sales

SALES MANAGEMENT

Structure of a unit is as under:-

1) Introduction & objectives 2) 2-5 sections

3) Short answer questions(SAQ) 4) Summary

5) Keywords 6) References

7) Suggested readings

Module I- Sales Process and its Management

1) Introduction to sales management 1 - 17

2) Sales Process 18 - 32

3) Personal selling 33 - 47

4) Computer applications in sales management 48 - 63

Module II- Selling Skills

5) Communication skills 64 - 80

6) Sales Presentation 81 - 109

7) Negotiation Skills 110 - 123

8) Retail communication 124 - 140

Module III-People Issues in Sales management

9) Job analysis, recruitment & selection 141 - 159

10) Training the sales force 160 - 174

11) Compensation and motivation of sales force 175 - 187 12) Monitoring and performance evaluation 188 - 204

Module IV- Sales Organization and Planning

13) Sales Planning 205 - 218

14) Sales Organization 219 - 235

15) Sales forecasting and sales quotas 236 - 249

UNIT 1 INTRODUCTION TO SALES MANAGEMENT

Structure

1.1 Introduction

1.2 Marketing Approaches

1.3 Marketing and Sales

1.3.1 Good Selling Process 1.3.2 Sales approaches

1.3.2.1 Direct Sales 1.3.2.2 In-direct sales 1.3.3 Types of personal sales

1.4 Evolution of sales department

1.5 Components of the Marketing Mix

1.5.1 Personal Selling and Other Promotional Tools

1.6 Functions of the sales manager

1.7 Sales Management Model

1.8 Summary

1.9 Glossary/ Keywords

1.10 References

1.11 Suggested Readings

1.1 Introduction

“Sales management” as the term implies means management of sales. Often it is considered synonymous with the management of personal sales. It involves an understanding of the effort that goes into the management of the sales force and the various processes of sales.

Sales management initially was meant to be the direction of sales force personnel. Later the term took on a broader significance apart from personal selling and the term “sales management” included managing of all the sales related activities including below the line advertising, sales promotion, physical distribution, pricing and product merchandising.

The Definitions Committee of the American marketing association defined sales management as “ the planning , direction and control of personal selling, including recruiting, selecting, equipping, assigning, routing, supervising, paying and motivating as these tasks apply to the personal sales force”. However, we shall also include in-direct sales through channels within the ambit of sales management.

Objectives

After studying this chapter you will be able to:-

1) Identify clearly the differences between the functions of marketing and sales 2) Describe various marketing and sales approaches

4) Identify the various functions of a sales manager and his/her objectives

1.2 Marketing Approaches

Marketing is defined by the American Marketing Association [AMA] as "the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large."

Marketing deals with the company orientation towards the market place. It deals with mainly four concept’s namely the production concept', product concept, marketing concept and the selling concept.

1.2.1 Production concept

The production concept founded on the belief that the customers favor those products that are highly available and affordable to them. So the concept assumes that the cheap products are sold well and relies on the improved production and distribution activities. Companies try to attain profits by exploiting economies of scale. Improved production and distribution are emphasized rather than the quality or features of the product/service. This concept is also known as the manufacturing concept. This type of strategy for a business works well in the developing countries where the demand is more than the supply.

Important questions the firm has to address in this process are:- 1) Can the product be produced?

Marketing

Concepts

Production

Concept

Product

Concept

Selling

concept

Marketing

Concept

2) If the product can be produced, can it be done in required quantities?

China has oft practiced the production concept in making the goods/services available at all times at very low prices and increased efforts to compete in international markets. This concept is perfectly suitable when the company distributes the products/services for the masses and not to a specific target group. This concept works well when the demand for the product is high and the customer preference doesn’t change for a long period of time.

Production concept works perfectly fine for some companies especially in the fast moving consumer goods (FMCG) sector. However it was found later that some products did not sell adequately irrespective of all the measures taken by the production concept. Then this situation demanded another concept known as the product concept.

1.2.2 Product concept

Product concept relies on the assumption that the customers buy those products that offer the most quality, performance, and innovative features. This concept suggests that the quality of the product is an important factor in the customer buying process and customers would always prefer to buy products of superior quality.

Computer industry is a good example where the production concept worked earlier but later on product concept took over. Customers required more and more features and quality while choosing a computer/ laptop. As more and more companies joined this business and the foreign brands came in the local players had to adopt the product concept.

Quality however needs to be defined. Attributes of quality may differ from customer to customer. To some customers quality means faster processing technologies and to some it may be some other features in the product. So companies must take enough care in designing a product which would be in accordance with the quality parameters of the target group. Timing of the product in the market also plays a vital part in the success of a product. Sometimes technological or innovational products fail when they

are introduced in the markets and the customers are unaware of the benefits. So educating the customers before introducing a product is important.

For instance the Golden Eye technology in televisions was introduced by Videocon but the customers were clueless about what benefit it provides. After some time, when the customers understood about that technology, it was introduced by LG and it became a marketing success for its products.

In some industries the customer would not be able to understand the product benefits or may be lacking a little motivation to buy the product even if they know it’s necessary. In such cases product concept might fail to make the customer buy the product.

Hence the “Selling Concept” was adopted by some companies.

1.2.3 Selling Concept

This concept relies on the assumption that “We need to compel the customer to buy the product”, so the customer will buy the product only if the company aggressively promotes/sells their products/ services. This concept believes that customer is usually inert and would not buy the product/service if the choice is left to them. So the company would push its products/services towards the customers and push them to buy. Hence a strong network of sales force is created for this purpose and they convince the customers to buy the products/services through advertising and personal selling. This kind of approach worked well with products/ services like insurance, vacuum cleaners, water purifiers, and various other household items etc.

Important questions the firm has to address in this process are:- 1) Can the product be sold?

