Module 2 : the Selling Process : Sales Activities and Careers

Module 2 : the Selling Process : Sales Activities and Careers

MODULE 2 : THE SELLING PROCESS : SALES ACTIVITIES AND CAREERS

Organisational Buying Decisions

Participants

-Initiators : People who perceive a problem or opportunity that may require the purchase of a new product or service

-Users : People in the organization who must use or work with the product or service often influence the purchase decision

-Influencers : People who provide information for evaluating alternative products and suppliers, and play a major role in determining the specifications and criteria to use in making the purchase decision.

-Gatekeepers : People who control the flow of information to other people involved in the purchase process. The Purchase agents, suppliers’ salespeople.

-Buyers : Purchasing agent or Purchasing manager, who has the authority to contact suppliers and negotiate purchases. May be constrained by technical specifications and contract requirements determined by technical experts and top users.

-Deciders : Person with the final authority to make a purchase decision.

Organisational Buying Center :

All the people who participate in buying a particular product or service can be referred to as a buying center. Normally there are 3-12 members in the buying center.

Two kinds of Purchase Decisions :

(i)New Buy

(ii)Straight Rebuy

Relative influence of representatives from various functional departments at different stages in the two types of organizational purchase decisions may be different.

Steps in the Buying Process

(i)Identify need

(ii)Set specifications

(iii)Evaluate choices

(iv)Select Supplier

Implications of the Buying Decision on Sales planning

-Trying to determine who the salesperson should contact

-When each contact should be made

-What kind of information and appeals each kind of participant is likely to find most useful and persuasive

Stages in the Organisational Buying Process

(i)Anticipation or recognition of a problem or need

(ii)Determination and description of the characteristics and the quantity of the needed item

(iii)Search for and qualification of potential suppliers

(iv)Acquisition and analysis of proposals and bids

(v)Evaluation of proposals and selection of suppliers

(vi)Selection of an order routine

(vii)Performance evaluation and feedback

Anticipation or Recognition of a Problem or Need

A firm’s demand for goods is a derived demand. This characteristic makes organizational markets quite volatile. Many different situations can lead someone to recognize a need for a particular product or service. Need recognition may be almost automatic or a need may arise when someone identifies a better way of operating, or when the focus of a firm’s operations changes. Needs may be identified and the purchasing process maybe initiated by a variety of people in the organization.

Determination and Description of the Characteristics and Quantity of the Needed Item

These are usually determined by the demand for the firm’s outputs and by the requirements of its production process and operations. Criteria used must ensure that :

-Criteria should be technically precise

-Careful consideration to quantities required to minimize inventories or downtime caused by lack of needed materials

A variety of technical experts and also people who will use the material or equipment are involved in this stage of the decision making process. Clear communication regarding the above points is required.

Search for and Qualification of Potential Suppliers

In case of repeat buying, the search maybe limited to one or a few suppliers that have performed satisfactorily in the past. If the purchase involves a new item or if the item is complex and expensive, organizational buyers often search for several potential suppliers to ensure that they can select the one with the best product and most favourable terms.

Acquisitions of Proposals or Bids

Once potential suppliers are identified, the buyer may request specific proposals or bids from each. When the item is frequently purchased, standardized or technically simple, this process may not be extensive. For more complicated and expensive goods and services, lengthy and detailed sales presentations and written proposals may be requested from each potential vendor.

Evaluation of Offerings and Selection of Suppliers

Various members of the buying center examine the acceptability of the various proposals and potential suppliers. It may also involve negotiation about prices, credit terms and delivery schedules.

Factors influencing the choice of the supplier

-Service/working relationship

-Product quality/selection

-Low price

-Ability to meet deadlines

-Reputation for fair dealing

-Nearness/location

-Friendship with supplier

-Salesperson’s personality

-Credit policies

-Prestige of supplier

-Reciprocity

The relative importance of different types of selection criteria varies across organizations snf the types of products and services being purchased.

Selection of an Order Routine

After an order has been placed with a supplier, the purchasing department often tries to expedite the delivery of the goods.

Performance Evaluation and Feedback

This involves evaluation of both the product and the suppliers. In most organizations, evaluation is a formal process, involving written reports from the user department and other persons involved in the purchase.

Repeat Purchase Behaviour

In Straight Rebuys, a customer reoders an item that it has purchased many times. Straight rebuys are often carried out by members of the purchase department with little influence from other employees. The buyer chooses suppliers from an approved list, giving weight to the company’s past satisfaction with those suppliers and their products.

For suppliers not on the approved list, the objective is to move the customer away from the automatic reordering process of a straight rebuy toward the more extensive evaluation process of a modified rebuy purchase decision – where the buyer is interested in modifying product specifications, or other terms it has been receiving from existing suppliers and is willing to consider dealing with new suppliers.

It might be recommended for the company’s salespeople here tyo bypass the purchasing department and call directly on users or technical personnel and try to convince them the firm’s products offer advantages on some important dimension over the products they are currently using.

