Chapter 13 Personal Selling and Sales Promotion

CHAPTER 13
PERSONAL SELLING AND SALES PROMOTION

PREVIEWING THE CONCEPTS CHAPTER OBJECTIVES

1.
Discuss the role of a companys salespeople in creating value for customers and
building customer relationships.
2.

Identify and explain the six major sales force management steps.

3.
Discuss the personal selling process, distinguishing between transaction-oriented
marketing and relationship marketing.
4.

Explain how sales promotion campaigns are developed and implemented.

JUST THE BASICS

CHAPTER OVERVIEW
This chapter concentrates on two more IMC elementspersonal selling and sales promotion.
Personal selling is the interpersonal arm of marketing communications, in which the sales force
interacts with customers and prospects to build relationships and make sales.
Sales promotion consists of short-term incentives to encourage purchase or sale of a product or
service.
Although this chapter examines personal selling and sales promotion as separate tools, they must
be carefully integrated with other elements of the promotion mix.
ANNOTATED CHAPTER NOTES/OUTLINE
FIRST STOP
IBM: A Classic Model for Modern Customer-Focused Selling
Now a $105 billion company, IBM has survived and prospered for nearly 100 years.
When Vivek Gupta first joined IBM in 2003, his sales strengths and philosophies were a perfect fit
for the company. IBM was a newcomer in India, struggling to gain a foothold in a market where
more than 70 percent of corporations are family controlled.
When Gupta first approached potential customer Vodafone, the managing director told him, I
dont do any business with IBM and I dont intend to.
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It took Gupta nearly four years to finally sell Vodafone on a gigantic $600 million contract.
Gupta thrives on rooting out customer problems to solve.
IBMs culture has always dictated that its salespeople be part teacher, part psychologist, and part
glad-handler.
While many things have changed at IBM over the past 100 years, one thing has remained
constant: IBM salespeople are still inspired by the founders basic principles of selling.
PERSONAL SELLING
Robert Louis Stevenson once noted everyone lives by selling something.
The Nature of Personal Selling
Personal selling is one of the oldest professions in the world.
The people who do the selling go by many names: salespeople, sales representatives, district
managers, account executives, sales consultants, sales engineers, agents, and account
development reps to name just a few.
Use Key Terms Personal Selling and Salesperson here.
The term salesperson covers a wide range of positions.
At one extreme, a salesperson might be an order taker, such as the department store salesperson
standing behind the counter.
At the other extreme are order getters, whose positions demand creative selling and relationship
building for products and services ranging from appliances to industrial equipment.
The Role of the Sales Force
Personal selling is the interpersonal arm of the promotion mix.
The role of personal selling varies from company to company.
Some firms have no salespeople at allfor example, companies that sell only online or through
catalogs, or companies that sell through manufacturers reps, sales agents, or brokers. In most
firms, however, the sales force plays a major role.
Linking the Company with Its Customers
The sales force serves as a critical link between a company and its customers.
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They represent the company to customers.

They represent customers to the company.

Salesperson-owned loyalty is the concept of customers becoming loyal to salespeople as well as

to the companies and products they represent.
Use Discussion Question 13-1 here.
Use Critical Thinking Exercise 13-7 here.
Coordinating Marketing and Sales
A company can take several actions to help bring its marketing and sales functions closer together.

It can increase communications between the two groups by arranging joint meetings and
by spelling out when and with whom each group should communicate.
The company can create joint assignments.
The company can create joint objectives and reward systems for sales and marketing.
They can appoint marketing-sales liaisonspeople from marketing who live with the
sales force and help to coordinate marketing and sales force programs and efforts.
The firm can appoint a chief revenue officer (or chief customer officer)a high-level
marketing executive who oversees both marketing and sales.
Use Chapter Objective 1 here.

MANAGING THE SALES FORCE

Sales force management is defined as the analysis, planning, implementation, and control of sales
force activities. (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
Sales Force Structure
A company can divide sales responsibilities along any of several lines.
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.
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Characteristics:

The organization defines each salespersons job and fixes accountability.

The organization increases the salespersons desire to build local customer relationships.
Because each salesperson travels within a limited geographic area, travel expenses are
relatively small.

Product Sales Force Structure: The sales force sells along product lines.
This structure can lead to problems if a single large customer buys many different company
products.
Customer (Market) Sales Force Structure: The sales force is organized 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.
Complex Sales Force Structures: A company often combines several types of sales force
structures when it sells a wide variety of products to many types of customers over a broad
geographic area.
Use Key Terms Territorial Sales Force Structure, Product Sales Force Structure, and Customer
Sales Force Structure here.
Use Discussion Question 13-2 here.
Sales Force Size
Sales force size may range in size from only a few salespeople to tens of thousands.
Workload approach: A company first groups accounts into different classes according to size,
account status, or other factors related to the amount of effort required to maintain them. It then
determines the number of salespeople needed to call on each class of accounts the desired number
of times.
Other Sales Force Strategy and Structure Issues
Outside (Field Sales Force) and Inside Sales Forces
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.
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Technical sales support people provide technical information and answers to customers
questions.
Sales assistants provide administrative backup for outside salespeople.
Telemarketers and online sellers use the phone and Internet to find new leads and qualify
prospects or to sell and service accounts directly.
Use Key Terms Outside Sales Force (Field Sales Force) and Inside Sales Force here.
Use Marketing by the Numbers here.

Most companies now use team selling to service large, complex accounts. Sales teams can
unearth problems, solutions, and sales opportunities that no individual salesperson could.
Such teams might include experts from any area or level of the selling firmsales, marketing,
technical and support services, R&D, engineering, operations, finance, and others.
Shortcomings of team selling:
1. Salespeople who are used to having customers all to themselves may have trouble
learning to work with and trust others on a team.
2. Selling teams can confuse or overwhelm customers who are used to working with only
one salesperson.
3. Difficulties in evaluating individual contributions to the team selling effort can create
some sticky compensation issues.
Use Key Term Team Selling here.
Recruiting and Selecting Salespeople
In a typical sales force, the top 30 percent of the salespeople might bring in 60 percent of the
sales.
The best salespeople possess four key talents:
1.
2.
3.
4.

