Chapter 13 Communicating Customer Value: Personal Selling and Direct Marketing Previewing the Concepts: Chapter Objectives 1. 2. 3. 4. 5.

Discuss the role of a companys salespeople in creating value for customers and building customer relationships. Identify and explain the six major sales force management steps. Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing. Define direct marketing and discuss its benefits to customers and companies. Identify and discuss the major forms of direct marketing. JUST THE BASICS Chapter Overview This chapter continues the discussion of communication methods begun in Chapter 12. It focuses on personal selling and direct marketing. Personal selling is the interpersonal arm of marketing communications in which the sales force interacts with customers and prospects to make sales and build relationships. Direct marketing consists of direct connections with carefully targeted consumers to both obtain an immediate response and cultivate lasting customer relationships. Selling is one of the oldest professions in the world. Today, most salespeople are welleducated, well-trained professionals who work to build and maintain longer-term customer relationships. They listen to their customers, assess customer needs, and organize the companys efforts to solve customer problems. The sales force serves as a critical link between a company and its customers. A sales force can be organized such that it has a territorial structure. In this structure, each salesperson is assigned to an exclusive geographic area and sells the companys full line of products or services to all customers in that territory. A product sales force structure is one in which the sales force sells along product lines. In a customer sales force structure, the sales force is organized along customer or industry lines. Many companies, particularly those that sell a wide variety of products to many types of customers over a broad geographic area, use a complex sales force that combines several types of structures. Personal selling consists of a seven-step process. The first is prospecting and qualifying, followed by the preapproach, approach, presentation, handling objections, closing, and follow-up. All of this should lead to long-term customer relationships.

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Direct marketing consists of direct connections with carefully targeted individual consumers to both obtain an immediate response and cultivate lasting customer relationships. Most companies still use direct marketing as a supplementary channel or medium for marketing their goods. However, for many companies today, direct marketing is more than thatit constitutes a new and complete model for doing business. Effective direct marketing begins with a good customer database. This database is an organized collection of comprehensive data about individual customers or prospects, including geographic, demographic, psychographic, and behavioral data. The database can be used to locate good potential customers, tailor products and services to the special needs of targeted consumers, and maintain long-term customer relationships. There are several forms of direct marketing, including telephone marketing, direct mail marketing, catalog marketing, direct response television marketing, and kiosk marketing. A very powerful approach for many companies is integrated direct marketing, which involves using carefully coordinated multiple-media, multiple-stage campaigns. Direct marketers and their customers usually enjoy mutually rewarding relationships. Sometimes, however, a darker side emerges. The aggressive and sometimes shady tactics of a few direct marketers can bother or harm consumers, giving the entire industry a black eye. Direct marketers know that, left untended, such problems will lead to increasingly negative consumer attitudes, lower response rates, and calls for more restrictive state and federal legislation. Chapter Outline 1. Introduction a. Perhaps no industry felt the recent economic slowdown more than the technology sectortotal information technology spending has been flat for several years. But despite the slump, CDW Corporation, the nations largest reseller of technology products and services, is thriving. b. The company owes its success to its highly effective clicks and people direct marketing strategy. CDWs direct model combines good oldfashioned high-touch personal selling with a modern high-tech Web presence to build lasting one-to-one customer relationships. c. Whereas many of CDWs competitors chase after a relative handful of very large customers, CDW has traditionally targeted small and midsize businesses (SMBs). These smaller customers often need lots of advice and support. d. The major responsibility for building and managing customer relationships falls to CDWs sales force of nearly 1,880 account managers. Each customer is assigned an account manager, who helps the customer select the right products and technologies and keep them running smoothly.

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e. f. g.

Account managers do more than just sell technology products and services. They work closely with customers to find solutions to their technology problems. Customers who want to access CDWs products and expertise without going through their account manager can do so easily at any of several CDW Web sites. When someone says salesperson, you may still think of the stereotypical traveling salesmanthe fast-talking, ever-smiling peddler who travels his territory foisting his wares on reluctant customers. Such stereotypes, however, are sadly out of date. Today, like CDWs account managers, most professional salespeople are well-educated, well-trained men and women who work to build valued customer relationships.

2.

Personal Selling a. Sales forces are found not only in business organizations that sell products and services, but also in many other kinds of organizations. 1. Colleges use recruiters to attract new students. 2. Churches use membership committees to attract new members. 3. Hospitals and museums use fund-raisers to contact donors and raise money. 4. The U.S. Postal Service uses a sales force to sell Express Mail and other services to corporate customers.

Applying the Concept Do student groups on campus have a sales force? How do they gain new members considering that one-quarter of them leave every year? The Nature of Personal Selling b. The people who do the selling go by many names: salespeople, sales representatives, account executives, sales consultants, sales engineers, agents, district managers, marketing representatives, and account development reps are a few of the names. c. The term salesperson covers a wide range of positions. 1. At one extreme, a salesperson might be largely an order taker, such as the department store salesperson standing behind the counter. 2. At the other extreme are order getters, whose positions demand the creative selling of products and services. Use Key Term Salesperson here.

