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Relationship Marketing:Where Personal Selling Fits

Relationship Marketing:Where Personal Selling Fits

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Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin

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Main TopicsMain TopicsMain TopicsMain Topics

What Is the Purpose of Business?What Is Marketing?

Customer Orientation’s EvolutionMarketing’s Importance in the Firm

Essentials of a Firm’s Marketing EffortRelationship Marketing

Relationship Marketing and the Sales ForceLevels of Relationship Marketing

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Main TopicsMain TopicsMain TopicsMain Topics

Partnering with CustomersThe New Consultative Selling

E-Selling: Technology and Information Build RelationshipsWhat’s a Salesperson Worth?

The Key to Success

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In Chapter 2 We Will See What is Meant by the Terms...

Business Marketing Product, Price, Place, Promotion Personal Selling

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The Purpose of Business is to: Increase the general well being of humankind

through the sales of goods and services

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This Requires

Making a profit in order to operate the business and to provide beneficial products to the marketplace

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Profit is a Means to an End

Profit is needed to serve humankind Profit is needed to operate the business Profit is needed to provide products to the

marketplace

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The Two Basic Functionsof Business

Production of goods or creation of services Marketing those goods and services

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What is Marketing? Marketing is a process of planning:

The conception, pricing, promotion, and distribution of goods, services, and ideas

To create exchanges that satisfy individual and organizational objectives

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Customer Orientation’s Evolution The production concept The selling concept The marketing concept

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The Production Concept

Companies were production oriented

We know what people want – they want our product.

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The Selling Concept

Characterized by product demonstrations and unsophisticated sales techniques

Emphasis on the product Product created and then sold Management is sales-volume oriented Stresses needs of the seller

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The Marketing Concept

Emphasis is on customer’s wants Customer’s wants drive production Management is profit-oriented Planning is long-term Stresses wants of buyers

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Exhibit 2-1: The Difference Between Selling and Marketing Concepts

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Marketing’s Importance in the Firm

Marketers have four main objectives:Maximize the sales for existing products in

existing marketsDevelop and sell new productsDevelop new markets for existing or new productsProvide quality service to ensure repeat business

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Exhibit 2-2: The Marketing Group is the Link Between Customers and the Organization

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Product: It’s More Than You Think

A good is a physical object that can be purchased

A service is an action or activity performed for a fee

Value-added refers to benefits received that are not included in the purchase price of a good or service

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Exhibit 2-3: Four Elements of the Marketing

Mix and Four Promotion Activities

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Exhibit 2-4: Examples of Business-To-Business Value-Adding

Help customer reduce process costs Improve yieldsReduce waste (through recycling, etc.)Reduce reworkReduce direct laborReduce indirect labor (inspection, handling)Reduce energy costs

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Help customer reduce inventoryConsignmentJust-in-time deliveryReduced cycle time

Exhibit 2-4: Examples of Business-To-Business Value-Adding

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Help customer reduce administrative costsSimplify billing Improve tractabilityUse electronic data interchange

Exhibit 2-4: Examples of Business-To-Business Value-Adding

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Improve safety for customer and his employeesReduce price to the customerSubstitute certain product components Improve company processes and supplier

processes

Exhibit 2-4: Examples of Business-To-Business Value-Adding

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What is Meant by the Term “Product?”

A product is a bundle of tangible and intangible attributes, including package, color, and brand, plus the services and even the reputation of the seller

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The Term “Product” May Refer to a Good or Service

ExamplesGoods - a physical object for sale

AutomobileCell phonePrescription medicine

Services - an action or activity done for others for a fee

Automobile repairWireless phone planHealth insurance

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The Good and the Service:

Automobile - repair services Cell phone - wireless phone plane Prescription medicine - health insurance

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We Will Use the Terms Follow-up and Service. What do They Mean?*

Follow-up refers to maintaining contact with a customer in order to evaluate the effectiveness of the product and the satisfaction of the customer (More on this in Chapter 14)

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The Term “Service” May Refer to A:

Product, as insurance and advertise which is sold by someone

Service, as customer service which is an activity offered by a seller in conjunction with the purchase of a product, such as delivery, repair, credit cards accepted, 800 telephone number, web site, salesperson available to help customer (More on this in Chapter 14)

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Customer Service by the Salesperson Include:

Salesperson goes to customer’s business to help:Resell productsCustomer use productHandling complaintsReturn damaged productsProvide samplesSuggest further business opportunities

(Above discussed in Chapter 1)

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People Buy More Than the Product

People buy want-satisfaction as Image of owning as a

Polo shirt vs. Wal-Mart shirtDodge Viper* vs. Volkswagen Vanagon*

What the product will do Its quality

*products and associated images used for illustrative purposes only

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What is a consumer product? A consumer product is produced for, and

purchased by, households or end consumers for their personal use

What is an example of a consumer product?ToothpasteTelevisionClothes

There Are Two General Types of Products - Consumer and Industrial Products

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There Are Two General Types of Products - Consumer and Industrial Products

What is industrial product? An industrial product is sold primarily for use

in producing other products. Industrial users are profit nonprofit organizations that buy good and services for one of three purposes*1.To make other goods and services

2.To sell to consumer or other industrial users

3.To conduct the organization’s operations*

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The Key Phrases That Differentiate Between Consumer and Industrial Products are:

Consumer product - personal use Industrial product - producing other products What is an example of an industrial product?