Intrinsic motivation
Disciplined work style
The ability to close a sale
The ability to build relationships with customers

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.
Sources of new potential hires:

The human resources department gets names from current salespeople, using employment
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agencies, placing classified ads, searching the Web, and working through college
placement services.
Another source is to attract top salespeople from other companies.

Training Salespeople
Training programs have several goals.
1. The training program must teach them about different types of customers and their needs,
buying motives, and buying habits.
2. It must teach them how to sell effectively and train them in the basics of the selling
process.
3. The training program must teach them about the companys objectives, organization, and
chief products and markets, and about the strategies of major competitors.
Many companies are adding digital e-learning to their sales training programs.
Most e-learning is Web-based but many companies now offer on-demand training from anywhere
via almost any digital device.
Compensating Salespeople
Management must decide what mix of compensation elements makes the most sense for each
sales job.
Different combinations of fixed and variable compensation give rise to four basic types of
compensation plans:
1.
2.
3.
4.

Straight salary
Straight commission
Salary plus bonus
Salary plus commission

The average salespersons pay consists of about 67 percent salary and 33 percent incentive pay.
Compensation should direct salespeople toward activities that are consistent with overall sales
force and marketing objectives.
Supervising and Motivating Salespeople
The goal of supervision is to help salespeople work smart by doing the right things in the right
ways.
The goal of motivation is to encourage salespeople to work hard and energetically toward sales
force goals.
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Supervising Salespeople
Companies vary in how closely they supervise their salespeople.

The annual call plan shows which customers and prospects to call on and which activities
to carry out.
The time- and- duty analysis shows the time the salesperson spends selling, traveling,
waiting, taking breaks, and doing administrative chores. (Figure 13.2)
Use Figure 13.2 here.

On average, active selling time accounts for only 10 percent of total working time!
Sales force automation systems: Computerized, digitized sales force operations that let
salespeople work more effectively anytime, anywhere.
Selling and the Internet
Perhaps the fastest-growing technology tool is the Internet.
Internet-based technologies can produce big organizational benefits for sales forces. They help
conserve salespeoples valuable time, save travel dollars, and give salespeople a new vehicle for
selling and servicing accounts.
But, technology does have its drawbacks.
It is expensive.
Such systems can intimidate low-tech salespeople of clients.
Some things just cannot be presented or taught via the Internet.
Motivating Salespeople
Organizational climate describes the feeling that salespeople have about their opportunities,
value, and rewards for a good performance.
Use Key Term Sales Quotas here.
Sales quotas: 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.
Companies use various positive incentives to increase sales force effort:
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Sales meetings provide social occasions, breaks from routine, chances to meet and talk
with company brass, and opportunities to air feelings and to identify with a larger group.

Companies sponsor sales contests to spur the sales force to make a selling effort above
what would normally be expected.

Other incentives include honors, merchandise and cash awards, trips, and
profit- sharing plans.

Evaluating Salespeople and Sales-Force Performance

Management sources of salesperson information include:

Sales reports
Call reports
Expense reports

Formal evaluation forces management to develop and communicate clear standards for judging
performance and provides salespeople with constructive feedback and motivates them to perform
well.
SELLING DIGITALLY: ONLINE, MOBILE, AND SOCIAL MEDIA TOOLS
The fastest-growing sales trend is the exploding use of online, mobile, and social media tools in
selling.
Using the Internet hasn't really changed the fundamentals of selling.
Todays customers have much more control over the sales process than they had in the past.
Customers can now browse corporate Web sites, blogs, and YouTube videos to identify and
qualify sellers.
As a result, if and when salespeople do enter the buying process, customers often know almost as
much about a companys products as the salespeople do.
In response to this new digital buying environment, sellers are reorienting their selling processes
around the new customer buying process.
Use Marketing at Work 13.1 here.
Use Linking the Concepts here.

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THE PERSONAL SELLING PROCESS

Steps in the Selling Process (Figure 13.3)
Use Chapter Objective 3 here.
Use Key Term Selling Process here.
Use Figure 13.3 here.
The selling process consists of seven steps.
1.
2.
3.
4.
5.
6.
7.

Prospecting and qualifying

Preapproach
Approach
Presentation and demonstration
Handling objections
Closing
Follow-up

1. Prospecting and Qualifying

Prospecting involves identifying qualified potential customers.
The best source of prospects is referrals.
There are several sources of referrals.

Current customers
Suppliers, dealers, and noncompeting salespeople
The Web or other social network contacts
Unannounced office visits (a practice known as cold calling)

Qualifying a lead requires knowing how to identify the good ones and screen out the poor ones.
Prospects can be qualified by looking at various factors.

Financial ability
Volume of business
Special needs
Location
Possibilities for growth

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2. Preapproach
The preapproach is the stage in which the salesperson learns as much as possible about the
organization (what it needs, who is involved in the buying) and its buyers (their characteristics and
buying styles).
Call objectives are set by the salesperson and may involve qualifying the prospect, gathering
information, or making an immediate sale.
Other call objectives may include deciding on the best approach and the best timing and
determining the overall sales strategy for the account.
3. Approach
During the approach step, the salesperson should know how to meet and greet the buyer and get
the relationship off to a good start.
4. Presentation and Demonstration
During the presentation step of the selling process, the salesperson tells the value story to the
buyer, showing how the companys offer solves the customers problems.
The customer-solution approach fits better with a relationship marketing focus.
Before salespeople can present customer solutions, they must develop solutions to present.
The following qualities are ones that buyers dislike most in salespeople:

Pushiness
Being late
Deceitfulness
Being unprepared or disorganized

The following qualities are ones that buyers value most in salespeople:

Good listening skills

Empathy
Honesty
Dependability
Thoroughness
Follow-through

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5. Handling Objections
In handling objections, the salesperson should do the following:

Use a positive approach

Seek out hidden objections
Ask the buyer to clarify any objections
Take objections as opportunities
Turn the objections into reasons for buying

Every salesperson needs training in the skills of handling objections.

