Personal Selling Strategies
Sales Management achieves personal-selling objectives through personal-selling strategy • Key decisions in personal – selling strategy are : a) The kind of sales force required and b) The size of sales force required • The decision on the kind of salespersons defines the role that sales personnel play in their contacts with customers & prospects. The decision on the size of the sales force dictates deployment of sales personnel as well the frequencies & intensities of their contacts with customers & prospects Personal selling objectives & personal setting strategies vary with the kind of competitive setting prevailing in the industry. • When the qualitative personal selling objectives change, changes are required in the kind of sales force. • When quantitative personal selling objectives change, changes are usually required in the size of the sales force COMPETITIVE SETTINGS • Individual companies operate in different competitive settings that define the nature & intensity of competition the sales force will face in the market • Economists have identified 4 basic kinds of competitive market settings.
Read also Major Pricing StrategiesThey are : Pure or perfect competition Monopolistic competition Oligopolistic competition No direct competition Pure Competition • A market setting characterized by : 1) a large number of buyers & sellers, none powerful enough to control or influence the prevailing market price 2) No single buyer or seller is large enough to appreciably affect the product’s demand or supply 3) All sellers’ products are identical, so buyers are indifferent as to which seller they buy from 4) All buyers are always fully informed about all the sellers’ products ; prices 5) No artificial restraints on prices exist If these assumptions represented the real world in an industry, then no company would bother itself with any marketing strategies because 1) Each seller would be too small to gain business at the expense of others through price cutting, if it did cut price, the others would immediately match the cut 2) Product differentiation will be ruled out as all products are identical 3) No seller would gain by promoting through advertising or personal selling as all buyers buy based on price ; are already fully informed4) As sellers ; buyers are in direct contact, marketing channels ; distribution will not be required The real world knows no industries operating under such conditions Monopolistic Competition • A competitive setting characterized by : 1) A large number of sellers of a generic product but each seller’s brand is in some way differentiated from every other brand 2) Most ultimate consumers appear convinced that different brands of the same generic product are not exactly alike. This provides marketers with opportunities to build brand preferences among buyers 3) Most ultimate consumers are not fully informed about the offerings of competing sellers 4) It is easy for competitors to enter the industry Most modern marketers operate in similar competitive settings that provide marketing opportunities & clearly require skill in planning & implementing an overall marketing strategy • Sellers differentiate their brands through individualizing one or several components of the marketing mix• Advertising differentiates the brand in the minds of ultimate consumers, personal selling ensures the desired distribution intensity & that middlemen provide the needed push. An unusual distribution method or innovative pricing can also help differentiate the brand Oligopolistic Competition the number of competitors is small, they are individually identified & known to each other • it is very difficult for new competitors to enter the market • each seller is a large enough organization & has a large enough market share • each seller must weigh the possible reactions of each of its competitors in formulating & implementing its own overall marketing strategy • Oligopolies exist in such industries as steel, cement, petroleum, aluminium, automobiles, appliances, computers, etc • The successful firm keeps on growing & the less successful ones disappear through mergers & takeovers When one seller introduces a new variation of a basic product, the other sellers risk a rapid loss of market share if they fail to respond appropriately & almost immediately • All competitive moves are watched closely, are imitated, matched, improved upon or otherwise countered by other competitors as rapidly as they can launch counter-offensives • Personal selling strategy plays important roles in building & maintaining dealer co-operation, in servicing the distribution network & in gathering information on competitors’ activitiesNo Direct Competition (Monopoly) • The monopolist does not face any direct competition but faces indirect competition • It must initiate ; stimulate primary demand (for the product category) through promotional strategies • It needs distribution strategies ; requires the implementation of personal selling strategy DETERMINING THE KIND OF SALES PERSONNEL • Making this decision requires consideration of qualitative personal-selling objectives. What should be the duties and responsibilities of the sales personnel ? How should their job performance be measured ? Each company deals with a unique set of marketing factors, such as the strengths and weaknesses of its products (what it sells), the motivations and buying practices of its customers and prospects (whom it sells to), its pricing strategy, and the competitive setting—different selling jobs require different levels of selling and nonselling abilities, training, technical and other knowledge.
Choice of Basic Selling Style • Sales job roles can be grouped into four basic styles that cut, to a large degree, across industry and company boundaries : 1) trade selling 2) missionary selling ) technical selling 4) new-business selling Trade selling : • The trade salesperson develops and maintains long-term relations with a stable group of customers. This is low-key selling, with little or no pressure, and the job is dull and routine. • Advertising and other forms of promotion are more vital to overall marketing strategy than is personal selling. Missionary selling : • The missionary salesperson is concerned only incidentally with securing orders, since orders result from the missionary’s primary public relations and promotional efforts with customers of the customers. The medical “detailer” who calls on doctors and hospitals to acquaint them with new drugs is an example. Technical selling : • The technical salesperson performs advisory functions similar to those of the missionary salesperson but, in addition, sells direct to industrial users and other buyers.
