeople to develop monthly, weekly, or daily call reports , where they document information about customers they called on and how the call went. Today most salespeople generate these call reports electronically, often on their laptop computer as a part of the firm’s overall CRM initiative. They allow the sales manager to track what the salespeople do in the field, and they provide marketing managers with timely information about customers’ responses, competitive activity, and any changes in the firm’s customer base.

Evaluate the Sales Force A sales manager ’s job isn’t complete until she evaluates the total effort of the sales force.

First, it is important to determine whether the sales force meets its objectives. If it is not, the sales manager must figure out the causes. Is the problem due to flaws in the design and/or implementation of the sales force strategy? Or did uncontrollable factors con- tribute? An overall downturn in the economy such as the one that began in 2008 with the subprime mortgage loan crisis, a big drop in housing prices, and a huge escalation in the price of gasoline can make it impossible for the best sales force to meet its original sales objectives. Managers normally measure individual salesperson performance against sales quotas for individual sales territories, even when compensation plans do not include bonuses or commissions based on the quotas. They may also include quantitative measures such as number of sales calls and sales reports the group completed when they evaluate perfor- mance. In addition to quantitative measures, many firms also evaluate their salespeople on qualitative indicators of performance, such as salesperson attitude, product knowledge, and communication skills. Increasingly, as firms focus on relationship selling, several important customer metrics such as customer satisfaction, loyalty, and retention/turnover are key measures of superior salesperson performance. Finally, the company can consider the salesperson’s expense account for travel and en- tertainment since the best sales record can mean little to a company’s bottom line if the sales- person gouges the company with outrageous expenses. You think you’re creative when you 438 PART FOUR |COMMUNICATE THE VALUE PROPOSITION B A R R O W , L O R I 7 4 7 7 B U ISBN 1-256-36591-2 Marketing: Real People, Real Choices , Seventh Edition, by Michael Copyright CHAPTER 14 |ONE-TO-ONE: TRADE PROMOTION, DIRECT MARKETING, AND PERSONAL SELLING 439 spend money? Here are some classic expenses a few salespeople actually submitted, accord- ing to Sales and Marketing Management magazine: 27 • Chartering a private plane to make an appointment after missing a regularly sched- uled flight • A $2,300 round of golf for four people • A set of china for a salesperson’s wife to use for a client dinner party • Season baseball tickets for $6,000 • A three-day houseboat rental with a crew and chef for $30,000 Brand YOU ! Personal selling works! No one can sell your brand better than you can.

Sell yourself by connecting with people you know. Net- working helps you access the hidden job market . . . 80 percent of jobs are filled through networking. You know more people than you realize. And those people can lead you to more peo- ple. And before you know it, you’ll be interviewing! Master the skill of networking in person and on social networking sites in Chapter 14 of Brand You . Real People , Real Choices Here’s my choice. . . To learn the whole story, visit www.mypearsonmarketinglab.com. Why do you think Jeffrey chose option #2? Option Option How It Worked Out at Woodtronics Jeffrey went directly to the client with a mockup of the new Evolution platform. He didn’t let the architect know he had done this until he was confident that the client was completely satisfied with the new alternative.

Woodtronics got the sale; what’s more, the client decided to purchase the new product within a week of seeing the demo. Option B A R R O W , L O R I 7 4 7 7 B U ISBN 1-256-36591-2 Marketing: Real People, Real Choices , Seventh Edition, by Michael Copyright 440 PART FOUR |COMMUNICATE THE VALUE PROPOSITION 3. Objective Summary Appreciate the important role of personal selling and how it fits into the promotion mix.

Personal selling occurs when a company representative inter- acts directly with a prospect or customer to communicate about a good or service. Many organizations rely heavily on this approach because at times the “personal touch” can carry more weight than mass-media material. Generally, a personal selling effort is more important when a firm engages in a push strategy, in which the goal is to “push” the product through the channel of distribution so that it is available to consumers.

Today’s salespeople are less likely to use transactional selling (hard-sell tactics) in favor of relationship selling, in which they pursue win–win relationships with customers.

Key Term personal selling, p. 427 4. Objective Summary Identify the different types of sales jobs.

Order takers process transactions that the customer initiates. Technical specialists are very involved in giving product demon- strations, giving advice and recommendations, and product setup. Missionary salespeople work to stimulate purchase, but don’t take actual orders. New-business salespeople ,or order get- ters , are responsible for finding new customers and calling on them to present the company’s products. And finally, team selling has become very prevalent in many industries as a way to bring together the expertise needed to better satisfy customer needs.