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The Role of the Sales Force d. Personal selling is the interpersonal arm of the promotion mix. It involves two-way, personal communication between salespeople and individual customers. 1. It can be more effective than advertising in more complex selling situations. 2. The sales force serves as a critical link between a company and its customers. i. They represent the company to customers. ii. The salespeople also represent customers to the company, acting inside the firm as champions of customers interests and managing the buyer-seller relationship. 3. Salespeople need to be concerned with more than just producing salesthey should work with others in the company to produce customer value and company profit. Use Chapter Objective 1 here. Use Discussing the Issues 1 here. 3. Managing the Sales Force a. Sales force management is the analysis, planning, implementation, and control of sales force activities. The major sales force management decisions are shown in Figure 13-1. Use Key Term Sales Force Management here. Use Chapter Objective 2 here. Use Figure 13-1 here. Designing Sales Force Strategy and Structure b. A company can divide sales responsibilities along any of several lines. 1. In the territorial sales force structure, each salesperson is assigned to an exclusive geographic area and sells the companys full line of products or services to all customers in that territory. i. This organization clearly defines each salespersons job and fixes accountability. ii. This sales method increases the salespersons desire to build local business relationships that improve selling effectiveness. iii. This type of organization is often supported by many levels of sales management positions. 2. In the product sales force structure, the sales force sells along product lines.

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i. 3.

4.

This product structure can lead to problems if a single large customer buys many different company products. In a customer sales force structure, the sales force is organized along customer or industry lines. i. Separate sales forces may be set up for different industries, for serving current customers versus finding new ones, and for major accounts versus regular accounts. ii. Organizing the sales force around customers can help a company to become more customer focused and build closer relationships with important customers. A complex sales force structure is often used when a company sells a wide variety of products to many types of customers over a broad geographic area. i. Salespeople can be specialized by customer and territory, by product and territory, by product and customers, or by territory, product, and customer. ii. No single structure is best for all companies and all situations.

Use Key Terms Territorial Sales Force Structure, Product Sales Force Structure, and Customer Sales Force Structure here. Use Discussing the Issues 2 here. c. Once the company has set its structure, it is ready to consider sales force size. 1. Many companies use some form of workload approach to set sales force size. i. Using this approach, a company first groups accounts into different classes according to size, account status, or other factors that relate to the amount of effort required to maintain them. ii. The company then determines the number of salespeople needed to call on each class of accounts the desired number of times.

Applying the Concept What components of a salespersons day go into calculating his or her workload? List the components and estimate the amount of time a salesperson located in New York City, who can walk or take the subway to each client, will spend doing each task. d. Sales management must also decide who will be involved in the selling effort and how various sales and sales support people will work together.

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1.

The company may have an outside sales force, an inside sales force, or both. i. Outside salespeople travel to call on customers. ii. Inside salespeople conduct business from their offices via telephone or visits from prospective buyers. iii. Inside salespeople include support people, sales assistants, Web sellers, and telemarketers.

Use Key Terms Outside Sales Force, Inside Sales Force here. Use Discussing the Issues 3 here. 2. Most companies are now using team selling to service large, complex accounts. i. Teams might include experts from any area or level of the selling firm, including sales, marketing, technical and support services, R&D, engineering, operations, finance, and others. ii. The move to team selling mirrors similar changes in customers buying organizations. iii. Team selling does have some pitfalls. Selling teams can confuse or overwhelm customers who are used to working with only one salesperson. Salespeople who are used to having customers all to themselves may have trouble learning to work with and trust others on a team. Difficulties in evaluating individual contributions to the team selling effort can create some compensation issues. Use Key Term Team Selling here. Use Marketing at Work 13-1 here. Recruiting and Selecting Salespeople e. At the heart of any successful sales force operation is the recruitment and selection of good salespeople. f. According to the Gallup Management Consulting Groups research, the best salespeople possess four key talents: intrinsic motivation, disciplined work style, the ability to close sales, and the ability to build relationships with customers. g. When recruiting, companies should analyze the sales job itself and the characteristics of its most successful salespeople to identify the traits needed by a successful salesperson in their industry. h. Recruiting will attract many applicants from whom the company must select the best.

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i.

The selection process can vary from a single informal interview to lengthy testing and interviewing. 1. Many companies give formal tests to sales applicants. 2. Tests typically measure sales aptitude, analytical and organiza-tional skills, personality traits, and other characteristics. Use Application Questions 1 here.

Training Salespeople j. New salespeople may spend anywhere from a few weeks or months to a year or more in training. k. The average initial training period is 4 months. Then, most companies provide continuing sales training via seminars, sales meetings, and the Web throughout the salespersons career. l. Training programs have several goals. 1. Salespeople need to know and identify with the company, so most training programs begin by describing the companys history and objectives, its organization, its financial structure and facilities, and its chief products and markets. 2. Salespeople also need to know customers and competitors characteristics, so the training program teaches them about competitors strategies. 3. Many companies are adding Web-based training to their sales training programs. Such training ranges from simple text-based product information to Internet-based sales exercises to sophisticated simulations that re-create sales calls. Compensating Salespeople m. Compensation is made up of several elements: a fixed amount, a variable amount, expenses, and fringe benefits. 1. The fixed amount, usually a salary, gives the salesperson some stable income. 2. The variable amount, which might be commissions or bonuses based on sales performance, rewards the salesperson for greater effort. 3. Expense allowances, which repay salespeople for job-related expenses, let salespeople undertake needed and desirable selling efforts. 4. Fringe benefits, such as paid vacations, sick leave, accident benefits, pensions, and life insurance, enhance job satisfaction. n. Management must decide what mix of these compensation elements makes the most sense for each sales job. 1. Different combinations of fixed and variable compensation give rise to four basic types of compensation plans.

