Chapter 19: Managing Personal Communications: Direct Marketing and Personal Selling
LEARNING OBJECTIVES
After reading this chapter, students should:
q Know how companies can use integrated direct marketing for competitive advantage
q Know how companies can do effective e-marketing
q Know what decisions companies face in designing a sales force
q Know how companies can manage a sales force efficiently
q Know how salespeople can improve selling, negotiating, and relationship marketing skills
CHAPTER SUMMARY
Direct marketing is an interactive marketing system that uses one of more media to effect a measurable response or transaction at any location. Direct marketing, especially electronic marketing is showing explosive growth.
Direct marketers plan campaigns by deciding on objectives, target markets and prospects, offers, and prices. This is followed by testing and establishing measures to determine the campaign’s success.
Major channels for direct marketing include face-to-face selling, direct mail, catalog marketing, telemarketing, interactive TV, kiosks, Web sites, and mobile devices.
Interactive marketing provides marketers with opportunities for much greater interaction and individualization through well-designed Web sites as well as online ads and promotions.
Sales personnel serve as a company’s link to its customers. The sales rep is the company to many of its customers, and it is the rep who brings back to the company much-needed information about the customer.
Designing the sales force requires decisions regarding objectives, strategy, structure, size, and compensation. Objectives may include prospecting, targeting, communicating, selling, servicing, information gathering, and allocating. Determining strategy requires choosing the most effective mix of selling approaches. Choosing the sales-force structure entails dividing territories by geography, product, or market (or some combination of these). Estimating how large the sales force needs to be involves estimating the total workload and how many sales hours (and hence salespeople) will be needed. Compensating the sales force entails determining what types of salaries, commissions, bonuses, expense accounts, and benefits to give, and how much weight customer satisfaction should have in determining total compensation.
There are five steps involved in managing the sales force: (1) recruiting and selecting sales representatives; (2) training the representatives in sales techniques and in the company’s’ products, policies, and customer-satisfaction orientations; (3) supervising the sales force and helping reps to use their time efficiently; (4) motivating the sales force, balancing quota, monetary rewards, and supplementary motivators; and (5) evaluating individual and group sales performance.
Effective salespeople are trained in the methods of analysis and customer managements, as well as the art of sales professionalism. No approach works best in all circumstances, but most trainers agree that selling is a seven-step process: prospecting and qualifying customers, preapproach, approach, presentation and demonstration, overcoming objectives, closing, and follow-up and maintenance.
OPENING THOUGHT
Students should be very familiar with the marketing systems described in this chapter, especially Internet shopping. The challenge to the instructor in this chapter is ensuring that the students understand that Internet marketing (e-marketing) is just one of the many different avenues available to marketers trying to reach their target markets. Students may be predisposed to believe that “all” marketing or the “future” of marketing is via the electronic channels. The instructor should encourage in-class discussions on this position and he/she is encouraged to take the “defensive” position to help the students understand the many varied levels of business and consumer marketing.
For those students who are not currently sales people, or are not interested in a career in sales, their opinions, and views of salesmanship (derived from personal experiences, TV, and other forms of communication) can be an interesting source of discussion. Some students will believe that “all salesmen lie.” The section of this chapter concerning the sales force may present a challenge to the instructor in disproving or refuting these, common assumptions about salespeople long enough to communicate the material. The instructor is encouraged to spend sufficient time on this section to show/demonstrate to the students the role that the sales force plays in the overall marketing communications mix for many firms. Inviting sales managers and their sales people in the class as guest speakers will help communicate the professionalism and difficulty of this profession.
TEACHING STRATEGY AND CLASS ORGANIZATION
PROJECTS
1. At this point in the semester-long project, students who have decided to market their product/service through direct market channels should submit their proposals. All other groups must decide at this point if they will use a direct sales force and if so to outline the specifics (including financials) for this option.
2. Market demassification has resulted in an ever-increasing number of market niches and the use of direct marketing to reach these niches is growing. In small groups (five students suggested as the maximum), have students collect as many direct marketing advertising pieces of information sent to them over the course of a month during the semester. After collecting the catalogs, credit card offers, e-mail notices, and other forms, students are to evaluate the effectiveness of these techniques in causing them to purchase. Which one(s) of these direct market techniques do they feel is the most successful (caused a purchase) or least effective (caused irritation to them) and, why? What can astute marketers do to increase the effectiveness of the direct marketing?
3. Sonic PDA Marketing Plan Many marketers have to consider sales force management in their marketing plans. The high cost of maintaining a direct sales force and the need to establish multiple channels of distribution have led some companies to include online, mail, and telephone sales for some of their personal selling efforts. In your marketing role at Sonic, you are planning a sales strategy for the new PDA. After reviewing your decisions about other marketing mix activities, answer these questions about personal selling:
· Does Sonic need a direct sales force, or can it sell through agents and outside representatives?
· Toward whom should Sonic’s selling activities be focused?
· What kinds of sales objectives should Sonic set for its sales personnel?
· What role should e-marketing play in the new PDA launch?
· What training will sales representatives need to sell the Sonic 1000?
Summarize your answers in a written marketing plan or type them into the Marketing Mix, Marketing Organization, and Sales Forecast sections of Marketing Plan Pro.
ASSIGNMENTS
Small Group Assignments
1. The direct market offering, according to the text, consists of five elements—the product, offer, medium, distribution method, and creative strategy. Have the students collect direct marketing offerings (sent to them, their families, and close friends). On a scale of 1-5 (1 being does not work, 5 being works very well), rank each of these offerings in terms of these five elements. What is the group’s consensus as to which offers works the best (and worse) and why?