Transactional selling focuses on making an immediate sale with little concern for developing a long-term relationship with the customer. It is sometimes called the “hard sell” approach. In con- trast, relationship selling involves securing, developing, and maintaining long-term relationships with profitable customers.

Developing a customer relationship means ensuring that you and the customer find more ways to add value over time.

Key Terms order taker, p. 431 technical specialist, p. 431 missionary salesperson, p. 431 (pp. 431–433) (pp. 427–431) 1. Objective Summary Identify the sales promotion elements for B2B.

A sales promotion is a short-term program designed to build in- terest in or encourage purchase of a product. Trade sales pro- motions come in a variety of forms. Some are designed as discounts and deals, including co-op advertising, for channel members and some are designed to increase industry visibility.

Approaches aimed at increasing industry visibility include trade shows, promotional products, point of purchase (POP) displays, incentive programs, and push money.

Key Terms trade promotions, p. 420 merchandising allowance, p. 421 case allowance, p. 421 co-op advertising, p. 422 trade shows, p. 422 promotional products, p. 422 point-of-purchase (POP) displays, p. 422 push money, p. 423 2. Objective Summary Understand the elements of direct marketing.

Direct marketing refers to any direct communication designed to generate a response from a consumer or business customer.

Some of the types of direct marketing activities are mail order (catalogs and direct mail), telemarketing, and direct-response ad- vertising, including infomercials and home shopping networks.

Key Terms direct marketing, p. 423 catalog, p. 423 direct mail, p. 424 telemarketing, p. 425 direct-response advertising, p. 425 direct-response TV (DRTV), p. 425 infomercials, p. 426 M-commerce, p. 426 (pp. 423–427) (pp. 420–423) Objective Summary Key Terms Apply Study Map CHAPTER 14 B A R R O W , L O R I 7 4 7 7 B U ISBN 1-256-36591-2 Marketing: Real People, Real Choices , Seventh Edition, by Michael Copyright CHAPTER 14 |ONE TO ONE: TRADE PROMOTION, DIRECT MARKETING, AND PERSONAL SELLING 441 new-business salesperson, p. 432 order getter, p. 432 team selling, p. 432 transactional selling, p. 433 relationship selling, p. 433 5. Objective Summary List the steps in the creative selling process.

The steps in the personal selling process include prospecting and qualifying, preapproach, approach, sales presentation, handling objections, close, and follow-up. These steps combine to form the basis for communicating the company’s message to the customer. Learning the intricacies of each step can aid the salesperson in developing successful relationships with clients and in bringing in the business for their companies.

Key Terms creative selling process, p. 433 prospecting, p. 433 preapproach, p. 434 (pp. 433–436) approach, p. 435 sales presentation, p. 435 close, p. 436 follow-up, p. 436 6. Objective Summary Explain the role of sales management.

Sales management includes planning, implementing, and con- trolling the selling function. The responsibilities of a sales man- ager include the following: creating a sales force strategy, including the structure and size of the sales force; recruiting, training, and compensating the sales force; and evaluating the sales force.

Key Terms sales management, p. 436 sales territory, p. 437 (pp. 436–439) Chapter Questions and Activities Concepts: Test Your Knowledge 1. Explain some of the different types of trade sales promo- tions marketers frequently use. 2. What is direct marketing? Describe the more popular types of direct marketing. 3. What is m-commerce? 4. What role does personal selling play within the marketing function? 5. What is relationship selling? How does it differ from trans- actional selling? 6. What is prospecting? What does it mean to qualify the prospect? What is the preapproach? Why are these steps in the creative selling process that occur before you ever even contact the buyer so important to the sale? 7. What are some ways you might approach a customer?

Would some work better in one situation or another? 8. What is the objective of the sales presentation? How might you overcome buyer objections? 9. Why is follow-up after the sale so important in relationship selling? 10. Describe the role of sales managers. What key functions do they perform? Activities: Apply What You’ve Learned 1. Assume that you are a member of the marketing depart- ment for a firm that produces several brands of household cleaning products. Your assignment is to develop recom- mendations for trade sales promotion activities for a new laundry detergent. Develop an outline of your recommenda- tions for these sales promotions. In a role-playing situation, present and defend your recommendations to your boss. 2. Timing is an important part of a sales promotion plan. Trade sales promotions must be properly timed to ensure channel members fully maximize the opportunity to sell your prod- uct. Assume that the introduction of the new laundry de- tergent in question 1 is planned for April 1. Place the activities you recommended in question 1 onto a 12-month calendar of events. (Hint: The calendar needs to start before the product introduction.) In a role-playing situation, pre- sent your plan to your boss. Be sure to explain the reasons for your timing of each trade sales promotion element. 3. Consider carefully the potentially annoying downsides of various forms of direct marketing to consumers. As a mar- keter, what would you do to ensure that your firm’s direct marketing efforts don’t turn customers off your product? B A R R O W , L O R I 7 4 7 7 B U ISBN 1-256-36591-2 Marketing: Real People, Real Choices , Seventh Edition, by Michael Copyright 4. For you personally, what are the pros and cons of personal selling as a potential career choice? Make a list under the two columns and be as specific as you can in explaining each pro and con. 5. Assume a firm that publishes university textbooks has just hired you as a field salesperson. Your job requires that you call on university faculty members to persuade them to adopt your textbooks for their classes. As part of your training, your sales manager has asked you to develop an outline of what you will say in a typical sales presentation.