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2.

i. Straight salary. ii. Straight commission. iii. Salary plus bonus. iv. Salary plus commission. Compensation should direct the sales force toward activities that are consistent with overall marketing objectives. Table 13-1 shows an illustration of a compensation plan. Use Table 13-1 here.

Supervising Salespeople o. Through supervision, the company directs and motivates the sales force to do a better job. 1. Companies vary in how closely they supervise their salespeople. They use various tools. i. An annual call plan shows which customers and prospects to call on in which months and which activities to carry out. ii. A time-and-duty analysis could be performed. Figure 13-2 shows how salespeople spend their time. Use Figure 13-2 here. 2. Many firms have adopted sales force automation systems, computerized sales force operations for more efficient order-entry transactions, improved customer service, and better salesperson decision-making support. Sales managers must also motivate salespeople. 1. Management can boost sales force morale and performance through its organizational climate, sales quotas, and positive incentives. i. Organizational climate describes the feeling that salespeople have about their opportunities, value, and rewards for good performance. ii. Many companies adopt sales quotas, which are standards stating the amount they should sell and how sales should be divided among the companys products. Compensation is often related to how well salespeople meet their quotas. iii. Various positive incentives, such as sales meetings, sales contests, honors, merchandise and cash awards, trips, and profit-sharing, are also used to motivate and reward sales force performance.

p.

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Use Key Term Sales Quotas here. Evaluating Salespeople q. Management gets information about its salespeople in many ways. 1. Sales reports are weekly or monthly work plans and longer-term territory marketing plans. 2. Call reports are based on salespeoples completed activities. 3. Expense reports show what salespeople will be partly or wholly repaid. r. Formal evaluation forces management to develop and communicate clear standards for judging performance. Use Linking the Concepts here. Use Application Questions 2 here. 4. The Personal Selling Process a. The selling process consists of several steps that the salesperson must master. These steps focus on the goal of getting new customers and obtaining orders from them. Use Key Term Selling Process here. Steps in the Selling Process b. Figure 13-3 shows the selling process consisting of seven steps. Use Figure 13-3 here. 1. The first step is prospecting, which is identifying qualified potential customers. i. Salespeople must often approach many prospects to get just a few sales. ii. Although the company supplies some leads, salespeople need skill in finding their own. iii. Salespeople also need to know how to qualify leads identifying the good ones and screening out the poor ones. iv. Prospects can be qualified by looking at their financial ability, volume of business, special needs, location, and possibilities for growth.

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Lets Discuss This How would you qualify a prospect for Mary Kay Cosmetics? For a new Dell laptop? 2. The preapproach step is where salespeople learn as much as possible about an organization and its buyers. i. Salespeople can consult standard industry and online sources, acquaintances, and others to learn about a company. ii. Salespeople should set call objectives, which may be to qualify a prospect, to gather information, or to make an immediate sale. The approach step occurs when salespeople meet and greet a buyer to get a relationship off to a good start. i. This step involves salespeoples appearance and opening lines, and their follow-up remarks. During the presentation step of the selling process, salespeople tell the product story to a buyer, presenting customer benefits and showing how the product solves the customers problems. i. The need-satisfaction approach calls for good listening and problem-solving skills. ii. The qualities that buyers dislike most in salespeople include being pushy, late, deceitful, and unprepared or disorganized. iii. The qualities buyers value most include empathy, good listening, honesty, dependability, thoroughness, and followthrough. In handling objections, salespeople should use a positive approach, seek out hidden objections, ask the buyer to clarify any objections, take objections as opportunities to provide more information, and turn the objections into reasons for buying. Closing is the process of getting the order. i. Salespeople should know how to recognize closing signals from the buyer, including physical actions, comments, and questions. ii. Salespeople can use one of several closing techniques. a. They can ask for the order. b. They can review points of agreement. c. They can offer to help write up the order. d. They can ask whether the buyer wants this model or that one. e. They can note that the buyer will lose out if the order is not placed now. The last step in the selling process is follow-up. This is necessary if salespeople want to ensure customer satisfaction and repeat business.

3.

4.

5.

6.

7.

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Use Key Terms Prospecting, Preappraoch, Approach, Presentation, Handling Objections, Closing, and Follow-Up here. Use Discussing the Issues 4 here. Personal Selling and Customer Relationship Management c. The principles of personal selling as just described are transaction- oriented; their aim is to help salespeople close a specific sale with a customer. d. In many cases, companies want profitable, long-term relationships with customers they can win and keep. e. The sales force usually plays an important role in building and managing profitable customer relationships. f. Todays large customers favor suppliers who can sell and deliver a coordinated set of products and services to many locations and who can work closely with customer teams to improve products and processes. Use Chapter Objective 3 here. 5. Direct Marketing a. With the trend toward more narrowly targeted or one-to-one marketing, many companies are adopting direct marketing, either as a primary marketing approach or as a supplement to other approaches. b. Direct marketing consists of direct connections with carefully targeted individual consumers to both obtain an immediate response and cultivate lasting customer relationships. Use Key Term Direct Marketing here. Use Chapter Objective 4 here. The New Direct-Marketing Model c. Most companies still use direct marketing as a supplementary channel or medium for marketing their goods. d. For many companies today, however, direct marketing is more than just a supplementary channel or medium. 1. Especially in its newest transformationInternet marketing and ecommercedirect marketing constitutes a new and complete model for doing business. 2. This new direct model is rapidly changing the way companies think about building relationships with customers. Use Marketing at Work 13-2 here.