6. Closing
Salespeople can use one of several closing techniques:

Ask for the order

Review points of agreement
Offer to help write up the order
Ask whether the buyer wants this model or that one
Note that the buyer will lose out if the order is not placed now

7. Follow- Up
Follow-up is necessary if the salesperson wants to ensure customer satisfaction and repeat
business.
Use Key Terms Prospecting, Preapproach, Approach, Presentation, Handling Objections,
Closing, and Follow-Up here.
Use Critical Thinking Exercise 13-8 here.
Use Discussion Question 13-4 here.
Use Marketing Ethics here.
Personal Selling and Managing Customer Relationships
A transaction orientation is intended to help salespeople close a specific sale with a customer.
A relationship orientation is intended to serve the customer over the long haul in a mutually
profitable relationship.
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.
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Use Marketing at Work 13.2 here.

SALES PROMOTION
Sales promotion consists of short-term incentives to encourage the purchase or sale of a product
or service.
Use Chapter Objective 4 here.
Use Key Term Sales Promotion here.
Rapid Growth of Sales Promotion
Sales promotion tools are targeted toward final buyers (consumer promotions), retailers and
wholesalers (trade promotions), business customers (business promotions), and members of the
sales force (sales force promotions).
Today, in the average consumer packaged-goods company, sales promotion accounts for 77
percent of all marketing expenditures.
Several factors have contributed to the rapid growth of sales promotion:
1.
2.
3.
4.

Product managers face greater pressures to increase their current sales.

The company faces more competition, and competing brands are less differentiated.
Advertising efficiency has declined.
Consumers have become more deal oriented.

The growing use of sales promotion has resulted in promotion clutter. Consumers are
increasingly tuning out promotions, weakening their ability to trigger immediate purchase.
Use Discussion Question 13-5 here.
Sales Promotion Objectives
Sales promotion objectives vary widely.

Consumer promotions: Urge short-term customer buying or enhance customer brand

involvement.
Trade promotions: Get retailers to carry new items and more inventory, buy ahead, or
promote the companys products and give them more shelf space.
Business promotions: Generate business leads, stimulate purchases, reward customers,
and motivate salespeople.

Sales promotions should help to reinforce the products position and build long-term customer
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relationships.
Frequency marketing programs and loyalty card programs have mushroomed in popularity in
recent years. These are programs that give rewards to regular customers to keep them coming
back.
Major Sales Promotion Tools
Many tools can be used to accomplish sales promotion objectives. Descriptions of the main
consumer, trade, and business promotion tools follow.
Consumer Promotions
Use Key Term Customer Promotions here.
Use Critical Thinking Exercise 13-9 here.
Consumer promotions include a wide range of tools.
Samples are offers of a trial amount of a product.
Sampling is the most effectivebut most expensiveway to introduce a new product or to
create new excitement for an existing one.
Coupons are certificates that save buyers money when they purchase specified products.
Most major consumer goods companies are issuing fewer coupons and targeting them more
carefully.
Cash refunds (or rebates) are like coupons except that the price reduction occurs after the
purchase rather than at the retail outlet.
Price packs (also called cents-off deals) offer consumers savings off the regular price of a
product.
Premiums are goods offered either free or at low cost as an incentive to buy a product.
Advertising specialties, also called promotional products, are useful articles imprinted with an
advertisers name, logo, or message that are given as gifts to consumers.
Point-of-purchase (POP) promotions include displays and demonstrations that take place at the
point of sale.
Contests, sweepstakes, and games give consumers the chance to win something.

A contest calls for consumers to submit an entry to be judged.

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A sweepstakes calls for consumers to submit their names for a drawing.

A game presents consumers with something every time they buy.

Event marketing (or event sponsorships) allows companies to create their own brand marketing
events or serve as sole or participating sponsors of events created by others.
Use Marketing at Work 13.2 here.
Use Online, Mobile, and Social Media Marketing here.
Trade Promotions
Trade promotions persuade resellers to carry a brand, give it shelf space, promote it in
advertising, and push it to consumers.
Use Key Terms Event Marketing and Trade Promotions here.
Use Discussion Question 13-6 here.
Manufacturers direct more sales promotion dollars toward retailers and wholesalers (79 percent)
than to final consumers (21 percent).
Manufacturers use several trade promotion tools:

A straight discount (also called a price-off, off-invoice, or off-list)

An allowance (usually so much off per case)
Free goods
Push money
Free specialty advertising items

Business Promotions
Business promotions are used to generate business leads, stimulate purchases, reward customers,
and motivate salespeople.
Use Key Term Business Promotions here.
Conventions and trade shows: Firms selling to the industry show their products at the trade
show.
Vendors receive many benefits:

Opportunities to find new sales leads

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Contact customers
Introduce new products
Meet new customers
Sell more to present customers
Educate customers with publications and audiovisual materials
Reach many prospects not reached through their sales forces

Sales contests: Contests for salespeople or dealers to motivate them to increase their sales
performance over a given period.
Sales contests work best when they are tied to measurable and achievable sales objectives (such as
finding new accounts, reviving old accounts, or increasing account profitability).
Developing the Sales Promotion Program
Marketers must determine the following when designing the sales promotion program:
1.
2.
3.
4.
5.