2) How much can we charge for the product or what can be the maximum discount that can be given and still have a decent profit?

This concept would work well for the first time sale to a customer who might take the product/service when persuaded by the sales representative. After buying the

product/service if the customer is not satisfied then he/she might not be interested in entertaining the sales person for the next time.

It was later realized that most of the customers will buy the products which they need and want. Hence the marketing concept has come into the picture.

1.2.4 Marketing concept

The marketing concept underlines the following principles:- 1) Identify the needs and wants of the customer

2) Design the products and services to fulfill the same

3) Use various promotion techniques to communicate the benefits of the product 4) Realizing the profit by satisfying customer needs over a long term

The marketing concept then is the management belief that customers will long those products that they need and what and that the key task of the management is to identify customer needs and wants and design products accordingly.

SAQ 1

1) Identify any two products for which you would prefer to follow the production concept?

2) Explain which concept would work well in selling a cell phone to a CEO of the company and to a small farmer?

3) Identify which model does Dell follow in selling the computer products and explain how it has benefited them?

1.3 Marketing Vs sales

Sales as a process implies exchanging the products or services in exchange for money in such a manner that what you get from it is more than what you put into it. In other

words, the difference between the realized sales price and the cost of manufacturing is the profit for the organization from sales.

Marketing on the other hand includes understanding the value proposition in the minds of the customer and designing the products and services accordingly.

1.3.1 Good Selling Process

Good Marketing makes sales easy. However, even when the marketing process is good, the sales process needs to be handled carefully.

Good selling implies:-

1) Identifying the right customer

2) Communicating the product benefits to the customers and 3) Exchange of goods/ services for money

Sales are the culmination of all the marketing efforts and in a nut shell, it is the exchange of good and services, for money. It may be said that marketing is all the activities conducted to prepare for sales. Sales are all the activities required to close the deal.

Clearly customers will buy those products which they need and also where the perceived value of the product is greater than the selling price of the product. The task of marketing is to enhance the value proposition in the minds of the customer and increase the perceived value.

It would be ideal if the customers came and demanded the product/ service. However the customers may not do so because of several reasons such as:-

1) He/ She doesn’t know that the product is available 2) May not know where the product is available 3) And have no idea of whom to contact

4) Have no clear idea of the value proposition and the benefits

5) May not be clear of the utility of the product in solving his / her problem The sales force then plays an important role such as:-

1) To reach out to the customer and inform him/ her about the product benefits 2) Make the product easily available to the customer

The product can be made easily available by the following methods:-

1) Meeting the customer on a one-one basis and delivering the product at the door step. This is referred to as personal sales.

2) Make the product available at place which is easily approachable by the customer. This is refereed to Indirect or channel sales.

Sales management then begins with identifying the process of sales. The sales strategy determines the route the sales would take.

1.3.2 Sales Approaches

Two possible approaches by which the sales would take place can be classified as follows:-

Depending upon the product and the approachability, needs and a affordability of the customer one of the above approaches would be followed by sales personnel

1.3.2.1 Direct sales approach may be:-

1) Selling to offices- (for examples, Office Automation Products)

Sales Approaches Direct sales Approach In-Direct sales Approach

2) Selling to Industries- (business to business –B2B) 3) Door-to-door selling

1.3.2.2 In-Direct sales approach

1) Company to retailer to customer

2) Company to wholesaler and then to retailer to customer

3) Company to wholesaler to distributor and then to retailer to customer

An attempt is made to introduce these various sales approaches, but the following text is primarily focused on personal selling.

The issues of channel management/ indirect sales approaches are also covered in the course work of “Distribution& Logistics” and “Supply Chain Management”.

1.3.3 Types of Personal Sales

Personal sales can be classified into broad areas like:- 1) Office sales

2) Industrial/ Institutional sales

(In some countries like India there is significant difference in the approaches to be followed for Industrial/ Institutional sales and the government sales)

3) Door-to-door sales

The kind of sales strategy to be adopted is the function of the product / service, the market, buying process, and the competition.

SAQ 2

1) If you were a sales person for agricultural products like fertilizers, quality seeds etc., which sales approach would best fit in and why?

2) In the above question, what steps would you follow if the customer has no knowledge about the benefits of your product?

1.4 Evolution of the sales department

As described by Richard (2001), before the Industrial revolution the small scale industries were the leaders of the market and selling the products / services was not much of a problem. More emphasis was given on manufacturing activities. The orders were in hand before the actual manufacturing process of those orders had started. Meeting the demand was a major problem.

In many firms a small team used to supervise all the business activities. There was no need of seperate teams for different functions like selling, marketing and manufacturing. All the tasks were performed by the team or sometimes, by a couple of individuals. Most of the time was spend on manufacturing. It was an ideal situation for most of the firms not to bother about the marketing and selling activities until the Industrial revolution began.

With the Industrial revolution, which began in 1760 in England and shortly after the American Revolution, in United States, the companies had started to focus on the expansion of their territory by finding new market places.

Factories were producing huge quantities of goods with the improved technology and machinery. The production process had become simple and now the main problem was what to do with excess surplus after meeting the domestic demand in nearby markets. The situation demanded for the expansion of their presence in new markets, crossing the boundaries of the cities, countries & continents.

With increasing presence in many countries, it became difficult to manage all the departments by a single individual as was the case before the industrial revolution. The size and volume of business had increased to such an extent that it became necessary to delegate the authority to others. This process encouraged in establishment of various

functional units like manufacturing, finance, marketing etc. Each and every department was to function independently and be supervised by a separate authority.

The creation of the marketing department has solved the problem of understanding the market place & helped in performing all activities to improve the market dominance of the products. With increasing markets and customers various sales divisions were setup. However a major issue of how to communicate with customer has to be perfected. This is where the roles of marketing mix and personal selling as a function came into the picture.

