personal selling as on 22feb 2010

8/2/2019 Personal Selling as on 22feb 2010

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Sales managementSales management

Course Facilitator

M. Tariq Yousafzai


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Territorization

Territories are not rigid geographical boundaries

rather it is grouping of actual and potential

accounts

In other words Territorization is the process of

breaking up of a firms actual and potentialaccounts


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Reasons for Establishing Territories

Companies can have intensive market

coverage

Helps in providing better customer service

Provides motivation to salespersons

(compete)Performance evaluation

Salespersons are controlled via targets or

quotas

Helps avoid duplication of work

Continued...


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Reasons for revising territories

Inadequate information: (existing information mightbe incorrect when formulating territories)

Accounts potential might be under or overestimated

leading to creation of less or more territories

Changes in customer demand (up and down in

economy, in favor or out of favor cycle)

Increased competition

Decreased stamina of salespersons

Company policy (transferring seasoned salespersons to

an area with low sales thus revising territory)

New Product Launching


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Procedure for Developing Territories

Drawing territories is one amongst most important

responsibilities of sales managers

Results may be measured by sales volume, relative

market share, or profits.

Consequently, the primary objective for the sales

manager is to determine both the optimum number of

territories to be formed, and their configurations (an

arrangement of parts or elements in a particular form,figure or combination)


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Continued..

If an insufficient number of territories areformed, the sales potential of the firm will not be

realized for lack of coverage.

If too many territories are created, the accountbase of the business will become fragmented (a

small part broken off or separated from

something).


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Continued..

In such a case high turnover may result sincesalespeople will perceive little opportunity for

personal growth in such a situation.

This leads to another major objective: the

equalization of territory potentials. To be fair toall members of the sales force, all territories

should possess equal potentials.

Theoretically, this can be done by redistributing

accounts until the optimum point is reached.


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Continued..

However, it may be desirable doe salesmanagement to have different territories with

different potentials. Limited-potential territories

can be used as training grounds for new

members of sales force, or less demandingsettings for senior member.

Salespeople can be assigned to more

challenging territories in accordance with theirperformance.


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Continued

A more appropriate objective in many cases

may be adequately challenging territories,

formed by taking into consideration coverage

difficulty, salespersons varying abilities andterritorial sales potentials.


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Bases for territories

The bases for used for creating sales territories are mainly (a)

geography, (b) potential, servicing requirements and (d)workload

Geography:

The most common approach which usesexisting geopolitical boundaries such as states,provinces, counties or cities.

The major advantage of geographic approachis the ready availability of secondary data fromsuch sources such as bureau of statistics orSarhad chamber of commerce and industry


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Bases Continued

Potential

The potential approach refers to splitting up afirms customer base according to salespotential. It would seem to provide equalopportunity and thus bring out the best insalespeople.

First, management has to estimate the salespotential for the entire company, typically byapplying an expected market share percentage

to the projected market potential. Next, it has todetermine which sales potential will beappropriate for the average salesperson.


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Continued..

this approach ignores the differences incoverage difficulty.

Topography (the arrangement of the natural

and artificial physical features of an area),

customer density, and competitive intensity areamong the factors that require modification of

the equal-potential principle.


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Servicing requirements

Assume that Bonanza Pakistan has estimatedits total sales potential at 10 million for the year

2011 in Peshawar. Sales management has

further determined that each salesperson can

handle a personal sales potential of PKR500,000.

This would mean that twenty territories would be

formed, all of which would have identical salespotential of PKR 500,000 each.


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Continued..

However, the customer base constituting thesepotentials could differ from one territory to

another.

To contrast two possible extremes, onesalesperson might have a single customer worth

PKR 500,000 a year, whereas, another might be

asked to work with 500 accounts doing 1000

PKR worth of business annually.


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Continued..

A refinement of this approach classifies all accounts

according to their potentials

The best known of these classifications distinguishes

between A B and C accounts based on their annual

volumes and established call frequencies.

A accounts are cultivated aggressively and may

receive weekly or even more frequent calls; they

represent the mainstay of the business, but are alsomost vulnerable (exposed) to competitive efforts.


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Continued

B accounts are solid, stead business. They are

serviced regularly, perhaps at monthly intervals.