Size of the incentive

Conditions for participation
Promotion and distribution
Length of the promotion
Evaluation methods

END OF CHAPTER MATERIAL

Discussion and Critical Thinking
Discussion questions
13.1. Describe the roles a salesperson and the sales force perform in marketing. (AASCB:
Written and oral communication; Reflective thinking)
Answer:
The term salesperson covers a wide range of positions. At one extreme, a salesperson might
be largely an order taker, such as the department store salesperson standing behind the
counter. At the other extreme are order getters, whose positions demand creative selling,
social selling, and relationship building for products and services ranging from appliances,
industrial equipment, and airplanes to insurance and information technology services. Personal
selling is the interpersonal arm of the promotion mix. Advertising consists largely of
nonpersonal communication with large groups of consumers. By contrast, personal selling
involves interpersonal interactions between salespeople and individual customerswhether
face to face, by phone, via e-mail or Twitter, through video or online conferences, or by other
means. Personal selling can be more effective than advertising in more complex selling
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situations. Salespeople can probe customers to learn more about their problems and then
adjust the marketing offer and presentation to fit each customers special needs.
The role of personal selling varies from company to company. Some firms have no salespeople
at allfor example, companies that sell only online, or companies that sell through
manufacturers reps, sales agents, or brokers. In most firms, however, the sales force plays a
major role. In companies that sell business products and services, such as IBM, DuPont, or
Boeing, salespeople work directly with customers. In consumer product companies such as
Nestl or Nike, the sales force plays an important behind-the-scenes role. It works with
wholesalers and retailers to gain their support and help them be more effective in selling the
companys products to final buyers.
13.2. Compare and contrast the three sales force structures outlined in the chapter. Which
structure is most effective? (AACSB: Written and oral communication; Reflective
thinking)
Answer:
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.
One structure is not necessarily better than another. A company must develop a structure that
is appropriate for its needs. A good sales structure can mean the difference between success
and failure. Over time, sales force structures can grow complex, inefficient, and unresponsive
to customers needs. Companies should periodically review their sales force organizations to
be certain that they serve the needs of the company and its customers.
13.3. Compare an inside sales force and an outside sales force. Why might a company have
both? (AACSB: Written and oral communication; Reflective thinking)
Answer:
A 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. In contrast, inside
salespeople conduct business from their offices via telephone, online and social media
interactions, or visits from buyers. The use of inside sales has grown in recent years as a result
of increased outside selling costs and the surge in online, mobile, and social media
technologies. Some inside salespeople provide support for the outside sales force, freeing
them to spend more time selling to major accounts and finding new prospects. For example,
technical sales support people provide technical information and answers to customers
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questions. Sales assistants provide research and administrative backup for outside
salespeople. They track down sales leads, call ahead and confirm appointments, follow up on
deliveries, and answer customers questions when outside salespeople cannot be reached.
Using such combinations of inside and outside salespeople can help serve important customers
better. The inside rep provides daily access and support, whereas the outside rep provides
face-to-face collaboration and relationship building. Other inside salespeople do more than
just provide support. Telemarketers and online sellers use the phone, Internet, and social
media to find new leads, learn about customers and their business, or sell and service accounts
directly. Telemarketing and online selling can be very effective, less costly ways to sell to
smaller, harder-to-reach customers.
13.4. Discuss how online, mobile, and social media tools are changing the selling function.
(AACSB: Written and oral communication; Reflective thinking)
Answer:
The fastest-growing sales trend is the exploding use of online, mobile, and social media tools
in selling. New digital sales force technologies are creating exciting new avenues for
connecting with and engaging customers in the digital and social-media age. Some analysts
even predict that the Internet will mean the death of person-to-person selling, as salespeople
are ultimately replaced by Web sites, online social media, mobile apps, video and conferencing
technologies, and other tools that allow direct customer contact. Used properly, online and
social media technologies wont make salespeople obsolete but will make salespeople more
productive and effective.
The new digital technologies are providing salespeople with powerful tools for identifying and
learning about prospects, engaging customers, creating customer value, closing sales, and
nurturing customer relationships. Internet-based technologies can produce big organizational
benefits for sales forces. They help conserve salespeoples valuable time, save travel dollars,
and give salespeople new vehicles for selling and servicing accounts. Using the Internet hasnt
really changed the fundamentals of selling. However, the Internet and social media are
dramatically changing the customer buying process. As a result, they are also changing the
selling process. In todays digital world, many customers no longer rely as much as they once
did on information and assistance provided by salespeople. Instead, they carry out more of the
buying process on their ownespecially the early stages. Increasingly, they use online and
social media resources to analyze their own problems, research solutions, get advice from
colleagues, and rank buying options before ever speaking to a salesperson.
In response to this new digital buying environment, sellers are reorienting their selling
processes around the new customer buying process. They are going where customers are
social media, Web forums, online communities, blogsin order to engage customers earlier.
They are engaging customers not just where and when they are buying, but also where and
when they are learning about and evaluating what they will buy. Salespeople now routinely use
digital tools to monitor customer social media exchanges to spot trends, identify prospects,
and learn what customers would like to buy, how they feel about a vendor, and what it would
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take to make a sale. They generate lists of prospective customers from online databases and
social networking sites, such as InsideView, Hoovers, and LinkedIn. They create dialogs when
prospective customers visit their Web and social media sites through live chats with the sales
team. They use Internet conferencing tools such as WebEx, GoToMeeting, or TelePresence to
talk live with customers about products and services. They provide videos and other
information on their YouTube channels and Facebook pages.
Ultimately, online and social media technologies are helping to make sales forces more
efficient, cost-effective, and productive. The technologies help salespeople do what good
salespeople have always donebuild customer relationships by solving customer problems
but do it better, faster, and cheaper.
13.5. Define sales promotion and discuss its objectives. (AACSB: Written and oral
communication)
Answer:
Sales promotion consists of short-term incentives to encourage the purchase or sale of a
product or service and includes tools such as coupons, sweepstakes, premiums, and trade
allowances. Sales promotion objectives vary widely. Sellers may use consumer promotions to
urge short-term customer buying or to enhance customer brand involvement. Objectives for
trade promotions include getting retailers to carry new items and more inventory, buy ahead,
or promote the companys products and give them more shelf space. For the sales force,
objectives include getting more sales force support for current or new products or getting
salespeople to sign up new accounts.
13.6. Discuss the different types of trade sales promotions and distinguish these types of
promotions from business promotions. (AACSB: Written and oral communication)
Answer:
Trade promotions can persuade resellers to carry a brand, give it shelf space, promote it in
advertising, and push it to consumers. Shelf space is so scarce these days that manufacturers
often have to offer price-offs, allowances, buy-back guarantees, or free goods to retailers and
wholesalers to get products on the shelf and, once there, to keep them on it. Manufacturers
use several trade promotion tools. Many of the tools used for consumer promotions
contests, premiums, displayscan also be used as trade promotions. Or the manufacturer may
offer a straight discount off the list price on each case purchased during a stated period of time
(also called a price-off, off-invoice, or off-list). Manufacturers also may offer an allowance
(usually so much off per case) in return for the retailers agreement to feature the
manufacturers products in some way. An advertising allowance compensates retailers for
advertising the product. A display allowance compensates them for using special displays.
Manufacturers may offer free goods, which are extra cases of merchandise, to resellers who
buy a certain quantity or who feature a certain flavor or size. They may offer push money
cash or gifts to dealers or their sales forces to push the manufacturers goods.
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Manufacturers may give retailers free specialty advertising items that carry the companys
name, such as pens, pencils, calendars, paperweights, matchbooks, memo pads, and
yardsticks.
Business promotions are used to generate business leads, stimulate purchases, reward
customers, and motivate salespeople. Business promotions include many of the same tools
used for consumer or trade promotions, but there are two additional major business
promotion toolsconventions and trade shows, and sales contests.
Critical Thinking Exercises
13.7. Hiring the right people for sales jobs is an important sales management function. Aptitude
tests are used often to assist in assessing a candidates abilities and traits. Search the
Internet for information on sales assessment tests and present the characteristics and traits
most often assessed. (AACSB: Written and oral communication; Information technology;
Reflective thinking)
Answer:
Students responses will vary. Searching sales aptitude tests provides several companies that
perform such tests. For example, see www.employment-testing.com/Sales_Achiever.htm for a
Sales Achiever Sales Aptitude Assessment. This site lists and describes mental aptitudes and
personality dimensions that the companys test assesses and provides a sample of the Sales
Achiever Report that is given to clients.
13.8. Select a product or service and role-play a sales callfrom the approach to the close
with another student. Have one member of the team act as the salesperson with the other
member acting as the customer, raising at least three objections. Select another product or
service and perform this exercise again with your roles reversed. (AACSB: Written and
oral communication; Reflective thinking)
Answer:
Students responses will vary, but they should demonstrate an understanding of the selling
process. During prospecting, salespeople will determine who at the company to approach
when selling this service. They would use secondary research to search directories of small
business owners in the geographic area. In addition, they would attempt to qualify these leads
so they can target the most likely candidates.
The preapproach step involves learning more about the companies. Hair salons would have
different cleaning needs than dentists offices. Knowing how long the companies have been in
business and who makes the buying decision are two important pieces of information for this
approach.
The role-playing activity begins with an approach. Students should greet the customer by
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name, have developed some opening lines, and pose some key questions. As part of the
presentation step, they should have some information on the company. The salesperson should
be able to handle objections using a positive approach and attempting to turn the objectives
into reasons for buying. The student role-playing the salesperson should be sure to close the
sale. Ask for the business, make the terms, and get the customers agreement.
13.9. Find an example of each type of consumer sales promotion tool. Explain how you
obtained the promotion (that is, how did the marketer distribute it to consumers?) and
what you think the marketer was trying to achieve with the sales promotion tool.
(AACSB: Written and oral communication; Reflective thinking)
Answer:
Consumer promotions include a wide range of toolsfrom samples, coupons, refunds,
premiums, and point-of-purchase displays to contests, sweepstakes, and event sponsorships.