Let us understand what marketing mix is and the importance of its various components.

1.5 Components of the Marketing Mix

As you have already studied in marketing, marketing mix involves several components which can be understood by the following diagram.

(Sales management)

Marketing

Mix

Product

_Price

_Promotion

_Place

Advertising Public Relations Personal Selling Sales Promotion Internet Based promotions

The marketing mix consisting of various components plays an important role in establishing the market place/ dominance of a product.

According to the market needs the type of product, the pricing of product, the various promotion mechanisms to be used and the type of distribution network followed (place) should be decided.

Various tools of promoting a product include advertising, public relations, personal selling, sales promotion and Internet based promotions.

Personal selling can be understood as the one to one oral communication between the sales personnel and the target group in such a way that both the parties benefit from each other. The oral communication could be a personal meeting, a telephone conversation or by using latest trends in technology such video conferencing.

The benefits for a sale personnel would be in terms of financial reward for closing the sale successfully & the customer would be benefitted by the product/ service received. Often the objective of personal selling may not be to close a sale. Most of the time, objective may be to pass on the information about the products/ services to the target group. Maintaining a good relationship with the customer is often treated as one of the important objectives of the sales team.

1.5.1 Personal selling Vs Other Promotional tools

Let us now understand how the personal communication differs from other tools such as advertising, public relations, sales promotion and internet based promotion. We shall also understand the situations in which the personal selling would be preferred over other promotion tools and finally we shall discuss the disadvantages of the personal selling.

Personal selling is preferred in cases where the customer cannot be reached or communicated easily about the company product / services by other means, such as the rural areas where the television or internet is not available. Secondly in the cases where the target group might be a CEO of a company or a head of the institution, such customers cannot be communicated easily with other tools as compared to personal selling.

1.6 Functions of the sales manager

Any organization that has the sales people demands a sales manager. What does every sales manager have in common? They accomplish the tasks through their people and organizations. The sales manager is responsible for generating sales, profits & meeting the customer satisfaction levels as per the company objectives.

One manager, John Rozurat of W.W.Grainger, described management as “the art of getting things done through people”.

Charles Futrell(1998) describes the functions of the sales manager as follows:- 1) Planning :- Building a profitable customer oriented team 2) Staffing:- Hiring the right people to sell and lead

3) Training:- Educating sales personnel according to company objectives

4) Leading:- Guiding average people to perform at above average levels 5) Controlling:- Evaluating the past to guide the future

The outcome of these several functions would be the attainment of objectives such as:- 1) Achieving defined goals

2) Product sales and profits

3) Better Customer satisfaction levels 4) Efficiency and

5) Effectiveness

Sales management has several functions like planning, budgeting, recruiting and selection, training, motivating, compensation, designing territories & evaluating performance.

1.7 Sales Management Model

The 1st step “describing the personal selling function” deals with understanding the job activities and the sales process involved in personal selling

The 2nd step “Defining the strategic role of sales function” will deal with the corporate, business and marketing level strategic decisions which typically provide guidelines within which the sales manager and salespeople must operate.

Source: Thomas N. Ingram (1989)

The 3rd step “Designing the sales organization” deals with the importance of designing an effective sales organization which is necessary to implement the strategies successfully.

The 4th step “Developing the sales force” highlights the importance of right recruitment and selection methods and the need for proper training of the sales force personnel The 5th step “Directing the sales force” presents that hiring the best people for sales is one thing and directing their efforts to meet the sales organization goals and objectives is another. Sales managers spend a great deal of time in motivating, supervising and leading members of the sales force.

Describing

the personal

selling

function

Defining the

strategic role

of the sales

function

Designing

the sales

organization

Developing

the sales

force

Directing

the sales

force

Determining

sales force

effectiveness

and

performance

The 6th step “Determining sales force effectiveness and performance” deals with monitoring the progress of sales force to determine the effectiveness and performance. Developing forecasts, assigning quotas and budgets provides necessary information for the performance evaluation.

1.8 Summary

In this unit we understood the definition of sales management and the differences between marketing and sales. We highlighted various marketing approaches starting with the production concept, product concept, selling concept and finally the marketing concept and their role in sales generation. A good selling process is essential in making the sales easier by identifying the customer, communicating the benefits and exchanging the goods/services for money. For the sales process to be effective the sales force plays an important role in identifying the right approach to reach out to customers and make the sale. Later in this chapter we have studied the importance of the components of the marketing mix in establishing the market place and the critical role of personal selling played for the same. This unit also helped in understanding the role of the sales manager in planning, staffing, leading, training and controlling the sales force personnel. Finally in this unit we understood the sales management model which helps in managing the sales.

1.9 Glossary/ Keywords

1) Sales Promotion Activities, techniques and incentives that are directed towards customers with an intention to create consumer demand.

2) AMA American Marketing Association is a

professional association for marketers.

3) FMCG Fast moving Consumer Goods are the

products used by individuals or households which are used or replaced very fast by the

customers over a period of weeks, months of within a year. Some examples would be soft drinks, toiletries etc.

1.10 References

1. Tyagi C.L., Arun kumar (2004), “Sales Management”, Atlantic Publishers and Distributors, New Delhi, India.

2. Charles Futrell. (1998), “Sales Management: Teamwork, Leadership, and Technology (6th Ed.)”, The Dryden Press, Florida, USA.

3. Richard R. Still, Edward W. Cundiff, Norman A. P. Govoni (1998), “Sales management: decisions, strategies, and cases (5th Ed.)” Prentice-Hall International, New Jersey, USA.

4. Thomas N. Ingram, Raymond W. LaForge (1989), “Sales management: analysis and decision making”, The Dryden Press, New York, USA.

1.11 Suggested Readings

1. Douglas J. Dalrymple, William L. Cron, Thomas E. DeCarlo. (2004), “Sales Management”, John Wiley & Sons, New Jersey, USA.