Airlines purchase airplanesBoeing sells their airplanes to airlinesUniversity buys computers

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What Is Another Name for an Industrial Product?*

Business product Organizational product

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Price: It’s Important to Success

Price refers to the value or worth of a product that attracts the buyer to exchange money or something of value for the product

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Distribution Moves Products to Customers

Three Customer GroupsA household refers to a decision-making unit that

buys for personal useA firm is an organization that produces goods and

servicesA government is an organization that has two

functions: The provision of goods and services to households and

firmsThe redistribution of income and wealth

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Consumer and Industrial Products are Often Distributed Through Resellers

What are Resellers? Resellers, such as wholesalers or retailers,

purchase products and then sell to organizations and/or individuals

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What Is a Wholesaler? The Wholesaler (May Be Referred to as a Distributor)

Primarily engaged in buying, taking title to, usually storing and physically handling goods in large quantities, and reselling the goods, usually in smaller quantities toRetailersWholesalersManufacturers

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Exhibit 2-5: Examples of Distribution Channels for Consumer and Industrial Products

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Promotion Tells People

Promotion increases sales by communicating product information to potential customers

The four basic components of a firm’s promotional effort are: (PAPS)Personal sellingAdvertisingPublicitySales promotion

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Exhibit 2-6: Promotion Activities Personal Selling is…

personal communication of information to persuade

Advertising is…non-personal communication of information paid for by an identified sponsor such as an individual or an organization (Methods include TV, newspapers, catalogs and the radio)

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Publicity is…non-personal communication of information that is not paid for by an individual organization. Information appears in media such as television, radio and newspapers

Sales promotion involves…activities or materials used to create sales for goods or services

Exhibit 2-6: Promotion Activities

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Exhibit 2-6

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Exhibit 2-6: Promotion Activities Two types of sales promotion

Consumer - includes free samples, coupons, contests, and demonstrations to consumers

Trade - encourages wholesalers and retailers to purchase and to sell aggressively using devices such as sales contests, displays, special purchase prices, and free merchandise

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Exhibit 2-7: Examples of Each Marketing Mix Element

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Relationship Marketing

Relationship marketing is the creation of customer loyalty

Targets a major customer that it wants to sell to now and in the future

Establishes a long-term collaborative relationship

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Four basic questions used as guidelines in defining the role of the sales force:

1.How much selling effort is necessary to gain and hold customers?

2.Is the sales force the best marketing tool?

3.What type of sales activity will be necessary?

4.Can the firm gain strength relative to its competition with its sales force?

Relationship Marketing andthe Sales Force

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Personal selling builds relationships! Two main functions of personal selling are to:

Generate revenueProvide services to satisfy customers

Flexible in operation Focused on prospective customers Results in actual sales

Relationship Marketing andthe Sales Force

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implement relationship marketing

Relationship Marketing andthe Sales Force

Salespeople

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Summary of Relationship Marketingand the Sales Force

What is the role of the sales force in the marketing effort?

Personal selling builds relationships Salespeople implement relationship marketing

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Exhibit 2-8: Examples of Various Marketing and Sales Methods Used to Sell Mid-Sized Computers Business-To-Business

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Three Levels of Relationship Marketing

Transaction selling Relationship selling Partnering

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Three Levels of Relationship Marketing

Transaction selling: customers are sold to and not contacted again

Relationship selling: the seller contacts customers after the purchase to determine if they are satisfied and have future needs

Partnering: the seller works continually to improve its customers’ operations, sales, and profits

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Exhibit 2-9: Dependence Increases as Relationships become More Important

Trans

actio

nal

High

Low

Rel

atio

nshi

ps

HighLow Dependence

Relatio

nship

Partn

ersh

ip

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Partnering with Customers

Encourages both the buyer and seller to share information

Two companies work toward the same objective

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Partnering, cont…

Components of partnering include: Individual excellence Importance Interdependence Investment Information Integration Institutionalization Integrity

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Exhibit 2-10

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Consultative Selling

The process of helping the customer achieve strategic short and long-term goals through the use of the seller’s goods and/or servicesA highly interactive dialogue between a

salesperson and a customerA balanced exchange of information

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Three Consultative Selling Roles for the 21st Century

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Three Roles of Consultative Selling

The Team LeaderCoordinates all of the information, resources, and

activities needed to support customers before, during, and after the sale

The Business ConsultantGives advice and service. Uses internal and

external resources to gain an understanding of the customer’s business and marketplace

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The Long-Term AllyCreates a “win–win” situation. As the customer’s

sales and profits grow, so do the salesperson’sThe ability of a salesperson to fulfill the role of

long-term ally is a pivotal factor in determining whether a sales transaction is just a transaction or the beginning of a relationship

Three Roles of Consultative Selling

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The Customer-Seller Relationship Gap

May occur when the salesperson’s interest in the customer declines

Usually after the sale Yet the customer’s interest increases after

the sale This is one reason why service after the

sales is so important

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What’s a Salesperson Worth?

“Worth” is dependent upon at least three factors:What the salesperson costsHow much he/she sellsThe profit margin

Salespeople make a valuable contribution to the success of their employer

Selling closes deals and generates the revenue to keep the organization in business

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The Key to Success

Knowing and satisfying target customers with competitively superior products and service

Marketing is the company function that defines customer targets and the best way to satisfy their needs and wants competitively and profitably

Marketing’s main customer contacts are salespeople

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Exhibit 2-13: Marketing and Personal Selling Provide Service to Customers

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Summary

Selling is only one part of the overall marketing activities of the firm

Marketing is an exchange process between buyers and sellers

The marketing concept is based upon a firm’s desire to increase sales while anticipating and satisfying consumer needs

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The marketing mix is comprised of four variables:ProductDistributionPromotion

The role of the salesperson is considered carefully in the firm’s determination of the promotional aspect of its marketing mix

Summary, cont…

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Consultative selling focuses on the salesperson’s ability to provide customer satisfaction by adding value to the sales transaction

Summary, cont…