Minicases and Applications

Online, Mobile, and Social Media Marketing: Sales Promotions
Sales promotion has always been an effective tool for influencing behavior and providing a means
for measuring effectiveness. Marketers can measure how many buyers redeem a coupon, enter a
contest, receive a premium, or buy bonus packs. But now, new technologies are taking sales
promotion to a new levelgenerating consumer engagement. When AMC Theaters wanted to
encourage movie goers to watch a movie on Sunday, typically a slow day for AMC, they offered a
coupon for $1.00 popcorn and fountain drinks on Facebook for the week prior to a specific
Sunday and encouraged respondents to invite their friends to claim a coupon as well. The result?
More than 200,000 takers in six days and almost 50,000 driving their friends to AMCs fan page
as well. Similarly, when Edible Arrangements wanted to acquire fans for its Facebook page and
increase awareness for the company, it offered free boxes of chocolate covered fruit to consumers
who entered and liked the page. When the company quickly ran out of free samples, it changed
the offer to a coupon and experienced double-digit growth as tens of thousands of customers
flooded the stores to redeem the couponall in less than a week. When Nintendo Wii wanted to
raise awareness and generate excitement for its NBA Jam game, it used an essay contest of
jamisms, with voting done in a bracket style like the NBA playoffs. In addition to the 3,000
entries, the contest generated buzz and thousands of impressions and new Facebook fans.
13.10. Design a sales promotion campaign using online, mobile, and social media marketing for a
small business or organization in your community. Develop a presentation to pitch your
campaign to the business or organization and incorporate what youve learned about the
selling process. (AACSB: Written and oral communication; Reflective thinking)
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Answer:
Students responses will vary, but they should incorporate elements of the selling process. The
selling process consists of seven steps: prospecting and qualifying, preapproach, approach,
presentation and demonstration, handling objections, closing, and follow-up. Instructors may
want to arrange for specific businesses or organizations to be the clients and have the students
present their ideas to the client. Students should be expected to apply knowledge from at least
the presentation/demonstration, handling objections, and closing steps of the selling process.
With respect to the sales promotion campaign, consumer promotions include a wide range of
toolsfrom samples, coupons, refunds, premiums, and point-of-purchase displays to contests,
sweepstakes, and event sponsorships. Beyond selecting the types of promotions to use,
marketers must make several other decisions in designing the full sales promotion program.
First, they must decide on the size of the incentive. A certain minimum incentive is necessary if
the promotion is to succeed; a larger incentive will produce more sales responses. The
marketer also must set conditions for participation. Incentives might be offered to everyone
or only to select groups. Marketers must decide how to promote and distribute the promotion
program itself. The length of the promotion is also important. Evaluation is also very
important. The most common evaluation method is to compare sales before, during, and after
a promotion.
Marketing Ethics: Off Label Marketing
Johnson & Johnson agreed to a $2.2 billion settlement over the marketing of its antipsychotic
drug, Risperdal. Pfizer agreed to a $2.3 billion settlement and Eli Lilly paid $1.4 billion to settle
disputes with the U.S. government. GlaxoSmithKline agreed to a $3 million settlementits fourth
settlement with the government over the marketing of its products. By law, pharmaceutical
companies are allowed to market their drugs only for uses approved by the Food and Drug
Administration, but doctors may prescribe any approved drug as they see fit. Drug manufacturers
have been training their sales forces to educate doctors on non-approved uses and dosages, called
off-label marketing. Almost 75 percent of the largest pharmaceutical settlements with the
government are for off-label marketing. GlaxoSmithKline even went so far as to have a
questionable article ghost-written by a company and later published in a medical journal under the
names of academic authors to convince doctors that Paxil was proven effective in treating
depression in children, a use that the FDA has not approved. The reported clinical trial was later
criticized by the medical community, but doctors probably are not aware of that because a
majority of them rely on pharmaceutical companies for information on drugs. Most unlawful
practices by the pharmaceutical industry come to light only because an insidersomeone in
management or a sales repblows the whistle. Fortunately, the Federal False Claim Act provides
protection and even incentive for employees to come forward. Pharmaceutical companies settle
these types of investigations because, even if they plead guilty to criminal charges, which J&J and
GlaxoSmithKline did, they dont lose the ability to sell drugs to the government as they would if
found guilty after a trial.