C accounts are marginal and may warrant onlyquarterly visits. Depending upon the account

mix, servicing requirements will differ from one

territory to the next unless adjustments are

made to achieve an equitable


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(4) Workload

The fourth sales territory base, workload goes

one step further.

It only considers individual account potentialsand servicing requirements in creating

territories, but also reflects differences in

coverage difficulty caused by topographical

features, account locations, competitive activityand so forth.


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Continued..

Asingle urban area such as Peshawar is likelyto represent several sales territories, whereas a

rural area may not offer enough potential for

even a single sales representative.

A rural salesperson may only be able to carryout two or three calls a day; his or her urban

counterpart may easily accomplish ten or even

fifteen visits daily. This raises complex issues of

equity in workload and compensation.


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Methods for designing territories

BUILD UP METHOD:This involves designing territories by combining

enough pieces of a company's overall market to

create units that offer sufficient sales challenge

Sales challenge refers to desirable callfrequencies and number of salespeople

This method is favored by many consumer

goods manufacturers looking for intensive

coverage


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BREAKDOWN METHOD

This method proceeds in the opposite direction.

In this method is a product of total marketpotential and an estimate of the company's likelyshare of it.

The method then sets an average sales figureper sales figure per salesperson that issubsequently divided into the overall salesforecast

Such an approach is useful for industrial goodsproducers that desire selective distribution

For example distribution in industrial estates


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Continued..

ParadoxInstead of viewing sales as a result of salesforce

effort and then forecasting sales accordingly, the

number of members in the sales organization

are determined by expected overall sales.This leads to self-fulfilling prophecy


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Incremental Method

C

onceptually more appealingUnder this approach, additional territories are

created as long as marginal profit generated

exceeds the costs of servicing tthem

RoutingStraight line method

Cloverleaf pattern (made up of four or more

adjoining circular sequences


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Role ofPersonal selling in

Marketing Mix

As we know that sales people are known as

eyes and ears of the organization because they

have a say in the process of designing the

marketing mix elements.


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Role ofPersonal Selling in Product

Strategy

In the past salespersons had limited input into product

development decisions. But nowadays salespersons do

have a say in the new product development process.

They also participate in test marketing.

Test marketing means offering your product in

diversified areas such as Karachi on test basis so as to

know the general response of public. In Pakistan

normally TV and cable channels run their test

transmission. Normally, they offer free viewer ship.


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continued

Salespersons can also give their input in

suggesting the right kind of packaging such as a

convenient packaging for a product such as

sweetener (low calorie) for diabetic and old agepatients to facilitate easy handling of the

product.


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Role ofPersonal Selling in Distribution

Strategy

A channel of distribution is the route that the title

to a product takes from producer to the end

user. It can be direct and indirect channel.

Indirect distribution is mostly used for frequently

purchased, low priced items where the expenseof going directly would be too high in relation to

the product value such as maintenance, repair,

groceries (food items) and personal health care

products such as mouth wash, shaving material,shampoos, face wash and so on


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Role ofPersonal Selling in Promotional

Strategy

It is commonly known that nothing happens untilsomebody sells something. This means thatrevenue is generated when salespersons see aproduct or service.

This is why as a means of promotion

advertisements are used which createawareness about the product. After theawareness has been created general publicforms a favorable or unfavorable attitude about

the product. Afterwards interest might becreated in the consumer mind which leads todesire and action (AIDA)


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Role ofPersonal Selling in Price

Strategy

Salespersons are in position to see and sense

market reaction to alternative price levels and

advise senior management as they have a fairly

good idea about other competitors price lists.

The pricing can be competition orientedmeaning giving a price which can compete with

competitors parity products (parity products are

those products which give almost same quality

at a similar price such as Lipton and Tapal,Lucky, Cherat and Best Way Cement of

Pakistan)


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Modern Selling Approaches:

Companies are concerned with developing long lasting

relationships with their customers therefore many

approaches have developed.

CustomerRelationship Lifecycle

According to Bained et al, (2009) the customer

relationship lifecycle has four main stages as shown in

the Figure (2-12) customer acquisition, development,

retention and termination. These stages resemble the

stages of product lifecycle stages where differentstrategies are used as per needs of the product and in

this context as the relationship evolves.