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Benefits and Growth of Direct Marketing e. For buyers, direct marketing is convenient, easy to use, and private. 1. Direct marketing gives buyers ready access to a wealth of products and information, both at home and around the globe. 2. Direct marketing is immediate and interactivebuyers can interact with sellers by phone or on the sellers Web site to create exactly the configuration of information, products, or services they desire, and then order them on the spot. f. For sellers, direct marketing is a powerful tool for building customer relationships. 1. Using database marketing, todays marketers can target small groups or individual consumers, tailor offers to individual needs, and promote these offers through personalized communications. 2. Direct marketing can be timed to reach prospects at just the right moment. 3. Direct marketing gives access to buyers that the company could not reach through other channels. 4. Direct marketing offers sellers a low-cost, efficient alternative for reaching their markets. g. As a result of these advantages to both buyers and sellers, direct marketing has become the fastest-growing form of marketing. Use Discussing the Issues 4 here. Customer Databases and Direct Marketing h. A customer database is an organized collection of comprehensive data about individual customers or prospects, including geographic, demographic, psychographic, and behavioral data. 1. The database can be used to locate good potential customers, tailor products and services to the special needs of targeted consumers, and maintain long-term customer relationships. 2. A customer mailing list, in contrast, is simply a set of names, addresses, and telephone numbers. Use Key Term Customer Database here. i. Companies use their databases in many ways. 1. They can use a database to identify prospects and generate sales leads by advertising products or offers. 2. They can mine their databases to learn about customers in detail, and fine-tune their market offerings and communications to the preferences and behaviors of target segments or individuals.

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3.

The company database can be an important tool for building stronger long-term customer relationships. Use Figure 13-4 here. Use Chapter Objective 5 here.

Forms of Direct Marketing j. The major forms of direct marketing are shown in Figure 13-4. 1. Telephone marketing uses the telephone to sell directly to consumers and business customers. i. It has become the major direct-marketing communication tool. ii. B2B telephone marketing now accounts for more than 60% of all telephone marketing sales. iii. Marketers use outbound telephone marketing to sell directly to consumers and businesses. iv. Inbound toll-free 800 numbers are used to receive orders from television and print ads, direct mail, or catalogs. v. Properly designed and targeted telemarketing provides many benefits, including purchasing convenience and increased product and service information. vi. However, the recent explosion in unsolicited telephone marketing has annoyed many consumers. a. The FTC opened its Do Not Call List in mid-2003, and to date more that 87 million phone numbers have been registered. 2. Direct-mail marketing involves sending an offer, announcement, reminder, or other item to a person at a particular address. i. Using highly selective mailing lists, direct marketers send out millions of mail pieces each year. ii. Direct mail has proved successful in promoting all kinds of products, from books to gourmet foods to industrial products. iii. Direct mail is also heavily used by charities to raise billions of dollars each year. iv. The direct mail industry constantly seeks new methods and approaches. CDs and DVDs are among the fastest growing direct-mail media. v. Three new forms of mail delivery have become popular. a. Fax mail: Marketers now routinely send fax mail announcing special offers, sales, and other events to prospects and customers with fax machines. b. Email: Many marketers now send sales announce-ments, offers, product information, and other messages to email addresses. They may be resented as junk mail or SPAM

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3.

4.

5.

if sent to people who have no interest in them. Smart marketers target their direct mail carefully. c. Voice mail: Some marketers have set up automated programs that exclusively target voice mailboxes and answering machines with prerecorded messages. Catalog marketing has grown explosively during the past 25 years. i. Annual catalog sales are expected to grow to more than $175 billion in 2008. ii. Web-based catalogs present a number of benefits. a. They save on production, printing, and mailing costs. b. They can offer an almost unlimited amount of merchandise. c. They allow real-time merchandising. d. Online catalogs can be spiced up with interactive entertainment and promotional features. iii. Web-catalogs present some challenges. a. They are passive and must be marketed. b. Attracting customers is much more difficult for a Web catalog than for a print catalog. Direct-response television marketing takes one of two major forms. i. Direct-response advertising is where direct marketers air television spots, often 60 or 120 seconds long, that persuasively describe a product and give customers a tollfree number for ordering. ii. Infomercials are 30-minute advertising programs for a single product. a. For years, infomercials have been associated with somewhat questionable pitches. b. However, major corporations have been using infomercials to sell their wares. iii. With widespread distribution on cable and satellite television, the top three shopping networks combined now reach 248 million homes worldwide, selling more than $7.5 billion of goods each year. Kiosks are information and ordering machines in stores, airports, and other locations.