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13.11. What would you do if you were a pharmaceutical sales rep and were told to promote a
drug for off-label use? What protections and incentives are available under the Federal
False Claim Act to encourage employees to report illegal behavior? (AACSB: Written and
oral communication; Ethical understanding and reasoning; Reflective thinking)
Answer:
Students answers will vary. Some useful sources are:
Description of off-label marketing:
www.whistleblowerfirm.com/pharmaceutical-fraud/off-label-marketing/
Study finding that doctors receive most drug information from pharmaceutical companies:
www.plosmedicine.org/article/info%3Adoi%2F10.1371%2Fjournal.pmed.1000431
List of the top 20 pharmaceutical settlements, 14 of which are the result of off-label
marketing:
http://en.wikipedia.org/wiki/List_of_Largest_Pharmaceutical_Settlements
Information on the False Claims Act:
www.whistleblowerlaws.com/false-claims-act/federal-false-claims-act/. This law was enacted
during the Civil War and is also referred to as the Lincoln Law. Its intent is to reduce the
amount of fraud when selling to the government. Since pharmaceutical companies sell to
government programs such as Medicare, the law has been used to prosecute companies.
Under this act, whistleblowers are given the incentive of earning a percentage of the
governments settlement.
Marketing by the Numbers: Sales Force Analysis
Brown, Inc. manufactures furniture sold through retail furniture outlets in the southeastern United
States. The company has two salespeople that do more than just sell the productsthey manage
relationships with retail customers to enable them to better meet consumers needs. The
companys sales reps visit retail customers several times per year, often for hours at a time. Brown
is considering expanding to other regions of the country and would like to have distribution
through 1,000 retail customer accounts. To do so, however, the company would have to hire
more salespeople. Each salesperson earns $50,000 plus 2 percent commission on all sales.
Another alternative is to use the services of sales agents instead of its own salesforce. Sales agents
would be paid 10 percent of sales.
13.12. Refer to Appendix 2 to answer this question. Determine the number of salespeople Brown
needs if it has 1,000 retail customer accounts that need to be called on five times per year.
Each sales call lasts approximately 2.5 hours, and each sales rep has approximately 1,250
hours per year to devote to customers. (AACSB: Written and oral communication;
Analytical thinking)
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Answer:
The workload method uses the following formula to determine the sales force size:

NS

NC FC LC
=
TA

where,
NS = number of salespeople
NC = number of customers
FC = average frequency of customer calls per customer
LC = average length of customer call
TA = time an average salesperson has available for selling per year
so,
1,000 5 2.5
NS = = 10 salespeople
1,250
13.13. At what level of sales would it be more cost efficient for Brown to use its own sales force
compared to sales agents? To determine this, consider the fixed and variable costs for each
alternative. What are the pros and cons of using a companys own sales force over
independent sales agents? (AACSB: Written and oral communication; Analytical thinking;
Reflective thinking)
Answer:
To determine the level of sales at which one alternative would be as efficient as the other, we
must set the costs equal to each other. Because variable costs are a function of sales, we can
solve for the sales level at which the two would be equal:
Total Costssalesforce = Total Costssales agents
Total costs consist of fixed costs and variable costs, so for the sales force option, total costs
would equal the total salaries for the 10 salespeople (fixed costs) plus the commissions on
sales (variable costs). Total costs for the sales agent option are just variables costs. Therefore:
Total costssalesforce = ($50,000 x 10 salespeople) + (0.02 x sales)
Total costssales agents = (0.10 x sales)
Set the two equations equal to each other and solve for sales:
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Total Costssaleforce = Total Costssales agents