2. Ralph W. Jackson, Robert D. Hisrich (1996), “Sales and Sales Management”, Prentice Hall, New Jersey, USA.

UNIT 2 SALES PROCESS

Structure

2.2 Marketing Strategy

2.2.1 Segmentation and Target Marketing

2.2.2 Determining Potential buyer and buyer group

2.3 Sales Approach

2.3.1 Typical Purchasing Process

2.3.2 Essential activities of Sales Process 2.3.2.1 Interest creation activities 2.3.2.2 Pre-purchase activities 2.3.2.3 Purchase activities 2.3.2.4 Post-purchase activities 2.4 Summary 2.5 Keywords 2.6 References 2.7 Suggested Readings

2.1 Introduction

The previous unit dealt with the introduction to “Sales management”. It highlighted the functions of marketing and sales, described various sales approaches and presented functions of the sales manager.

We will begin the unit by understanding various steps in marketing strategy and then deal with the sales personnel skills set and the various steps in the sales process. In this unit we will discuss about the sales process activities. We shall discuss some essential activities which need to be performed by the sales personnel in the sales process. The sales personnel help in creating customer value and competitive advantage to the product/service.

Irrespective of the nature of sale and the type of customer, the sales personnel should follow certain basic activities for successful closing of a sale. We will discuss the essential activities of the sales personnel in general and later on find out in depth how the sales process changes for different types of sales like direct and indirect sales.

Objectives

After studying this unit you will be able to:-

1) Define segmentation, potential buyer and buyer group for the product/ service 2) Understand the typical purchasing process of the customer

3) Identify essential activities involved in a sales process

4) Explain the critical role played by the sales person in handling the sales process

2.2 Marketing Strategy

Marketing strategy can be thought of as all the activities performed to use the company‟s limited resources to achieve the objectives marketing and sales and attain competitive advantage.

The first step includes identifying the product/ service. The product/ service is developed as per the company goals and the market needs. After identifying the product/ service, the next step is analyzing the market. This is where we begin to identify the customer for the product/service.

2.2.1 Segmentation and Target Marketing

Market segmentation is defined as “the process of dividing the heterogeneous market into homogeneous sub-units”. If we take the population of a country say India, it would be around 113 crores. For a consumer product let‟s say the tooth paste, the market is huge. However, the entire population would not be looking for the same type of features in the toothpaste. So we need to convert this heterogeneous group into homogeneous sub groups. Let us say, we can divide the entire population into two categories, with one category preferring ayurvedic/herbal toothpaste and the other category preferring non-ayurvedic toothpaste. This categorization will give an idea of the market segment which prefers your toothpaste. The need for segmentation is that the marketer is clear about where to compete and place the product/ service.

There are different bases for segmentation, namely:- a) Customer-based Segmentation

b) Product-based segmentation and c) Competition based segmentation

Generally there are two important factors before selecting the target segment. They are:-

a) Attractiveness of a market segment and

b) The strategic fit between the segment and the firm‟s objectives, resources, and capabilities.

Market Research will play an important role in finding the answers to the above two factors.

Once the segmentation has been carried out for the product/service, we can define the strategy using one or a combination of the following approaches:-

a) Standardization: - In this strategy, the firm maintains the same product, same price and same communication medium to all the segments.

e.g.:- Cold drinks will be priced same to either the rich people or the poor people.

b) Differentiation: - In this strategy the firm differentiates the product to cater the needs of different segment. The pricing would be different in this case.

E.g.:- The Indian Railways differentiates its service into several categories like AC 2-tier, 3-tier, Sleeper and general coaches depending upon the various segment needs.

c) Focus: - This is the combination of the above two strategies. In this the basic product remains the same with additional features for various segments to be added at an extra cost.

E.g.:- A given model of laptop will be priced same for all segments, but if the segment needs an up-gradation of features it would be done at an added cost. So using the above approaches, we market the product/ service.

2.2.2 Determining Potential Buyer and Buyer group

Determining potential buyer is more a marketing task than the function of a sales process. The potential buyers for a product/service can be arrived by market segmentation.

The buyer group may be different for the product category and a brand. For example, if we take the cell phone. Every person in the segment is a potential buyer of the cell phone. But the buyers are different for high end mobiles and low end mobiles within the segment. Another example can be thought of as a photo copier. Every office is a potential buyer of a photocopier but when it comes to brand the offices might go for a cheaper brand an expensive brand.

This is where the sales team comes into the picture in determining who the potential buyers for the brand are and the products associated with it.

The marketing group or the brand management should identify the potential buyers. They ought to give certain marketing inputs in the form of promotions. It helps in creating the awareness of the supplier and the brand to the potential buyer before the sales person contacts the buyer. All these activities are a part of marketing policies and approaches of the firm. The firm also has to provide the support material to the sales people in terms of brochures, literature etc

This is where the sales team begins its activities. When the sales team takes their responsibilities the first task is to find the customer, a process which we generally refer as “Suspect to Prospect through MAN approach”. MAN stands for Money, authority and Need respectively.

Every potential buyer may not be an actual buyer of the product. The potential buyer cannot purchase the product if he doesn‟t have the money, authority and the need. It is written in this order because it is easier to identify whether the person is having the money followed by whether he has the authority to buy and finally whether he has the need to buy, it.

Sales team needs to know how to assess whether the potential buyer has the money, authority and need. One cannot just ask the potential buyer whether he/she has the money. So, some parameters such as education, occupation, family status etc. needs to be analyzed to arrive at a conclusion whether the potential customer has the money to buy the product.

Similarly, the salesperson has to assess whether the potential buyer has the authority to buy the product/ service and does he/she have the need for the same.

Marketing would do this job at a macro level and sales would do this job at the micro level. Marketing identifies the target segment or potential buyers of the product/ service but at the level of individual potential buyers it the task of sales person to identify the needs and wants of the individual potential buyer.