Use Key Terms Telephone Marketing, Direct-Mail Marketing, Catalog Marketing, and Direct-Response Television Marketing here. Use Marketing at Work 13-3 here. Use Under the Hood/Focus on Technology here. Use Linking the Concepts here. Use Discussing the Issues 5 here. Integrated Direct Marketing

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k. l.

Too often, a companys individual direct-marketing efforts are not well integrated with one another or with elements of its marketing and promotion mixes. Integrated direct marketing is a power approach that involves using coordinated multiple-media, multiple-stage campaigns. Use Key Term Integrated Direct Marketing here. Use Figure 13-5 here.

Public Policy and Ethical Issues in Direct Marketing m. The aggressive and sometimes shady tactics of a few direct marketers can bother or harm consumers, giving the industry a black eye. n. Direct-marketing excesses sometimes annoy or offend consumers. 1. Dinner-time or late-night phone calls are especially bothersome. 2. So-called heat merchants design mailers and write copy intended to mislead buyers. 3. Some direct marketers pretend to be conducting research surveys when they are actually asking leading questions to screen or persuade customers. o. Invasion of privacy is perhaps the toughest public policy issue now confronting the direct-marketing industry. 1. It seems that almost every time consumers enter a sweepstakes, apply for a credit card, take out a magazine subscription, or order products by mail, telephone, or the Internet, their names are entered into some companys already bulging database. 2. Although consumers often benefit from database marketing, many critics worry that marketers may know too much about consumers lives. p. The direct marketing industry is addressing issues of ethics and public policy. 1. Direct marketers know that, left untended, such problems will lead to increasingly negative consumer attitudes, lower response rates, and calls for more restrictive state and federal legislation. 2. Most direct marketers want the same things that consumers want: honest and well-designed marketing offers targeted only toward consumers who will appreciate and respond to them. Use Focus on Ethics here. Use Application Questions 3 here.

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Travel Log
Discussing the Issues 1. According to the chapter, salespeople serve two masters. What does this mean? Is it a good or bad thing? The sales force serves as a critical link between a company and its customers. In many cases, salespeople serve both mastersthe seller and the buyer. First, they represent the company to customers. They find and develop new customers and communicate information about the companys products and services. They sell products by approaching customers, presenting their products, answering objections, negotiating prices and terms, and closing sales. In addition, salespeople provide customer service and carry out market research and intelligence work. At the same time, salespeople represent customers to the company, acting inside the firm as champions of customers interests and managing the buyer-seller relationship. Salespeople relay customer concerns about company products and actions back inside to those who can handle them. They learn about customer needs and work with other marketing and nonmarketing people in the company to develop greater customer value. 2. List and briefly describe the three sales force structures outlined in the chapter. What sales force structure does CDW employ? In the territorial sales force structure, each salesperson is assigned to an exclusive geographic area and sells the companys full line of products or services to all customers in that territory. With a product sales force structure, the sales force sells along product lines. More and more companies are now using a customer sales force structure, in which they organize the sales force along customer or industry lines. Separate sales forces may be set up for different industries, for serving current customers versus finding new ones, and for major accounts versus regular accounts. CDW uses the customer sales force structure. How does the inside sales force differ from the outside sales force? How might a company benefit from having both? The company may have an outside sales force (or field sales force), an inside sales force, or both. Outside salespeople travel to call on customers in the field. Inside salespeople conduct business from their offices via telephone, the Internet, or visits from buyers. Some inside salespeople provide support for the outside sales force, freeing them to spend more time selling to major accounts and finding new prospects. Other inside salespeople do more than just provide support. Telemarketers and Web sellers use the phone and Internet to find new leads and qualify prospects or to sell and service accounts directly. Telemarketing and Web selling can be very effective, less costly ways to sell to smaller, harder-to-reach customers. The chapter argues that the ability to build relationships with customers is the most important of a salespersons key talents. Do you agree? Student responses will vary. However, in todays relationship-marketing environment, top salespeople are customer problem solvers and relationship builders. They have an instinctive understanding of their customers needs. 56

3.

4.

5. Describe how direct marketing benefits both buyers and sellers. For buyers, direct marketing is convenient, easy to use, and private. Direct marketing gives buyers ready access to a wealth of products and information, at home and around the globe. Finally, direct marketing is immediate and interactivebuyers can interact with sellers by phone or on the sellers Web site to create exactly the configuration of information, products, or services they desire, then order them on the spot. For sellers, direct marketing is a powerful tool for building customer relationships. Using database marketing, todays marketers can target small groups or individual consumers, tailor offers to individual needs, and promote these offers through personalized communications. Direct marketing can also be timed to reach prospects at just the right moment. Direct marketing also gives sellers access to buyers that they could not reach through other channels. Finally, direct marketing can offer sellers a low-cost, efficient alternative for reaching their markets. 6. For each of the forms of direct marketing discussed in the text, identify a product or service that could be effectively marketed using that approach. Explain why each form of direct marketing is well suited to the products you have chosen. Student responses will vary. Factors that determine the appropriateness of a form of direct marketing for a particular product include the social and financial costs of the product and the need for a consumer to experience the product before purchase.