Write that outline. 6. This chapter introduced you to several key success factors sales managers look for when hiring relationship salespeo- ple. Are there other key success factors you can identify for relationship salespeople? Explain why each is important. Marketing Metrics Exercise How does a firm know whether a salesperson is effective? Ob- viously, the short answer is that she produces high sales volume and meets or exceeds sales goals. But just increasing total dol- lar or unit sales volume is not always a good indicator of sales- person success. The problem is, everything else being equal, salespeople who are compensated strictly on sales volume will simply sell whatever products are easiest to sell to maximize to- tal sales. But these may not be the products with the highest profit margins, and they may not be the goods and services the firm identifies as key to future success in the market. Because of the problems with using raw sales volume as the sole indicator of salesperson success, some firms turn to a variety of other metrics, including input and output measures.

Input measures are effort measures—things that go into sell- ing, such as the number and type of sales calls, expense ac- count management, and a variety of nonselling activities such as follow-up work and client service. Output measures, or the results of the salesperson’s efforts, include sales volume but these also can be the number of orders, size of orders, number of new accounts, level of repeat business, customer profitabil- ity, and customer satisfaction. Ultimately, the best approach to measure salesperson suc- cess is to use a variety of metrics that are consistent with the goals of the firm, to ensure the salesperson understands the goals and related metrics, and to link rewards to the achieve- ment of those goals. If you were a professional salesperson, what type of met- rics would you prefer to be evaluated against? Why?

Choices: What Do You Think? 1. M-commerce allows marketers to engage in location com- merce when they can identify where consumers are and send them messages about a local store. Do you think con- sumers will respond positively to this? What do you think are the benefits for consumers of location commerce? Do you see any drawbacks (such as invasion of privacy)? 2. In general, professional selling has evolved from hard-sell to relationship selling. Do organizations still use the hard- sell style? If so, what types? What do you think the future holds for these organizations? Will the hard sell continue to succeed—that is, are there instances in which transac- tional selling is still appropriate? If so, when? 3. One reason experts cite for the increase in consumer on- line shopping is the poor quality of service available at re- tail stores. What do you think about the quality of service you get from most retail salespeople with whom you come into contact? What are some ways retailers can improve the quality of their sales associates? 4. Based on the salesperson compensation figures the chap- ter supplies, do you think professional salespeople are ap- propriately paid? Why or why not? What is it that salespeople do that warrants their compensation? 5. Would training and development needs of salespeople vary depending on how long they have been in the busi- ness? Why or why not? Would it be possible (and feasible) to have different training programs for salespeople who are at different career stages? 6. What would be the best approach for a sales manager to determine the appropriate rewards program to implement for her salespeople? What issues are important when she decides what rewards to offer? Miniproject: Learn by Doing The purpose of this miniproject is to help you understand the advantages of following the creative selling process.

1. With several of your classmates, create a new product in a category that most college students buy regularly (for ex- ample, toothpaste, shampoo, pens, pencils, soft drinks . . .

anything that interests you that might be sold through a drugstore like Walgreens). Make up a new brand name and some creative features and benefits of the new prod- uct you come up with. 2. Develop a plan for executing each of the steps in the cre- ative selling process. Carefully ensure that you cover all the bases of how you would go about selling your product to an organizational buyer at Walgreens for distribution to all stores. 3. Report on your plan to your class, and ask the other stu- dents for feedback on whether your approach will con- vince the Walgreens buyer to make a purchase. 442 PART FOUR |COMMUNICATE THE VALUE PROPOSITION B A R R O W , L O R I 7 4 7 7 B U ISBN 1-256-36591-2 Marketing: Real People, Real Choices , Seventh Edition, by Michael Copyright Marketing in Action Case Real Choices at Frito-Lay Chips, chips, and even more chips! This might be the mantra for Frito-Lay salespeople as they carry out their daily assignments.