SAQ 1

1) If you are the sales manager in your city for a firm selling laptops, what method would you follow in identifying the segments for your product and why?

2) Explain the importance of MAN approach in identifying the actual buyer for selling a high priced product like a luxury car.

2.3 Sales Approach

Once the sales team identifies the prospect, it‟s time to decide on the sales approach. The first step in the sales process is the pre-approach. Pre-approach would include the attire, presentation material, fixing an appointment and deciding what to do in the appointment like opening remarks etc. The objective of the pre-approach is the often data collection, knowing more about your prospect, the team involved in buying the product, the customer history and so on.

The sales team will always be able to sell better if they talk customer needs and not the features of the product/ service. This is referred to as term “FABing” which means converting features to attributes and attributes to benefits.

If you are selling the photocopier it would be advisable to talk about the customer benefits. You may start your discussion by saying “Last year the expense on photocopy is „X‟ amount, if you install the machine you would end up saving „Y‟ amount per annum”.

Now let us understand the typical purchasing process.

2.3.1 Typical Purchasing process

Every purchase has a process which can be understood by the following diagram.

Recognition

of needs

Evaluation

of options

Purchase

decision

Implementation

and evaluation

Most of the customers do not buy a product unless there is a need for it. The problem is that the customer often does not know what he/she needs. So in the first step of purchasing process one has to identify what the problem or need is.

In the second step “Evaluation of options” the customer would look for various competitive products or solutions for his problem. There might be a different criteria used by different customers. Some of them might be:-

a) Price: - Many customers use price as the differentiation criteria. Customers might go for a cheaper product rather than a costly one. This is seen more often in developing countries and less in developed countries. In this the sales person may be actively negotiating for a better price or give some discounts. Discounts play a major role in the successful closing of sale. But the sales person should have a clear idea of what could be the maximum discount allowed by the company for the product/service.

Some customers go on with the higher price products or some may buy the medium priced products. The choice would depend on the customer mindset.

b) Quality: - Here the customer would be preferring the best quality product and does not mind paying a little more. Quality might be different for different customers. For the customer, Quality may be associated with long life of the product, more features, best designs, better after sales service, and so on. Most of the customers associate quality with the brand. It is the role of the sales person to know what the customer means by a quality product and carry on with the sales process.

In the third step the purchasing decision will be taken by the customer. The role of a sales person is to make the purchasing process hassle free and convenient.

And the final step “Implementation and Evaluation” deals with the installation of the product and evaluating the value. If the customer evaluation is positive it would lead to another sale in the future.

These are the four steps in a typical purchasing process for every sale. The level of activities involved in each step differs for different types of sales like direct and indirect sales. For instance more activities might be involved in the first step (recognition of needs) for an industrial sale while compared to door-to-door sale. It is very important to know the kinds of activities involved in each of the steps for different types of sales.

2.3.2 Essential Activities of Sales Process

The sales process can be categorized into four main activities. Interest creation activities, pre –purchase activities, purchase activities and post activities. To convert the suspect to a prospect, each and every activity is important and needs to be performed successfully. These activities aim at serving customer better. The process is called sales process cycle.

Every sale has some essential activities to be performed by the sales team. Let us understand those activities with the help of the following chart.

Interest Creation

Activities

Post Purchase Pre-Purchase

Activities Activities

Purchase

Activities

Source: Sales Management, by Andris A. Zoltner , Prabhakant Sinha, Greggor A.

2.3.2.1 Interest Creation Activities

The first activity is interest creation. Once a potential customer is identified, he/she needs to be educated about the product/service you are offering. It is the job of the sales person to be prepared with the necessary literature, brochures and or presentations. If the product is a technical in nature, the aim of the sales person should be in explaining the benefits of the product to the customer and not its technical features. In this activity, creating awareness about the brand or product should be the main aim than pushing for sales. The sales person needs to understand the customer in this phase and identify his/her problem and provide the necessary information documents which the customer may request. Various promotional techniques can be used for interest creation. Some of the ways in which companies create interest in the product/service would be:-

 Giving full access to the software features and capabilities for a limited time period like 1 month. During this time the customer can evaluate the product and then buy it. This is usually prevalent in firms selling software products.

 Distributing fee trial packs are along with other products. This is the case with firms selling products like soaps, shampoo, toothpaste etc.

 Offering free test drive option to the customer, so he/she can purchase only if they are satisfied in case of high – value product like automobiles.

 Coining motivational quotes. “Why should boys have all the fun” (Hero Honda‟s “Pleasure”) implies that girls are entitled to same freedom as men and driving the scooter is symbol of freedom and liberty.

2.3.2.2 Pre-purchase Activities

Having created interest in the brand/ product in the first activity, it is time for moving on to the next activity by the sales person. In this process we assume that the customer is actively considering various product offerings and comparing them. This activity aims at describing the product or service features to the extent possible. Much emphasis is laid on demonstrating the capabilities of the company and or the product. Here, the sales

person takes on an active role in assessing the customer needs and helping them in problem solving.

2.3.2.3 Purchase Activities

Having presented a solution to the customer problems, it is time for the sales person to push for closing. Here a lot of activities happen both, from the sales person‟s end and the customer‟s end. Sales person‟s role lies in negotiating, bidding, finalizing the terms and condition of the sale. The customer evaluates various proposals, negotiates and finalizes the payment. It is not necessarily required that the same person or company who initiated the pre-purchase activities would be involved in purchase activities. Some of the processes may be outsourced to other agents.