Application Questions 1. Describe the link between personal selling and customer relationship management. How might decisions sales managers make when recruiting, training, motivating, and evaluating salespeople impact customer relationships? Apply your answers to the Procter & Gamble customer business development sales organization described in the chapter. It is important to recruit salespeople who are well-educated, well-trained professionals who work to build and maintain long-term customer relationships. They must listen to their customers, assess customer needs, and organize the companys efforts to solve customer problems. Top performers can put themselves on the buyers side of the desk and see the world through their customers eyes. Many companies avoid high commission salary structures, instead designing compensation plans that reward salespeople for building customer relationships and growing the long-run value of each customer. Companies should also make customer relationship building a part of evaluating salespeople. P&G sales reps are organized into customer business development (CBD) teams. Each CBD team is assigned to a major P&G customer, such as Wal-Mart, Safeway, or CVS Pharmacy. Teams consist of a customer business development manager, several account executives (each responsible for a specific category of P&G products), and specialists in marketing strategy, operations, information systems, logistics, and finance. This organization places the focus on serving the complete needs of each important customer. It lets P&G grow business by working as a strategic partner with our accounts, not just as a supplier. Our goal: to grow their business, which also results in growing ours.

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Select a product or service with which you are familiar. Craft several opening lines to sell that product or service to a classmate or friend as a prospective buyer. After approaching the prospective buyer, evaluate your chosen opening lines. How effective were they at creating interest and curiosity? Student responses will vary depending on group interaction. The text notes that, surprisingly, many direct marketers are thriving in spite of new regulations such as the National Do-Not-Call Registry. In your opinion, how has such legislation hurt direct marketers? How has it helped? Student responses will vary. Do-not-call legislation has hurt the telemarketing industry, but not all that much. Two major forms of telemarketinginbound consumer telemarketing and outbound business-to-business telemarketingremain strong and growing. Telemarketing also remains a major fundraising tool for nonprofit groups. However, many telemarketers are shifting to alternative methods for capturing new customers and sales, from direct mail, direct response TV, and live-chat technology to sweepstakes that prompt customers to call in.

3.

Under the Hood

You have probably seen them popping up everywhere. There are kiosks at REI, in the mall, and at the airport. The market demand for self-service [kiosk] technology touches virtually every industry including retail, hospitality, financial services and beyond, says Greg Swistak, executive director of the Kiosks.org Association. Kiosks are offered by marketers as one more way to reach consumers directly. But these days, customers at kiosks can do much more than simply surf the Web. At the most recent Self-Service and Kiosk Show, many companies exhibited new technologies that will make kiosks more personal and more interactive. Livewire International showcased new kiosks that activate and dispense gift and travel cards. Hand Held Products now offers technology that allows direct marketers to target customers, creating one-to-one marketing offers. And, at the show, Kioware demonstrated a mobile kiosk, capable of offering passengers in taxicabs access to searchable maps and information on restaurants, nightlife and hotels.* 1. Have you ever used a kiosk at in a retail setting or at the airport? Describe how the kiosk impacted your customer experience? Student responses will vary. 2. How can direct marketers use kiosks, and the new technologies detailed above, to build customer relationships? Kiosks offer opportunities for marketers to interact with consumers and gain valuable information about their demographic profiles, concerns, and interests. Kiosks allow customers to customize their experiences, browse information on their own, and get assistance when needed. They can also help businesses generate sales leads. Kiosks also allow marketers to target customers with personalized messages. Knowing more about customers, their needs, and their interests allows companies to create products and

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services that offer consumers value and build long term relationships based on customer satisfaction. *See Companies Display New Technology at the Self-Service and Kiosk Show, August, 16 2005, accessed at www.atmmarketplace.com.

Focus on Ethics
They come in the mail regularly, several a day for some consumers, with messages of hope and good fortune. Cover letters and authentic looking certificates shout, You are already a winner! Since the birth of direct marketing, sweepstakes and lotteries have helped companies deliver information to consumers about new products and marketing offers. For a sales pitch or direct marketing campaign to work, it must grab consumers attention and build curiosity. But even for reputable and experienced marketers, walking the line between grabbing attention and acting appropriately can be tricky. Unfortunately, the widespread use of direct marketing communications has helped to disguise misleading statements as legitimate offers. As one columnist puts it, a visit to the United States Postal service Web site will provide a consumer with a list of mail-fraud schemes including: employment fraud, multi-level marketing, work-at-home, 900 telephone numbers, charity fraud, cut-rate health insurance, solicitations disguised as invoices, sweepstakes and lotteries, chain letters, free-prizes and vacations, foreign lotteries by mail, government look-alike mail, prison pen pal money-order scams, and fraudulent health and medical products, to name just a few. Unfortunately, the fraudulent solicitations work. Last year the FTC received nearly 400,000 complaints about direct mail fraud. And the Post Office estimates that consumers lose more than $120 million each year to international scams alone. Such experiences make consumers more suspicious of even legitimate offers that might interest them. So, direct marketers take matters of fraud and deception very seriously. On its Web site (www.dmaconsumers.org/sweepstakeshelp.html), the Direct Marketing Association (DMA) advises U.S. citizens on their rights as consumers and offers advice on identifying fraudulent direct mail offers.* 1. Is it possible to use sweepstakes and giveaways as a part of an ethical direct marketing campaign? What are some of the considerations marketers should make when using such promotions to sell a product? Student responses will vary. Marketers should make rules and regulations clear and avoid making misleading statements. Some marketers also avoid targeting vulnerable groups. 2. Visit the DMA consumer Web site and learn more about the associations efforts to educate consumers. Do you think the direct marketing industry should monitor itself or is more government regulation required to protect consumers? Student responses will vary. *See Susan E. Rice, Scammers Target Most Trusting in Hopes of Stealing Easy Money, July 20, 2005, The Chetek Alert, accessed at www.zwire.com. GREAT IDEAS 59