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Customer relationship cycle


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Continued

The customer relationship lifecycle reveals

those consumers who keep on returning to the

same business are loyal customers.

Loyal customers occupy six steps on the ladder

of loyalty as shown in table below


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Customer loyalty ladder


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continued

Partner: A partneris a customer who enjoys a

partnering relationship with your company Advocate:

An advocate is a customer who does positive word of

mouth to other customers

Supporter: A supporteris a passive fan of your

organization Client: A clientis a customer who gives repeat

business but neutral towards organization

Purchaser: A purchaser is one rung higher and is

someone who has bought once from you Prospects: Aprospects who is normally a potential

customer


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Partnering Relationships

This refers to the transition from pure selling to

mutually beneficial roles with clients. From the

view point of sales manager a client can be

seen as a prospect, purchaser, client, advocateand finally a partner.


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Relationship Selling:

This means to develop associations with customers. It

includes identifying and satisfying new needs and

developing stronger contacts with customer.

For instance the Express Surf commercial tries to

establish a strong sense of association where a lady

says MAIN EXPRESS NAHI CHOR SAKTI. Similarly,some consumers have developed long lasting nostalgic

associations with Dalda Banaspati Ghee. Even though

vegetable oil is best for health still people recall their

parents bringing home Dalda. In fact their unique slogan

of Maan Ke Pyaar Ki Tarah khalis is still working for the

company.


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Team Selling

This refers in particular for salespersons working

with larger clients with complex needs.

In this type of selling approach salesperson not

only provide the product or service but mayextend their cooperation in installation as well as

training the clients personnel in learning as how

to actually operate the product or service


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continued

For instance Microsoft is recognized is the

largest donor to flood affected people of

Pakistan along with General Electric, Proctor

and Gamble and Coca Cola.

Microsoft provide some part of donations in cashand others in the form of software (eagle

disaster preparedness software). Afterwards

Microsoft went on to train Pakistani workers for

operating the software in an effective andefficient manner.


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Value added Selling

In this approach salespersons are expected to

exceed customers expectations. It is important

to know that value added means going beyond

merely selling products by providing services.

This approach is carried our for more

demanding customers.

For example as part of their value laden/adding

activities Zong and Ufone offer cheap cell

phones along with a free sim for poorcustomers.


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Consultative Selling

Here salespersons act as consultants or

problem solvers. For example if you want to

purchase a Dell computer then you go to their

website and ask their representative online

about the various options available and different

price ranges.

More than this they also provide free of cost

trouble shooting at their web site of you have

some problem in your computer or laptop.


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Sales Promotion

Whereas Kotler et al. (2005), define sales

promotion as short run incentive to induce

buying of a product or service.

Almost all consumer product companies confirmusing some kind of sales promotions and it

makes up to 75 % of their marketing spending

(Schultz & et. al, 1998).


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(1)Consumer oriented sales promotions

According to Kitchen and Pelsmacker (2004),

consumer oriented sales promotions use pull

strategy by encouraging consumers to pull the

products from the manufacturers channel.

These sales promotion tools which includes but

not limited to samples, coupons, cash refunds,

price packs, premiums, advertising specialties,

patronage rewards, point-of-purchase (POP)

displays, demonstrations, contests, andsweepstakes target the end-users (Armstrong

et. al, 2009).


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(2) Trade oriented sales promotion

Trade oriented sales promotion uses a push strategy by

offering incentives (push money) to wholesalers andretailers to push the product through the marketing

channel (Kitchen & Pelsmacker, 2004).

Boone and Kurtz (2008) further elaborated these toolsand mentioned that these include but are not limited to

trade allowances (buying allowance, off-invoice

allowances, promotional allowances), point-of-purchase

(POP) advertising, trade shows, scientific shows, dealer

incentives, contests and training programs.


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(3) Business oriented sales promotions tools

These sales promotions tools are business oriented and

used for generating business leads, increasingpurchases, rewarding clients and motivatingsalespersons. For instance, conventions and salescontests (Kotler & Armstrong, 2008).

Tony Yeshin (2006) advocates that sales promotions aremore beneficial for small firms as the costs of salespromotion can be trim tailored according to the needs ofa specific business.

These help a small business to compete for shelf andmind space in competition with heavy weight brands withhuge media spending.


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personal selling as on 22feb 2010

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