Source: The complete guide to accelerating sales force performance, by Andris A. Zoltner , Prabhakant Sinha, Greggor A. Zoltners, page no: 31

This table explains how the different stages in sales process are handled by the company sales force and the selling partner. To sell an IBM product, an IBM sales representative is involved in interest creation and pre-purchase activities like explaining the features, capabilities and benefits of the product and how the product would be an advantage to the customer in solving his problems. In the later stages like purchase activity, the IBM sales person would handover the lead to a reseller business partner to complete the purchase and post-purchase activities and technical support may be provided by IBM team when required.

Companies may also decide to handle all the activities from interest creation to post-purchase. Most of the companies who adopt the outsourced model that have several advantages and disadvantages.

Interest Creation Pre-purchase Purchase Post-purchase

IBM IBM direct

sales person

Business Partner (reseller)

Business partner does delivery and installation IBM may provide technical support

Advantages of Outsourced selling (Partner, reseller & distributor)

Customer relationships: If the reseller or partner has good communication and negotiating skills, the chance of closing a sale is high.

Financial Costs: If the partner charges a percentage of sales made, the financial and selling risk of the firm is reduced.

Product variety: A distributor can acts as a one-stop solution for all customer requirements. If your company is good in manufacturing microphones/headsets only, then you can take the help of the distributor who would be dealing with the computer products. The chance of your product sale is higher when the customer comes for purchasing a computer/laptop and buys your key board as an accessory.

 Variable capacities: If demand of a product/service increase, company can‟t increase the sales force to sell the products and fire them when demand decreases. So, in peak demand season the distributors can help in selling your products/service to the customers.

Disadvantages of Outsourced selling (Partner, reseller & distributor)

 Conflicts: Conflicts can arise when deciding which customers to be served and which territories should be assigned. The company may not be able to force the reseller to follow its sales strategies.

 Control: Outsourced selling cannot be controlled like personal sales team of the company. Companies may not be able to keep track of the reseller performance in selling the goods/services. Reseller may be interested in his own profit and may encourage the customer to buy other products as he/she may receives more share/profit/commission by selling other products.

2.3.2.4 Post-purchase Activities

The post purchase activity begins after successful closure of the sale. This phase includes delivery of the product/ service, installation (if required), providing more

information about the features and finally collecting the payment. This phase can also include after-sales service. The primary objective of this phase is to win customer loyalty so that he/she would be a regular customer of the brand/product.

As discussed earlier, some functions in this stage like providing information, delivery of product and installation can be done by the company itself or with the help of a reseller. After sales service plays an important role in creating the customer loyalty. It can be as simple as addressing the customer problem on the telephone line or may be a personally visiting the customer premises to resolve an issue. In B2B deals, post-purchase activities can include installing the product or service and then providing training for the uses of the product/service of the company until they understand the new product/service.

Understanding the post-purchase behaviour by the sales team is an important task if the company looks for repeated business for a long term relationship with customer.

.

Source: Small business management: an entrepreneurial emphasis By Justin Gooderl

Longenecker, Carlos W. Moore, J. William Petty, Leslie E. Palich, page no: 298

This model explains that activities like post purchase dissonance is a type of cognitive dissonance which would arise after the purchase decision is made and customer has

Usage “I found another

for use…”

Post-purchase

Dissonance

“Did I buy the right one?”

Purchase “This is the one

I want”

Product disposal “Can I trade this in?”

Consumer Complaints “I’m calling the

store.”

No Purchase

Repurchase

Positive Evaluation “It works well”

Negative Evaluation “It doesn’t work well”

thoughts of other products as an alternative. This can create a negative effect on the evaluation and satisfaction level with the product/ service. So, sales people should try to find ways of maintaining this cognitive dissonance among customers.

SAQ 2

1) If you are in need of an anti-virus product, identify the typical purchasing process you would follow.

2) If you are a sales representative for kitchen chimney products, what sort of interest creation activities would you employ if the customer is not interested?

2.4 Summary

In the previous unit, we discussed various marketing and sale approaches followed by the companies. In this unit we have understood the importance of segmenting and targeting in identifying the customers. We have understood how the customer would purchase the product/service starting with the recognition of needs, evaluating options, making the purchase decision and finally implementation and evaluation of the product after it is delivered by the sales representative. It is the job of the sales person to help the customer in handling the purchasing process of the customer. We studied the essential activities of the sales person in handling the customer and making a deal. We understood how interest can be created in the product/service in various ways. After the interest is created it is time for the sales representative to handle the pre-purchase activities like giving sufficient information about the product/service and describing the benefits. The next stage would be purchase activities where the sales representative would be aiming at closing the deal successfully by negotiating and finalizing the payment terms. Finally the post purchase activities would include delivering the product/service, collecting the payment as per the terms and providing after sales service. Finally, we discussed that for repeated business with customers, it has become extremely important to handle the post-purchase behaviour of the customer as more and more alternative products/services are available for customer.

2.5 Keywords

1) Reseller Company or an individual who purchases the products/ service with an intention of selling them to other customers on behalf of the company.

2) Potential Buyer Buyer who is interested in buying your product/service, but may not necessarily buy it.

2.6 References

1. Andris A. Zoltners, Prabhakant Sinha, Greggor A. Zoltners (2001), “The complete guide to accelerating sales force performance”, Amacon, New York, USA.

2. Justin Gooderl Longenecker, Carlos W. Moore, J. William Petty, Leslie E. Palich (2006), “Small business management: an entrepreneurial emphasis (13th Ed.)”, South Western, USA.

3. Rajan saxena (2006), “Marketing Management (3th Ed.)”, Tata Mcgraw-Hill, New Delhi, India.

4. William L. Cron, Thomas E. Decarlo (2006), “Dalrymple’s Sales Management (9th Ed.)”, John wiley & Sons, New Delhi, India.