Barriers to Effective Learning 1. The issues surrounding managing the sales force can be difficult for some students. Individually, each of the decisions a sales manager needs to make seem reasonable enough, but bringing them all together to actually plan how to develop and manage the sales force appears complicated to most undergraduates. These issues can be made simpler by going through each of the concepts carefully and thoroughly. You may also want to have the students design their own sales force for a product or service idea they have. This will really drive home the concepts of how you design the sales force, as well as all the management processes. Sales to most students equates to retail sales, a field that many people dislike. Therefore, many students will not be planning on going into sales as a career, and this could cause them to tune out during this section. You can bring them back by talking about the nature of selling in various kinds of service firms, such as accounting firms, that many students may be heading toward after graduation. Also, a discussion of the sophistication and professionalism of the salespeople in companies such as IBM and other business-to-business companies can generate some enthusiasm for this important field. The personal selling process will be a surprise to many students, again because they typically think of retail sales, if theyve thought about sales at all. The importance of all of these steps in the sales process can be highlighted in the discussion of business-to-business sales. Direct marketing is a hot topic these days because of the national Do-Not-Call list and the recently passed federal legislation on anti-spamming. The students should be able to maintain their interest in this topic, but they may well be surprised that direct marketing is not just for underfunded or shady enterprises. Highlight the section on customer databases to get across the analytics required for successful direct marketing, as well as all the forms of direct marketing listed in the text.

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Student Projects 1. 2. 3. 4. Research several companies to decide how their sales forces are structured (i.e., territorial, product, customer, or complex). List and briefly describe the steps in the personal selling process. Which do you think are most difficult? Which step is most critical to successful selling? Analyze your own potential to be a salesperson in your chosen field. List your strengths and weaknesses as they apply to a career in sales. How would you play up your strengths and compensate for your weaknesses? Select one of the direct marketing methods and discuss the decisions that are necessary in developing a strategy for using the method.

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7. 8. 9. 10.

Interview a salesperson from any business of your choice. Ask about his or her job and how he or she develops customers and plans sales calls. Ask about the effective selling process described in Figure 13.3 in the text. Does he or she use a model like this when they are selling? If so, how? If not, what do they use? What does he or she think is the best and worst aspect of selling? Ask if he or she has any comments on how one trains or plans to get into selling. Interview a sales manager from any business of your choice. Ask him or her about the process that they use to manage a sales force. What is their greatest challenge? How does he or she measure success of their sales force? What form of motivation does he or she use? How did he or she get into sales management? What is the greatest difference between being a salesperson and being a sales manager? What is his or her toughest task as a manager? Demonstrate how a salesperson could prospect for sales customers via the Internet. Which search sites seemed to be the most effective in your search effort? Try to be as specific as possible with the illustration you chose. Take a company of your choice. Plan a direct marketing effort for the company. Relate benefits that might occur if the company used direct marketing instead of traditional communication or promotion forms. Using your university or college as an example, describe three different databases that would be useful for recruiting efforts. How could these databases be obtained? Write a position paper on privacy and security issues in direct marketing. Where are the industrys strengths? Weaknesses? What would you recommend to solve problems facing the industry?

Interactive Assignments Small Group Assignments 1. Form students into groups of three to five. Each group should read the opening vignette to the chapter on CDW. Each group should then answer the following questions: a. What is the role of the sales force in CDW? b. What sort of people would you recruit for the CDW sales force? c. Why would training take so long at CDW? Do you think theyd be as effective if they provided less training? Explain your response. d. How would you motivate such highly-trained salespeople? Be specific. e. In an Internet environment, how would you prospect for and qualify potential customers? Each group should share its findings with the class. Individual Assignments 1. Read the opening vignette to the chapter. Think about the answers to the following questions: a. What is the role of the sales force in CDW? b. What sort of people would you recruit for the CDW sales force?

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c. Why would training take so long at CDW? Do you think theyd be as effective if they provided less training? Explain your response. d. How would you motivate such highly-trained salespeople? Be specific. e. In an Internet environment, how would you prospect for and qualify potential customers? Share your findings with the class. Think-Pair-Share 1. Consider the following questions, formulate an answer, pair with the student on your right, share your thoughts with one another, and respond to questions from the instructor: a. What is the role of the sales force in modern business? b. What are the primary types of sales positions? Describe each. c. List and briefly identify each of the major steps in sales force management. d. Identify the three major forms of sales force structure. e. What is the workload approach? How is it calculated? f. How are inside and outside sales forces different? g. What are the advantages and disadvantages of team selling? h. What are the methods of compensating salespeople? Evaluate each. How are strategic goals incorporated into a compensation scheme? i. How should salespeople be evaluated? j. List and identify the steps in the effective selling process. k. What are the different presentation formats suggested by the chapter? l. How should salespeople strive to build relationships? What is relationship marketing? m. What is direct marketing? n. What is the new direct-marketing model? How is this different from the old model? o. What are the benefits to buyers of direct marketing? p. What are the benefits to sellers from direct marketing? q. How can marketers use customer databases to do a more effective job of marketing? r. What is integrated direct marketing? s. Briefly characterize the policy and ethical issues brought about by direct marketing.