Although it may not seem like it on the surface, it is a challenge to be effective in the salty snack sales environment. As with most forms of selling, the secret to success lies in finding ways to be both efficient and effective. There is only so much shelf space for all those tempting crunchy bags in grocery and con- venience stores, and lots of manufacturers that want their prod- ucts to be on them. The salty snack industry includes potato chips; tortilla chips; snack nuts and seeds (including corn nuts); popcorn; pretzels; extruded cheese; snacks; corn snacks; and other. Total retail sales in the United States totaled over $17 bil- lion in 2009. Frito-Lay is one of the world’s leading producers of salty snacks. Frito-Lay North America is a division of PepsiCo, Inc. Based in Plano, Texas, the company’s most popular brands include Fritos, Lay’s, Doritos, Cheetos, and Tostitos. In 1932, C. E. Doolin pur- chased the recipe for Fritos and began to sell corn chips in San Antonio from his Ford Model T. In the same year, Herman W.

Lay began his potato chip business in Nashville by purchasing a snack food manufacturer. The Frito Company and the H. W. Lay Company merged in 1961 to become Frito-Lay, Inc. Eventually, in 1965 Frito-Lay, Inc.

and the Pepsi-Cola Company combined and created PepsiCo, Inc. Today, PepsiCo is organized into four divisions: Frito-Lay North America, PepsiCo Beverages North America, PepsiCo In- ternational, and Quaker Foods North America. In the retail atmosphere, Frito-Lay faces competition from many sources. This includes large multinational companies such as ConAgra (DAVID Seeds, Crunch ‘n Munch, Orville Reden- bacher), Kraft Foods (Nabisco, Honey Maid), and Procter & Gamble (Pringles). In addition there are numerous regional manu- facturers such as Cape Cod Potato Chip (chips, popcorn), Snyder’s of Hanover (chips, pretzels), and Jay’s Foods (chips, popcorn). Relationships with retailers are critical as all these formida- ble competitors jockey for limited shelf space. The leadership of Frito-Lay’s sales organization believes that knowledge manage- ment is the key to success so that salespeople in the field can constantly update what they know about each store and tailor their offerings accordingly. The challenge is that important in- formation must be captured in many different places and sys- tems. This can inhibit the sharing of knowledge across members of the sales organization. Frito-Lay’s solution was to develop a knowledge manage- ment portal on the company’s intranet. The portal provides a central point of access to the database that integrates customer and internal corporate information. The goals for the Frito-Lay portal are to provide knowledge that is more efficient, make use of customer-specific data, and promote team collaboration.

Given the company’s size, this is no easy task. During the mid-2000s, the salty snack market grew slowly, and changes in consumers’ eating habits might provide an even slower future. A trend toward healthier snacking and concerns about weight loss will increase the competitiveness among the different snack food sales organizations. Salespeople have to continue to develop customer loyalty as consumers experiment with new products to enhance the at-home experience. Frito- Lay needs to decide just what pieces of information its sales force needs to know while not burdening them with too much data to be effective.

You Make the Call 1. What is the decision facing Frito-Lay? 2. What factors are important in understanding this decision situation? 3. What are the alternatives? 4. What decision(s) do you recommend? 5. What are some ways to implement your recommendation? Based on: Esther Shein, “Frito-Lay Sales Force Sells More Through Information Collaboration,” CIO.com , May 01, 2001 ( http://www.cio.com/ article/30167/Case_Study_Frito_Lay_Sales_Force_Sells_More_Through_Information_Collaboration ); Frito-Lay, Wikipedia , http://en .wikipedia.org/wiki/Frito-Lay (accessed July 14, 2010); Kat Fay, “Salty Snacks,” PreparedFoods.com , April 1, 2009 ( http://www .preparedfoods.com/Articles/Feature_Article/BNP_GUID_9-5-2006_A_10000000000000569180 ); Sonia Reyes, “Strategy: Frito-Lay Gets Wise to Rival’s Revamp,” Brandweek , June 21, 2004 ( http://www.allbusiness.com/marketing-advertising/branding-brand-development/ 4686710-1.html ). CHAPTER 14 |ONE TO ONE: TRADE PROMOTION, DIRECT MARKETING, AND PERSONAL SELLING 443 B A R R O W , L O R I 7 4 7 7 B U ISBN 1-256-36591-2 Marketing: Real People, Real Choices , Seventh Edition, by Michael Copyright