2.7 Suggested Readings

1. Ralph W. Jackson, Robert D. Hisrich (1996), “Sales and Sales Management”, Prentice Hall, New Jersey, USA.

UNIT 3 PERSONAL SELLING

Structure

3.2 Personal selling as a marketing communication tool

3.2.1 Personal selling and other communication tools 3.2.2 Advantages and Disadvantages of personal selling

3.3 Personal selling activities

3.3.1 Pre-approach activities 3.3.2 Approach activities 3.3.3 Presentation activities 3.3.4 Objection Handling 3.3.5 Closing the sale 3.3.6 Follow up activities

3.4 Summary 3.5 Keywords 3.6 References

3.1 Introduction

In the previous unit, we examined a typical purchasing process of the customer and the essential activities of a sales process. In this unit we will study about the steps involved in handling the personal sales. We first define personal selling and understand how it is differs from the other marketing communication activities like advertising, public relations, sales promotions and direct marketing.

Personal selling is one of the oldest communication techniques practiced by companies. Personal communication involves a person-to-person communication and is considered to be one of the best marketing tools due to the involvement of human element which helps to build up a long-term relationship with the customer understand the various activities involved and understand the importance of customer relationship management for future sales potential. Not every marketing communication tool is the best at all times. In this unit we shall understand the advantages and disadvantages of personal selling. Personal selling would achieve success easily when it is supported by other marketing tools like advertising or Public Relations.

Objectives

After studying this unit you will be able to:-

1) Define personal selling and how it differs from other marketing communication tools

2) Explain the advantages and disadvantages of personal selling 3) Understand various activities involved in handling personal sales.

4) Understand the importance of customer relationship management, in obtaining future sales opportunities.

3.2 Personal Selling as a marketing communication tool

Definition: Personal selling can be viewed as a marketing communication tool that

involves a one-to-one communication, which can happen in the form of face-to-face communication, over the telephone line, through video conferencing or by an email.

3.2.1 Personal selling vs. other communication tools

Personal selling is different from other marketing tools such as advertising, sales promotions etc. Advertising is a communication tool which targets many consumers simultaneously. Unlike advertising, personal selling is targeted at an individual prospect and develops the relationship. Advertising aims at a group and is non personal where the communication primarily relies on the media.

AMA defines sales promotion as “Media and non-media marketing communication employed for a pre-determined, limited time to increase consumer demand, stimulate market demand or improves product availability”. The major difference between sales promotion and personal selling is that the latter is a non-personal way of communicating with the customer.

3.2.2 Advantages and disadvantages of personal selling

Every communication tool serves the purpose of the company’s objective to increase its sales. However, in doing so, some communication tools work better than others for the business. Each and every tool like personal selling, advertising, sales promotions etc have their advantages and disadvantages.

Advantages of Personal Selling

a) Flexibility in delivering the message

If the customer doesn’t understand the message conveyed by the sales representative, then the message can be modifies and conveyed to the customer again. Since a sales representative interacts with one potential customer at a

time the messages can be tailored and delivered as per the customer needs. This flexibility is not available in advertising which happens through the television, newspapers, magazines, window displays etc.

b) Efficient way of communication

Personal sales is a two way communication process which allows for the efficient dialogue between the customer and the sales representative. It would be easy to know whether the customer has really understood the communicated message about the product/ service. The feedback would be immediate by the customer in personal selling, which would helps the sales representative to know whether the sales approach is working or not change the approach accordingly. In other promotional tools like advertising which rely on one way communication, would not guarantee that the customers have understood the communicated message.

c) Building long term relationships

Being a two-way & one-to-one communication, personal selling certainly has an added advantage over other communication tools in building long lasting relationships of customer.

d) Better access to various target segments

Not all the target groups can be reached with advertising, sales promotions, and public relations. In such cases personal selling would help to reach out to the customer and inform about the product/ service. For instance if the company deals with B2B markets or with the CEO of a company, personal selling would be a better communication tool than advertising or sales promotion. In B2B markets, the sales process involves a lot of communication time and hence a high level of two way interaction is required making the personal sales a practical communication tool.

In personal selling, greater amount of complex information like technical features of the product can be conveyed easily in comparison to other communication tools. Since numerous meetings can happen between the customer and the sales representative, there is ample time available to explaining all the features of the product.

Disadvantages of Personal Selling a) High costs per sale

Personal selling can’t be applied to all the products even though it might be efficient in building the long lasting relationship with the customer. Cost per sale plays an important role in deciding the personal selling as a communication tool by the companies. Personal selling would be applied if the cost per sale is justified like Insurance products, loan products, credit card sales, personal banking products, high value kitchen appliances like dish washers, water purifiers, chimneys etc., in which the benefits from the customer to the company are more than the costs that are incurred for the sale to happen. Low value products can not be dependent on personal selling unless it is a repeat purchase by the customer and long-term profit is justified for the cost incurred.

b) Misunderstanding by the customer

Many people prefer to buy the product/service from a store rather than buying it from a sales representative who visits home. These customers might have experienced the aggressive behaviour of sales people in the past and may be determined not to buy any product from them. Customer might lose trust on the sales people due to this aggressive behaviour, Hence, it is the responsibility of the sales people to focus in making the customer happy rather than pushing aggressively for the sale.

SAQ 1

1) Explain the benefits of using personal selling as a communication tool for selling loan products.

2) If you are the sales manager for a FMCG product like tooth paste, which one would you prefer among personal selling or advertising to increase the sales? Explain the reason for your preference.

3.3 Personal Selling process activities

Sales representatives of a company would have to follow a sales method, which help in dealing better with the customer. Various stages are involved in conducting a prospect to a buyer of the product/ service.

Personal selling generally involves six steps as described below:- a) Pre-approach activities

b) Approach activities c) Presentation d) Objection handling e) Closing the deal f) Follow up

The above mentioned steps are just a general way of understanding and the number of steps may vary from company to company. Let’s understand these in detail.