• The technical salesperson devotes considerable time to acquainting industrial users with technical product characteristics and applications and to helping them design installations or processes that incorporate the company’s products. • In this selling style, the ability to identify, analyze, and solve customers’ problems is important.New-business selling : • The new-business salesperson’s main job is to find and obtain new customers, that is, to convert prospects into customers. • The salesperson specializing in new-business selling should be unusually creative and ingenious and possess a high degree of resourcefulness. DETERMINING THE SIZE OF THE SALES FORCE Three basic approaches are used in approximating this number: (1) The work-load method (2) The sales potential method (3) The incremental method Work Load Method • In the work load method the basic assumption is that all sales personnel should shoulder equal workloads.
Management first estimates the total workload involved in covering the company’s entire market and then divides by the workload that an individual salesperson should be able to handle, thus determining the total number of salespeople required.• The six steps in applying the work load approach are shown in the following example : 1. Classify customers, both present and prospective, into sales volume potential categories (Classification criteria, other than sales volume or sales volume potential, can be used as long as it is possible to distinguish the differences in selling effort required for each class. Assume that there are 880 present and prospective customers, classified by sales volume potential as follows : |Class |A |large |150 accounts | |Class |B |medium |220 accounts | |Class |C |small |510 accounts | 2. Decide on the length of time per sales call and desired call frequencies n each class (Several inputs are used in making these two decisions, for example, personal judgment, the opinions of sales personnel, and actual time studies).
Assume that both present and prospective customers require the same amounts of time per sales call and the same call frequencies per year as follows : Class A : 60 minutes/call x 52 calls/year = 52 hours/year Class B : 30 minutes/call x 24 calls/year = 12 hours/year Class C : 15 minutes/call x 12 calls/year = 3 hours/year 3. Calculate the total work load involved in covering the entire market.In our example, this calculation is Class A : 150 accounts x 52 hours/year = 7,800 hours Class B : 220 accounts x 12 hours/year = 2,640 hours Class C : 510 accounts x 3 hours/year = 1,530 hours Total = 11,970 hours 4. Determine the total work time available per salesperson. Suppose that management decides that salespeople should work 40 hours per week, 48 weeks per year (allowing 4 weeks for vacations, holidays, sickness, etc. ), then each salesperson has available 0 hours/week x 48 weeks = 1,920 hours/year 5.
Divide the total work time available per salesperson by task. Assume that management specifies that sales personnel should apportion their time as follows : Selling tasks 45% 864 hours Non selling tasks 30%576 hours Traveling 25% 480 hours 100% 1,920 hours 6. Calculate the total number of salespeople needed. This is a matter of dividing the total market work load by the total selling time available per salesperson : 11,970 hours —————- = 14 salespeople needed 64 hours The work load approach is attractive to practicing sales executives. It is easy to understand and easy to apply Sales Potential Method • The sales potential method is based on the assumption that performance of the set of activities contained in the job description represents one sales personnel unit.
• A particular salesperson may represent either more or less than one sales personnel unit. If the individual’s performance is excellent, that individual may do the job of more than one unit ; if the individual’s performance is below par, he or she may do less. Sales job descriptions are constructed on management’s assumption that they describe what the average salesperson with average performance will accomplish. With that assumption, then, one can estimate the sales revenue that each salesperson (that is, each sales personnel unit) should produce. • Dividing the forecasted sales volume by this amount and allowing for sales force turnover results in an estimate of the number of salespeople needed.
These relationships are summarized in the equation : N= S / P + T ( S / P) This reduces to N = S / P (1+T) whereN = number of sales personnel units S = forecasted sales volume P = estimated sales productivity of one sales personnel unit T = allowance for rate of sales force turnover • This is a simplified model for determining the size of a sales force. An assumption implicit in this simple model is that sales potentials are identical in all territories. • The crucial estimate of the sales productivity of one unit of sales strength relies heavily on the accuracy and completeness of the sales job description. Estimating the sales force turnover rate is a matter of reviewing previous experience and anticipating such changes as retirements and promotions. Incremental Method • Conceptually, the incremental method is the best approach to determining sales force size. • It is based on one proposition : net profits will increase when additional sales personnel are added if the incremental sales revenues exceed the incremental costs incurred.
• The company now has 15 people on its sales force and wants to determine whether it should add additional staff.Its sales executives estimate the following increases in sales volume, cost of goods sold, and gross margin that would result from the addition of the sixteenth, seventeenth, eighteenth, and nineteenth salespersons. • Next, they calculate the net pro/it contribution resulting from the addition of each salesperson • Although this method is the most conceptually correct, it is also the most difficult to apply. • It requires, first, that the company develop a sales response function to use in approximating (in terms of sales volume) the market’s behaviour in relation to alternative levels of personal-selling effort. A sales response function is a quantitative expression that describes the relationship between the amount of personal-selling effort and the resulting sales volume.
• Not many companies have the research sophistication required for development of sales response functions, but some apply the basic concept. • It is doubtful that the incremental method is appropriate where personal-selling is not the primary means of making sales, that is, in cases where other forms of promotion, such as advertising, have stronger influences on sales volume than does personal-selling effort.