2. Most managers agree that to increase the motivation of their salespeople they have to reinforce the intrinsic and extrinsic rewards offered. However, this is not a universally accepted opinion. Many managers use one type of reward almost exclusively in their motivation techniques. Students should interview three sales managers and ask them if they emphasize intrinsic or extrinsic rewards in their salesperson’s motivation? Which method do they personally feel is the most effective and why? Which method do they wish they did a better job in and why? From this research, can the students form a casual relationship between the industry, competitive nature of the industry, and the motivation techniques used?
Individual Assignments
1. The Marketing Memo entitled, The Public and Ethical Issues in Direct Marketing, illustrates some of the darker techniques of direct marketing. In a research paper, students are to comb the Federal Trade Commission’s Web site, Consumers Report, and other appropriate Internet sites, and document, which industries and industry practices are consumers complaining the most about, and students should speculate why direct marketers continue these practices.
2. Dell ® Computers has begun setting up kiosks demonstrating their products in regional malls across the country in hopes of attracting consumers to their brand by allowing them to “try before they buy.” Consumers are then directed to the company’s Web site to place an order. How effective do you believe this type of direct marketing will have/is having on Dell’s business? Can this strategy work for other “direct marketers”? And if so, for whom?
Think-Pair-Share
1. In the Marketing Insight, entitled, Principles of Customer-Orientated Selling, the authors have developed a method that he calls SPIN selling. Using this method, divide the group into sets of buyers and sellers for a series of “mock” role-plays. The product is an advanced form of computer software called “NOW!” that increases customer relationship management to a new level.
Students are to assume the role of a salesperson calling on Jones Inc., which is a firm employing 50 salespeople, but currently does not use any customer relationship software. Students are to “sell” the “buyer” on the advantages of “NOW!” by demonstrating situation, problem, implication, and need-payoff questions. Students should reverse roles at appropriate time intervals so that each student has the opportunity to “play” buyer and seller.
Questions for the class: How effective did you find the SPIN method to be in your “selling situation”? How difficult is it to frame questions in terms of situation, problem, implication, and need-payoff? Do you believe that the SPIN method works?
2. Infomercials can be found selling almost everything possible! As a group, have the student’s videotape three different infomercials and critically evaluate the effectiveness of these commercials in light of the five elements of the direct market offering. Which ones (one) do the students believe is the most (least) effective and why?
MARKETING TODAY—CLASS DISCUSSION TOPICS
Your company sells computer-related equipment to the home and small business market primarily through independent sales representatives. Your annual sales are approaching $2 million, however, recently you have become dissatisfied with the performance of the independent representatives. Your customers are broken down as follows: 1,000 customers nationwide—500 “A” customers, 200 “B” customers, and 300 “C” level customers, selling $500/sales call at a commission rate of 10 percent.
You feel that your sales might increase if you developed your own internal sales force.
In your calculations, you estimate that each one of your sales representative would be able to call on four customers/day/4 days per week and sell an average of $700 per call.
Using the information from this chapter, define the following:
a. Selecting the sales force—what selection criteria do you need?
b. How much training would you provide your sales force?
c. Define the “role” of the proposed sales representative from the six options given in the chapter.
d. What should the sales-force objectives and strategies be? What size of sales force is needed—using the workload approach method is this realistic?
e. Choose a sales force compensation method—fixed or variable and can you do it for the same rate that you are paying the independent representatives?
f. Managing the sales force—What is the number of managers needed?
g. Should you just stick with your independent sales representatives and devise increased bonus opportunities instead? What are some of the other non-financial considerations that should enter into your decision?
END-OF-CHAPTER SUPPORT
MARKETING DEBATE—Are Great Salespeople Born or Made?
One difference of opinion with respect to sales concerns the potential impact of training versus selection in developing an effective sales force. Some observers maintain that the best salespeople are “born” that way and are effective due to their personalities and all the interpersonal skills they have developed over a lifetime. Others contend that application of leading-edge sales techniques can make virtually anyone a sales star.
Take a position: The key to developing an effective sales force is selection versus the key to developing an effective sales force is training.
Pro: Selection is definitely the number one consideration in choosing salespeople in today's business. There is an old adage: “hire for personality, train for skill.” Salespeople occupy a role in the marketing mix called the “boundary spanner” that is they are the link between the company and the customer. In these roles, the salesperson is subjected to enormous amount stress to please both the customer and be fair to the company. In addition, salespeople must endure absence from family, travel difficulties, and time management issues. Selecting a person based upon their ability to handle these stresses, and have the personality skills of likability, resourcefulness, listening, and problem handling/decision-making/solution providing included can only be accomplished by selecting the right person from the start.
In addition, salespeople must communicate trust, be trustworthy, ethical, and honest because so much of their dealing with customers/clients depends upon these characteristics. One cannot be expected to “train” for honesty, nor can one be expected to train a person in his /her ethical behavior. These are traits formed from birth and can only be found during the selection process.
Con: This is an old position, perhaps true when salespeople had only one function—to sell and the selling process consisted mainly of convincing clients/customers of their products by the primary use of personality, persistence, and patience. Today, the role of the salesperson is much more complex and complicated. Selling skills today, involve problem identification, listening skills, and a host of other “trainable” skill sets, more than they consist of being the “likable fellow” or “best joke teller” of the past. All of the skills needed by successful salespeople can be taught, including persistence and patience.
In today’s complicated business environment with sales people assuming more and more of the role as consultant, and account manager the attributes for success in these roles requires a different combination of skills—skills that can be taught to anyone who is interested enough to learn and become competent in their execution.
MARKETING DISCUSSION
Pick a company and go to their Web site. How would you evaluate the Web site? How well does it score on the 7Cs design elements: context, content, community, customization, communication, connection, and commerce.