3.3.1 Pre-approach activities

This includes all the activities a sales representative would perform before actually meeting the prospect. These activities may include the following:-

 Knowing the details about the product/ service which is to be sold  Knowing about the company which the product/ service represents

 Knowing the details of the prospect like name, family background, income status, employment, credit history etc

 Knowing the right place and time to meet the customer

 Identifying which products/ services are to be presented to the prospect and keeping sufficient manuals/ technical documents

The level of activity depends upon the type of customer or market. If the sales are for the B2B market, then sales representative needs to have all the necessary documents which clearly explain all the technical details or benefits about the product/ service. If the sales are for the high value products like loan products, then knowing the credit history of the prospect is an important task. Knowing the right time, place and approach will be important if he/she is selling to top-level corporate like CEO of a company. Often people encounter sales representatives who come to sell the product/ services without even knowing the complete benefits or technical details. It is the job of the sales representative to clearly know the benefits or details of the product and also the about the company which they work for.

We already studied in the previous unit that the actual closing of the sale may not be necessarily handled by company’s sales representative. The sales process may be outsourced where the reseller will sell you the product/ service. In such cases the reseller must have a clear idea about the company for which he/she is selling the product/ service.

3.3.2 Approach activities

After identifying the prospect and gathering necessary information, it is time to interact. It is said that the first impression would last longer and is critical for any future meetings. The aim of the sales representative should be in gaining attention of the customer and stimulate his interest in the product/ service. Opening remarks would play a major role interest creation. Sales representative start introducing his/her name and the company which they represent. Later on, they proceed with the product/ service which the sales representative have in to offer. Interest can be created by citing product benefits, giving referrals, repeated calling etc. In B2B markets, if you are the sales representative selling a workstation to the IT firm, a single meeting wouldn’t be enough in getting to the presentation stage, so repeated calling would be required. It is the aim of the sales

representative to create enough interest to transit to the presentation stage. In brief the task of a sales representative in this stage can be summed up as following:-

 Gaining prospect attention

 Interest creation in the product/ service

 Gathering more information about the prospect  Successful transition to the presentation stage

3.3.3 Presentation activities

This is the stage where the sales representative will work to his level best to convert the prospect to a customer. The desire for the product/ service needs to be created by handling the presentation carefully. So this is a critical stage and if the presentation is not done effectively, the prospect might not be interested in listening to the presentation. We need to set the environment in the first few minutes of the presentation and get a positive impression. Often when we walk into an office for presentation, the prospect would be busy in middle of some work, so it’s very important to get his attention in the first few minutes. Just as people often judge the book by its cover, in the same way looking at the sales representative people decide sometimes whether to entertain the presentation or not. Attire and grooming of the sales representative like clothing and grooming are very important.

It is important to deal with a positive attitude while making the presentations. If you are dealing with PowerPoint slides, then there are some general guidelines which you have to follow in making the slides. We shall discuss more about this stage in subsequent units. Finally, to sum up, the important activities that you as a sales representative would perform in the presentation stage are as follows:-

 Introduce yourself and the company by giving a business card  Create an atmosphere for gaining the attention of the prospect

 Deal ethically with a positive attitude and never give any negative comments like those who didn’t buy this product/ service are suffering and so on

 If you require more information about the prospect company then state the reason for the same. For instance, if you want to know the number of staff or the type of customers handled by the prospect, then provide a reason for the same.  Ask some interesting questions in between just to check whether the prospect is

really listening to what you say in the presentation

In most of the cases, presentation stage would is not said to be successfully completed if the objections that arise from the prospect side are not handled properly. So in the next stage we understand about the objection handling.

3.3.4 Objection Handling

Handling sales objections is as important as making a good presentation for the prospect. Objection handling is about handling the objections of the prospect when he/she says no the product/ service stating a reason. The prospect may say no, due to some of the following reasons:-

 The product/ service which is offered is more expensive than other similar products in the industry

 Prospect may not interested in particular feature of the product/ service  Prospect may not have fully understood the benefits

 Prospect might not be interested in making a decision in buying a product in the first meeting itself

 Prospect might be willing to test you or need more information on the product/ service to be satisfied

It is the job of the sales representative to know the exact reason for the objection and handle it carefully. “Prevention is better than cure”, it makes sense in this context as it is better to handle the presentation well, before discussions lead to the above mentioned objections by the prospect. So it is important that the sales representative have a check-list of the possible objections which can arise during the presentation. It is also important that the companies provide the checklist and train its sales persons in handling situations when the objections arise.

Sometimes even a well trained sales person might go wrong in handling the objections as he/she might lose temper or may be for some other reason. So it is very important to know the ways in which the objections can be handled.

Darryl Davis in his book “How to be a power agent in real estate” describes Ten Commandments of handling objections. Some of them are as follows:-

 Objections shouldn’t be taken personally

 Objections should be looked as an opportunity to increase your skill set in handling them. As Warren Buffet who is the greatest investor and one of the richest persons in this world says in his autobiography, “ success is a terrible teacher, because you only learn from your failures”

 Take your time when handling objections and do not rush into giving an answer for the objection.

 The better you present, the less number of objections arise in the later stage of your presentation.

So objections should be thought of as an opportunity in gaining more attention of the prospect and should be handled carefully. After the objections are handled properly there should a smooth transition into the next stage “closing the deal”

3.3.5 Closing the deal

After successful presentation and effective objection handling it is time for the sales representative to close the deal by obtaining a purchase commitment from the customer. Various closing techniques can be employed by the sales representative in requesting an order for the product/ service. Sales representative must know the right time for closing the deal during the presentation. If closing technique is used at an appropriate time during the presentation, an objection may arise from the prospect. Sales representative can know the right time by observing the prospect carefully and looking for some buying signals from prospect such as:-

 Positive statements about the product/ service

 Enquiry about other customers who are using the product/ service  Willingness to test the product/ service