BEHAVIOURAL EQUATION THEORYJ A Howard formulated the theory

four essential elements of learning process in stimulus-response model

drives , cues , response , reinforcement

1. drives: strong internal stimuli that impels the buyer to respond.there are two kinds

innate drive: stems from physiological needs

learned drives: such as striving for status or social approval, are acquired when paired with satisfying of innate drives

2. cues: weak stimuli that determine when the buyer will respond

triggering cues: activate the decision process for any given purchase

non-triggering cues: influence the decision process but do not activate it. two

kinds –

A) Product cues: external stimuli received from the product directly. (Package, weight, price)

B) Informational cues: external stimuli. May come from advertising, personal selling etc.

***Specific product and information cues may also act as triggering cues

3. Response: what buyer does

4. Reinforcement: any event that strengthens the buyer’s tendency to make particular response

Howard incorporates these four elements into an equation:B=p X D X K X VB= response (purchasing the brand/patronising the supplier)P= predisposition (inward response tendency)D= present drive level (amount of motivation)K= incentive potential (value of product or its potential satisfaction to the buyer)V= intensity of all cues

CONTD…

the relation among the variable is multiplicative. thus, if any independent variable has zero value, b will also be zero and there is no response.

buyer-sellers dyad and reinforcement by providing the product to the buyer by giving social approvalsalespersons influence processthe process is explainable in terms of equationb= p x d x k x v salesperson influences p directly sales person also influences d, which ultimately affects k finally the sales person vary the intensity of his efforts, so

making difference in v

salesperson’s role in reducing buyer’s dissonance: four types of cases involving the salesperson’s role.

1. an established product: an ongoing salesperson’s-client relationship

2. an established product: a new salesperson-client relationship

3. a new product: an ongoing salesperson-client relationship

4. a new product: a new sales person-client relationship

how to reduce buyers dissonance1. to emphasize the advantages of products

purchased2. by providing the information that permits the buyer

to rationalize the decision

FORMULATION OF PERSONAL SELLING STRATEGIES

Pure competition No single buyer/seller is so large that affects the product total demand/supply All sellers products are identical No artificial restraints on price exists All buyers are informed about sellers price

Personal selling strategy

Unrealistic assumptions, therefore, no personnel selling strategies

Monopolistic competition Large number of sellers of generic product but each product is differentiated Easy entry conditions Buyers are not fully informed about the offering of competing sellers

Personal selling strategySellers differentiate their market offerings through individualizing one or several components of overall marketing strategy.

Oligopolistic competition– Few & large competitors– Entry barriers– Changing of marketing strategy of one competitor has direct

repurcussions on otherPersonal selling strategies

Plays important role in building and maintaining dealer competition, in servicing the distribution network and in gathering information on competitor’s activities.

No direct competitionNo direct but indirect competition exists.Personal selling strategies– Selling strategies required to stimulate primary demand– Requirement of distribution strategy– Requirement of pricing strategy – Integration of product, distribution, pricing strategies in overall

marketing strategies

DETERMINING THE KIND OF SALES PERSONNEL

1. Product market analysisA) Product specialist B) Market specialistC) Combination of both

2. Analysis of sales personnel role in securing the order: choice of basic selling style

A) Trade selling: Developing and maintaing long-term relationship with stable customers Low key selling, little or no pressure, job is dull & routine Advetising & other promotional measures are preferrred than personal selling Sales person role is to buildup volume by providing promotional assistance

B) Missionary selling Low key and does not require high-level technical training or ability Salesperson job is to persuade indirect customers to buy from the company’s direct customers

c) Technical sellingd) New business selling

DETERMINING THE KIND OF SALES PERSONNEL CONTD…

C) Technical selling Sales person deals with company’s established account &

perform advisory function Sales person sells directly to the industrial users & other

buyers Sales person specialize by either product or market The ability to identify, analyze & solve customers problem

is important

D)New business selling Sales persons role is to convert prospects into customer Sales person should unusually creative, ingenious and

possess a high degree of resourcefulness

DETERMINING THE SIZE OF SALES FORCE

1. The workload method: all sales persons should share equal workload

i. Classify customers into sales volume potential category

ii. Decide on length of time per sales call and desired calls frequencies on each class

iii. Calculate the total workload

iv. Calculate total worktime available per person

v. Divide total worktime available per person by task

vi. Calculate the total no. Of sales person needed

– Large firms like ibm & at&t has used this approach

– Basic flaw – disregard profit as an explicit consideration

- All sales person will utilize their time with equal efficiency

Contd…2. The sales potential method

Performance of the set of activities contained in the job description represents one sales personnel unit

Does not consider the lead time Assumes sales potential are identical in all territories Estimate of sales productivity of one unit sale & turnover is

crucial & relies on accuracy

N = s/p+t(s/p) or n=s/p(1+t)