Outside Example

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The Womens Investment Network (WIN) is a Philadelphia-based organization dedicated to helping women who are senior leaders in entrepreneurial and high-growth businesses. It is largely an educational forum, holding almost monthly programs on topics of interest to leaders of growing businesses, such as raising outside financing, legal issues, the types of insurance necessary to protect your business, how to hire interns, and the like. There are separate programs that are invitation only for CEOs and Venture Capitalists in which these groups discuss issues that are particular to their specific roles. The leaders of WIN are volunteers, although there is an outside organization that manages the logistics of running the organization. Getting ready to celebrate its tenth anniversary in 2006, WIN continues to struggle with how best to expand membership. Not interested in sheer numbers of members, it focuses on identifying and inviting for membership its core constituencysenior leaders of growing businesses, especially those that feel they want a forum in which to safely discuss their concerns about running their business, as well as those who want to help others succeed as they have. It does not turn away anyone who wants to join, and in fact, actively seeks those who could be the next generation of entrepreneurial women, those in both undergraduate and graduate programs in local universities studying entrepreneurship or business in general. You can learn more about this organization by visiting their Web site at www.winwomen.org. 1. How can such an organization utilize direct marketing to its advantage? 2. Describe a way for this organization to gather information about its members that will help it to plan its programs. 3. Of the forms of direct marketing, which ones do you think are best suited for WIN and other organizations of its type? Explain your answer. 4. Design an integrated direct marketing campaign for this organization. Classroom Exercise/Homework Assignment The Direct Marketing Association (www.the-dma.org) was established in 1917 and is the largest trade association for businesses involved in direct marketing, database marketing, and interactive global marketing. Its membership includes about 4,700 companies in the United States alone. The DMA provides its members with education, the latest industry knowledge and techniques, and representation to both federal and state legislatures, and can even provide some targeted marketing opportunities.

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Review the Web site for the DMA. What functions impress you the most? Worry you the most?

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Student responses will vary. On the impressive side, the DMA does provide a host of educational services for its members, which could help stem abuses by direct marketers. On the other side, the DMA also argues vociferously for sharing marketing data in the debate over consumer privacy. Although the association has always supported the ability of consumers to opt-out, they feel strongly that companies should be able to use the data they collect to their benefit and share the data with others. There is also content on the site that is restricted to members; what might they be trying to hide? 2. The Member Directory for the DMA is restricted. How do you feel about this? Again, student responses will vary. Some will point out that the vast majority of associations restrict their membership lists. Others will argue that, given the mission of the DMA, it might be helpful for consumers to be able to check to see if a given company is a member, thus giving it a kind of seal of approval. 3. When considering purchasing a product from a direct marketing company, would it make a difference to you if that company noted that they were a member of the Direct Marketing Association? Student responses will vary. Many will point out that any company can claim to be a member, and because you cant check on the DMA Web site, you will have no way of knowing if a company really is a member. And if it were, it doesnt necessarily mean that their business practices are totally on the up and up; it would make more sense to check with the Better Business Bureau. However, others will say that it is at least a step in the right direction, and they will believe that the DMA will police those who say they are members. Classroom Management Strategies This chapter continues the discussion begun in Chapter 12; it describes the final two communications methods for integrated marketing communications. Most of the chapter is spent on the sales process, and then direct marketing is discussed. 1. 2. The introduction and Personal Selling section can be covered in 5 minutes. These sections set the stage for the next two sections, and for that reason should not be rushed through. Spend 20 minutes going over the section entitled Managing the Sales Force. This is critical information that the students will need to learn. Figure 13-1 provides an introduction to the steps in sales force management. Marketing at Work 13-1 shows how sales forces are changing with the introduction of new technology. Finally, review Table 13-1 to show the connection between marketing strategy and sales force compensation. The Personal Selling Process can be covered in 15 minutes. Be sure to work with the students to ensure their understanding of each step of the process. Having them team up to sell something to other teams is often helpful in this section, ensuring that they prospect, develop their preapproach and approach, and then present, close, and follow-up. Figure 13-3 shows the complete selling process.

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Direct Marketing is a packed section. Spend 20 minutes here, paying particular attention to the subsections on customer databases and the forms of direct marketing. Most students will come into this thinking only of telemarketing calls. Others will have trouble distinguishing between direct marketing and advertising. Marketing at Work 13-2 talks about Dells direct process. Because most students are familiar with Dell, this can really help them understand the benefits of direct marketing. Public policy as it relates to direct marketing is ever changing. Have the students investigate the current status of laws and proposals as they pertain to telemarketing and email marketing campaigns, and report back to the class. A discussion of the implication of these laws and proposals will drive home the complexity of the issues.

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