($50,000 x 10) + (0.02 x sales) = (0.10 x sales)
$500,000 + (0.02 x sales) = (0.10 x sales)
$500,000 = (0.10 x sales) (0.02 x sales)
$500,000 = (0.08 x sales)
Therefore,
$500,000
Sales = = $6,250,000
0.08
If Brown expects sales to be greater than $6,250,000, then using its own sales force will be
more efficient than using sales agents. If sales are less than this level, then it would be more
efficient to use sales agents because the company would not incur the fixed costs associated
with maintaining a sales force.
Sales agents are independent of the manufacturers organization and typically are paid on
commission, so a manufacturer does not have the fixed costs that are necessary to maintain a
full-time sales force. A manufacturers selling costs are based on the amount the sales agent
sells for the manufacturer. On the downside, however, sales agents typically sell multiple
products from different manufacturers, although agents dont normally sell a competitors
product. However, they cannot devote all of their selling efforts on a given manufacturers
products nor are they as knowledgeable about a specific product as a manufacturers sales
representative. Sales agents might be a smart choice if the manufacturer does not have the
resources to maintain its own sales force.
A manufacturers sales representative is an employee of the company, and the company incurs
all the costs of employment. Even if a sales representative only receives compensation based on
commission, there are still other employment costs involved, such as benefits. Unlike sales
agents, however, a manufacturers sales force devotes all of its effort to selling the
manufacturers products and is more knowledgeable about the products.
Video Case Chapter 13 MedTronic
Running time
Intro: 1:44
Problem: 1:42
Solution: 3:01
Total: 6:31
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Video Summary
Many companies sell products that most customers can live without. But MedTronics devices are
literally a matter of life and death. Patient well-being depends upon the insulin delivery devices,
implantable defibrillators, and cardiac pacemakers designed and manufactured by MedTronic. In
some markets, seven out of eight medical devices in use are Medtronic devices.
But what happens when MedTronic has a product that it knows will help a given business or
institutional customer in terms of cost, time, and end-user well-being, but it cant get a foot in the
door to communicate that information? This video demonstrates how MedTronic sales
representatives maintain a customer-centered approach to the personal selling process as a means
for effectively communicating their product benefits.
Questions and Answers
13.14. How is the sales force at MedTronic structured?
From the information presented in this video, we do not know about MedTronics sales
force structure. But from outside information (see
http://online.wsj.com/article/SB10001424052748704013604576248793490210536.html),
we know that MedTronics sales reps and teams are organized by product group in this
case, cardiac and vascular products, so there is evidence for some aspect of a product
sales force structure. However, it is likely that MedTronics sales force structure is more
complex than this.
13.15. Can you identify the selling process for MedTronic? Give an example of each step.
While it is not apparent from the video how MedTronic addresses each step in the
personal selling process, consider the following.
Prospecting and qualifying At the very least, we know that Dominique did research on
the hospital. The contract that MedTronics competitor had with the hospital was up for
renewal. Dominique verified that this client was worth the effort and expense.
Pre-approach Dominique clearly continued doing research on this client in order to
identify all the potential barriers.
Approach Dominique established that the physicians at the hospital were open to
listening to what MedTronic had to offer.
Presentation and demonstration The things that we learn from this video are that
Dominique put a great deal of time and effort into this aspect of the selling process. He
focused on MedTronics advantages a superior product, total cost savings, and mostly,
on the service provided by MedTronic. It can be said that the presentation is carried out
over time. Dominique gained access to patients and was present during a procedure.
Handling objections We dont have a lot of specifics here. But we know that Dominique
exhibited patience and focused on the service aspect of the company, on his
dependability, and on building the relationship.
Closing For Dominique in this case, this was the easy part. In fact, because of the
nature of the situation, Dominique knew that all he could do was continue to pursue this
client and make himself available. Rather than pressuring the client to sign a contract,
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he waited until they were ready. Once they were ready, they let him know.
Follow-up It is also very clear that MedTronics product is not one where the
relationship with the sales rep ends after the sale. Part of the product is its service.
Dominique clearly understands that. His presence and service are continually available
as part of the overall marketing offering. As the video points out, Dominique doesnt just
follow-up with hospital administration and physicians. He follows up with patients.
13.16. Is MedTronic effective at building long-term customer relationships through its sales
force? If so, how? If not, how could its process be improved? Without a doubt,
Dominique and MedTronic get this. The fact that he spent as much time with the client as
he did before the client even agreed to a sale is evidence of this. The sales effort took
almost a year. But everything that Dominique did during this time was focused on longterm relationship building.
Teaching Ideas
This video begins with an introductory segment, followed by a problem segment, and ends with a
solution segment. The intention here is to provide flexibility and multiple options for using the
video. The following are some of the ways that instructors may utilize these three video segments.
1. Introduction only - Instructors may choose to use the introduction segment alone as a
means of highlighting the company. As a stand-alone video, the introduction segment
supplements material in many of the chapters of the text. This introduction segment
touches on the concepts of recruitment and training of sales people as well as the nature of
the product that MedTronic sells.
2. Problem challenge - The instructor may show the problem segment, either with or without
the introduction segment, and with or without the solution segment. This may be done in
the interest of time. It may also be done strategically. An ideal way to challenge students is
to require them to develop possible solutions to the presented problem before they have
seen the solution segment. The instructor then has the option of whether or not to show
the solution segment. In this segment, the barriers that sales representatives face are
clearly outlined and explained. These barriers especially hold true for expensive and
complex business-to-business products.
3. Solution only This may be done to illustrate a specific concept in the chapter. Rather
than taking the time to perform a problem/solution exercise, the solution segment may be
shown to demonstrate how a company overcame a specific problem. This is a great
segment to illustrate the importance of building relationships of trust with clients and
potential clients. The video demonstrates how MedTronic does this through the personal
selling process.
Company Case Teaching Notes
Cases appropriate for this chapter include:
Case 13, Salesforce.com: Helping Companies Super-Charge the Selling Process (Synopsis,
Discussion Questions, and Teaching Notes below)
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Case 16, Warby Parker: Eyewear with a Purpose (see IM Chapter 16 for instructor
material)