N = no. Of sales personnel unitsS = forecasted sales volumeP = estimated sales productivity of one sales personnel unitT = allowance for rate of sales turnover

Contd…

3. Incremental method

Best approach to determine sales force size

Based on proposition: net profits will increase when additional sales personnel are added if the incremental sales revenues exceeds the incremental costs incurred

Conceptually most correct but most difficult to apply It is doubtful that the method is appropriate where

personal selling is not primary means of making sales It fails to account for possible competitive reactions and

long term investment effect of personal selling

STEPS IN PERSONAL SELLING

Prospecting Pre-Approach ApproachPresentation

and demonstration

Handling objects

Close

PROSPECTING

• the planning work which is essential in eliminating non-buyers

• steps in prospecting

1. formulating prospects definition

2. searching out potential accounts

3. qualifying prospects & determining probable requirements

4. relating company product’s to each prospect’s requirement

CONTD…

• methods of prospecting

1. acquintance references

2. cold calling

3. centre of influence method

4. personal observation method

5. direct mail/ telephone method

6. company’s record

7. newspapers

8. retailers

9. any other

PRE-APPROACH

• the kind of preparation to meet the buyer

• significance of pre-approach

concentrate on prospect and not the suspect

helps gain information about the prospect before approaching

efficient & effective sales presentation

does not waste the prospects time & energy

APPROACH• direct contact between sales person & prospect

• importance of successful approach

enhances sales & thus important for running business enlightens the customer failed approach gives opportunity to rivals

• key to successful approach

meet prospect with prior appointment professionalism, confidence & complete information make prospect feel relaxed respect the views & critism of prospects effective presentation with the use of sales figure efficient follow up

CONTD…

• methods of approach

cashing on brand name or company’s reputation

customer benefit approach

innovative products open the door to salesman

the premium approach

the shock approach

the approach of making prospect feel important

the survey approach

the interactive approach

PRESENTATION & DEMONSTRATION

– requirements of good presentation

quick presentation of products attractive, decorated & well organized packages explaination of product features in simple & easy terms show the kind of quality demanded by sales person product appeal to customer senses

– advantages of demonstration

shows product features clearly reinforcement of buying decisions gives customer opportunity to compare products increases confidence of customer speaks louder than salesman

HANDLING OBJECTIONS

• types of objections

objections on price

objections on quality

objections on payment

objections on after sale service

objections on timing to buy

• procedure for handling objections

give opportunity to prospect to raise objection

admit valid objections and accept in positive spirit

never offend prospect by overruling objection

convince prospect to view problem from different angle

give better deal to customer to counter objection

THE SALES CLOSE

convince the customer to buy a product

• reasons for failure to close prospect not fully convinced

pressurized by salesman to buy product

prospects want to postpone purchase

salesman not recognizing his needs/preferences

salesman not fully aware

proper planning, presentation & demonstration is not there

SALES ORGANIZATIONS

• purpose of sales organizations

to permit the development of specialist

to assure that all necessary activities are performed

to achive coordination or balance

to define authority

to economize on executive time

SETTING UP A SALES ORGANIZATION

• Defining the objective

Set both quantitative as well as qualitative objectives Qualitative objectives are indispensable for long-range planning, thus,

kept in mind in short range planning also Quantitative objectives are required as operating guideposts

• Delineating the necessary activities

Determining the necessary activities & their volume of performance is based on qualitative & quantitative objectives

Also helps in determining which activities to be performed in what volume

CONTD…• grouping activities into ‘jobs’ or ‘positions’

activities identified are allocated to different positions activities are grouped so that closely related tasks are assigned to

same positions each position must also contain some variations

• assigning personnel to positions

whether to recruit special individuals to fill the positions or to modify the positions to fit the capabilities of available persons

• providing for coordination and control

sales executives require means to control their subordinates & to coordinate their efforts

they should not be overburdened nor should have too many subordinates

CONTD…

coordination & control is obtained through both formal & informal means

formal instruments of organizational control:1. written job description

reporting relationships job objectives, duties & responsibilities performance measurements

2. an organization chart reduces confusion about individuals role delineates formal relationship

3. organizational manuals extension of organization chart contains chart for both the company & the department

BASIC TYPES OF SALES ORGANIZATION STRUCTURE

• factors affecting the organizational structure

• types of organization structure the customers the marketing channelsthe company size the product or product line the practices of competitors personalities & abilities of personnel

• line sales organizations

oldest & simplest structurewidely used in smaller firms or firms with small numbers

of selling personnels, limited geographical area or narrow product line

chain of command run from top to downall executives exercise line authority & each sales person

is responsible to next in the hierarchy

LINE SALES DEPARTMENT ORGANIZATION

GM

SM

SALESPEOPLE

SALES PEOPLE

SALESPEOPLE

OFFICESTAFF

ASSISTANTSM DIV-1

ASSISTANTSM DIV-2

ASSISTANTSM DIV-3

ASSISTANT SM OFFICE

CONTD…

no cross communication between persons at same level greatest use in companies where all sales persons report directly to the chief sales

executives

• advantages: problems of discipline & control are small authority & responsibilty are clear saves time in making policy changes development of close relationship between superior & subordinate administrative expenses are low