Salesforce.com: Helping Companies Super-Charge the Selling Process

Synopsis
When Salesforce.com launched in 1999, its model for providing CRM software to businesses was
ahead of its time. In a field of providers that created customer proprietary software installed on
client desktop computers and servers, Salesforce.coms big thing was no software. It focused
on creating standardized and semi-custom products made available to customers via the Internet.
With no software to install and a simpler interface, Salesforce.com was easier to use, faster to get
up and running, and less expensive. Salesforce.com has since remained ahead of the pack by
focusing on innovation. It now has various CRM products that are available to clients large and
small. It is a market leader that appears to have revolutionized its market and shows no signs of
slowing down.
Teaching Objectives
The teaching objectives for this case are to:
1. Allow students to consider the role of a companys salespeople in creating value for and
building relationships with customers.
2. Help students understand how companies make sales force strategy decisions.
3. Give students exposure to the different steps in the sales process.
4. To consider the dynamics of the marketing environment and their impact on sales
organizations.
Discussion Questions
1. When Salesforce.com launched as an Internet-based service, how did that innovation help
sales reps to interact better with customers?
With no software to install, companies could have the salesforce.com tools up and
running in very little time with less investment. SF was ahead of its time in using an
online and cloud model for this kind of service. This method also gave sales reps easy
access to the system from any location with Internet access. This was also not common at
the time. With quicker, easier, and more convenient access, this gave sales reps plenty of
benefits for servicing customers.
2. Describe the differences that Salesforce.com has made for customers NBCU and GE
Capital.
Integrating customers Sales forces can be integrated across customers. All sales reps
in every department and division can access client activity across all different touch
points for the company.
Collaboration Sales forces can distribute the right social information to account execs
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at the right time, improving customer relationships.

Cross-selling As these companies are big and complex with many different divisions,
the above-mentioned benefits have resulted in more opportunities for cross-selling. That
not only improves revenues, it also makes for stronger customer relationships.
3. Consider the selling process. How might any of the Salesforce.com tools described in this
case facilitate each step?
Data.comprospectingandqualifying
Database.comprospectingandqualifying,handlingobjections,closing,followup
Site.compreapproach,approach,presentationanddemonstration,handling
objections,closing,followup
Desk.compreapproach,approach,presentationanddemonstration,handling
objections,closing,followup
SalesCloudpresentationanddemonstration,handlingobjections,closing,followup
4. Looking forward, what products will Salesforce.com have to develop in order to remain
on the cutting edge of supporting sales staffs with information and collaboration?
Push students to consider and speculate on the direction they think social media and
mobile devices are headed. That should provide direction on what they think
Salesforce.com will need to develop in order to remain ahead of the market. Answers will
vary.
Teaching Suggestions
Have students break out into groups. Have them visit www.salesforce.com. Assign each group a
Salesforce.com product. Give them 10-15 minutes and have them report on what that product is,
the benefits that it provides to client users, and the stages of the selling process it facilitates.
This case can also be used with the chapter on online marketing (Chapter 14).
GREAT IDEAS
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
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.
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2.

Sales to most students equate 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 (e.g., 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-tobusiness 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 be surprised that direct marketing is not
just for underfunded or shady enterprises.

3.

4.

Student Projects
1. Examine IBM (www.ibm.com). How is IBMs sales force structured?
2. List and describe each step of the personal selling process. Analyze your own potential as
a sales person at each step of the process. What steps of the process would be the easiest
for you to handle and what steps the most difficult? Why?
3. Consider your college/university. How could they effectively use sales promotion as a
recruiting tool?
4. What are the distinguishing features between transaction-oriented marketing and
relationship marketing?
5. Discuss the pros and cons of the different sales force compensation methods.
Small Group Assignment
Form students into groups of three to five. Each group should read the opening vignette to the
chapter on IBM. Each group should then answer the following questions:
1.
2.
3.
4.

What is the role of the sales force in IBM?

What sort of people would you recruit for the IBM sales force?
How would you motivate such highly-trained salespeople? Be specific.
In an Internet environment, how would you prospect for and qualify potential customers?

Each group should share its findings with the class.

Individual Assignment
The sales force serves as a critical link between a company and its customers. They represent the
company to customers and they represent customers to the company. Explain how this would
work for a company such as IBM.
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Think-Pair-Share
Consider the following questions, formulate answers, pair with the student on your right, share
your thoughts with one another, and respond to questions from the instructor:
1. What are the major forms of sales force compensation? Which do you believe to be
superior? Why?
2. List and briefly describe the stages of the personal selling process.
3. What is direct marketing?
4. What do you believe to be the major advantages and disadvantages of team selling?
5. In the personal selling process, when would you consider the sale over? Why?
Classroom Exercise/Homework Assignment
Consider you are a salesperson for the local Toyota dealership. A young, newly married couple
enters the lot. Walk us through the personal selling process, using this couple as your target.
Classroom Management Strategies
This chapter describes two communications methods for integrated marketing communications.
Most of the chapter is spent on the sales process, and then sales promotion is discussed.
1.
2.

3.

4.

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. 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 followup. Figure 13.3 shows the complete selling process.
The Sales Promotion section is a packed section. Spend 20 minutes here, paying particular
attention to the subsections on the various types of sales promotion programs.

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PROFESSORS ON THE GO

Personal Selling and Sales Promotion

Key Concepts
The nature of personal selling and the role of the sales force
Designing the sales force strategy and structure
Managing the sales force

According to the chapter, salespeople serve two masters. What does this mean? Is it
a good or bad thing?
The ability to build relationships with customers is the most important of a
salespersons key talents. Do you agree with this statement? Explain.
What is the role of the sales force in modern business?

Key Concepts
Seven steps in the personal selling process
Customer relationship management

The text emphasizes the link between personal selling and customer relationship
management. Why is this link such an important concept?
Suppose your grade in one of your classes is hovering between an A and B. How
would you apply the seven steps in the personal selling process to convince your
professor that you deserve an A?
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.
How should salespeople strive to build relationships? What is relationship marketing?

Key Concepts
The different types of sales promotion objectives
Customer promotions

Sales promotion objectives vary greatly. Suppose you are interested in spurring shortterm customer buying of your product. What type of sales promotion do you believe
would be the most appropriate? Why?
Go to your local department of discount store. List and describe four examples of
customer promotions you see. Which do you believe to be the most effective?

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