• disadvantages too much dependence on department head insufficient time for policy making & planning inappropriate for rapidly growing firms offers little opportunity to subordinates to acquire management skills

CONTD…• line & staff sales organizations

found in large & medium-sized firms employing number of sales persons, selling diversified product lines over wide geographic areas

provide top sales executives with group of specialists to assist

staff helps in conserving the time & frees executives for other works

staff specialists increases overall effectiveness of department

staff do not have authority to issue orders or directives

LINE & STAFF SALES DEPTT. ORGANIZATION

President

AdvertisingManager

Vp marketing

Sales personelDirector

Director Training

Assistant Gm sales

Manager market research

AssistantTo

Gm sales

Gm sales

Sales Promotion Manager

District sales manager

Branch sales manager

Sales personnel

CONTD…• Advantages

Specialization

planning activities are divided and apportioned to staff members

executives concentrate on coordination & control

• Disadvantages

increase in administrative expenses

difficult to prevent some persons from evading unwanted responsibilities

CONTD…• functional sales organization

each individual in an organization should have few distinctive duties as possible

principle of specialization is utilized to its fullest extent sales people receive instructions from several executive

but at different aspects of their work

• Advantages improved performance

• disadvantages

not feasible for small & medium sized firms suitable for large firms with stable operations & with

opportunity for considerable division of labour

CONTD…• committee sales organization

never a sole basis for organizing a sales deptt.

method of organizing the executive groups for planning & policy formulation

the agenda must be planned & controlled to avoid wasting time

• advantages

• promote coordination

• collective decision making

• provide focal point for discussion & for suggestions

SALES TERRITORIES• a sales territory is a grouping of customers and

prospects assigned to an individual sales person

• reason for establishing or revising sales territories

a. to provide proper market coverage

b. to control selling expenses

c. to assist in evaluating sales personnel

d. to contribute to sales force morale

e. to aid in the co-ordination of personal selling and advertising effort

Procedure for setting up or revising sales territories

• four steps1. selecting a basic geographical control units: the most commonly

used control units are –

a. counties: smallest unit for which govt. officials report data

b. zip code areas: generally reflects economic characteristics of area

c. cities: used when sales potential is located in urbanized areas

d. metropolitan statistical areas: geographical area with large population nucleus together with adjacent communities

e. trading areas: the geographical region surrounding the city that serves as dominant retail or wholesale center or both for the region

f. states: used when company with small sales force covering the market extensively rather intensively or when company is first using the national distribution , which assigns its sales person territories with 1 or more states as temporary expedient and as soon as feasible a change is made to a small control unit

CONTD…2. determining sales potentials in control unit

sales potential represents the maximum possible sales opportunities open to a specific company selling a good or services during a stated future period to a particular market segment

3. combining control units into tentative territories

decides on number of territories, assuming that all sales personnel are of average ability

analysis of past sales experience helps in determinig the % of total sales potential that an average sales person should realize

estimate the sales productivity per sales personnel unit and devides it into the total estimated sales potential = no. of sales personnel units - & territories required.

the next step is to decide the territory shape, which affects selling expenses & ease of coverage

CONTD…4. adjusting for coverage difficulty and redistricting tentative territories – redistricting

to adjust for coverage difficulty is a seven step procedure –

a. determine no., location & size of customers & prospects in each tentative territory

b. estimate time required for each sales call

c. determine length of time between calls, that is amount of time required to travel from one customer to another

d. decide call frequencies

e. calculate the no. of calls possible within a given period

f. adjust the no. of calls possible during a given period by the desired call frequencies for the different classes of customers & prospects

SALES QUOTAS

– quotas are quantitative objectives assigned to sales organizational units.

– all quotas have time dimension – they quantify what management expects within a given period

– quotas are devises for directing & controlling sales operation

– accurate data are important to the effectiveness of quota system

– judgement & administrative skills are required of those with quota setting responsibilities.

OBJECTIVES IN USING QUOTAS

• to provide quantitative performance standard – comparision of quota with sales performance identify week & strong points

• to obtain tighter sales & expense control

• to motivate desired performance

• to use in connection with sales contest

companies frequently use “performance against quota” as the main basis of making awards in sales contest

sales contest is a powerful incentive if all

participants feel they have equal chance of winning

TYPES OF QUOTAS• sales volume quota

oldest & most common type

communicates – “ how much for what period”

set for geographical areas, product lines or marketing channels or combination

the smaller the unit, the more effective the quota for controlling sales operation

• budget