SELLING ACTIVITIES

(i)The Selling Function

-Plan selling activities

-Search out leads

-Call potential accounts

-Identify decision makers

-Prepare sales presentations

-Make sales presentations

-Overcome objections

-Introduce new products

-Call new accounts

(ii)Working with Others

-Write up orders

-Expedite orders

-Handle back orders

-Handle shipping problems

-Find lost orders

(iii)Servicing the Product

-Learn about the product

-Test equipment

-Supervise installation

-Train customers

-Supervise repairs

-Perform maintenance

(iv)Managing Information

-Provide technical information

-Receive feedback

-Provide feedback

-Check with superiors

(v)Servicing the Account

-Stock shelves

-Set up displays

-Take inventory for client

-Handle local advertising

(vi)Attending conferences/meetings

-Attending sales conferences

-Attending regional sales meetings

-Work at client conferences

-Set up product exhibitions

-Attend periodic training sessions

(vii)Training/Recruiting

-Recruit new sales reps

-Train new salespeople

-Travel with trainees

(viii)Entertaining

-Entertain clients

(ix)Travelling

-Travel out of town

-Spend nights on the road

-Travel in town

(x)Distribution

-Establish good relations with distributors

-Sell to distributors

-Handle credit

-Collect past due accounts

How Sales People Spend Their Time

Account service/coordination:16%

Internal Meetings:5 %

Travel:20 %

Face to face selling:33 %

Phone Selling:16 %

Administration:10 %

Different Types of Sales Jobs

(i)Retail Selling

These jobs involve selling goods and services to ultimate consumers for their own personal use, such a sdoor-to-door selling, insurance agents, real estate brokers and retail store clerks.

(ii)Industrial Selling

This involves the sales of goods and services at the wholesale level.

It involves three kinds of customers :

(a)Sales to Resellers

(b)Sales to Business Users

(c)Sales to institutions

Many of the goods and services sold by industrial salespeople are more expensive and technically complex than those in retailing.

Industrial customers tend to be larger and engage in extensive decision making processes involving many people.

Decisions made in effectively managing an industrial salesforce are broader than those required for a retail salesforce.

Types of Industrial Sales Jobs

Four different types of trade selling according to Derek Newton are :

(i)Trade Selling

-Increase business from current and potential customers by providing them with merchandising and promotional assistance.

(iii)Missionary Selling

-To increase business from current and potential customers by providing them with product information and other personal selling assistance.

(iii)Technical Selling

-To increase business from presently identified customers and potential customers by providing them with technical and engineering information and assistance.

(iv)New Business Selling

-To identify and obtain business from new customers.

Steps in the Selling Process

(i)Prospecting for Customers

(ii)Opening the relationship

(iii)Qualifying the prospect

(iv)Presenting the sales Message

(v)Closing the sale

(vi)Servicing the account

Prospecting for Customers

Sales people use a variety of information sources to identify relevant prospects, including trade association and industry directories, telephone directories, other salespeople, other customers, suppliers, non-sales employees of the firm, and social and professional contacts. New technologies, particularly telemarketing, toll-free numbers and the internet can also help identify new accounts.

A firm’s account management policies should address how much emphasis salespeople should give to prospecting for new customers versus servicing existing accounts.

Opening the Relationship

In the initial approach, salespersons should :

-Determine who within the organisaation will have the greatest influence and or authority to purchase the product

-Generate enough interest within the firm to obtain the information needed to qualify the prospect as worthwhile potential customer

Qualifying the Prospect

-Does the prospect have need for my product or service?

-Can I make the people responsible for buying so aware of that need that I can make a sale?

-Will the sale be profitable to my company?

For this, information is required regarding the prospect’s operations, the kinds of products it makes, its competitors, likely future demand for its products, present suppliers, special relationships with present suppliers, financial health and credit rating. Thus, non-selling departments may also be involved in the qualification process.

Presenting the Sales Message

The salesperson transmits information about a product or service and attempts to persuade the prospect a customer. Major complaints companies have against salespeople are :

-Running down competitors

-Being too aggressive or abrasive

-Having inadequate knowledge of competitors’ producrs or services

-Having inadequate knowledge of our business or organization

-Delivering poor presentations

For an effective sales presentation, decide how many members of the buying firm should attend based on the attitudes and concerns of members of the buying center and whether all their concerns can be addressed in a single presentations.

Demonstrate a product’s advantage.

Closing the Sale

Closing refers to obtaining a final agreement to purchase. The salesperson’s task is to speed up the final decision in order to maximize profits. Often, this can be done by simply asking for an order.

Servicing the account

Involves providing a variety of service and assistance to customers after a sale to ensure their satisfaction and repeat business.

Why Salespeople Sell?

(i)Freedom of action and opportunities for personal initiative

(ii)Variety and challenge

(iii)Compensation

(iv)Working conditions

(v)Opportunities for career development and advancement

Alternative Selling Techniques

-Stimulus Response Approach

-The Mental Sales Approach

-The Need-Satisfaction Approach

-The Problem-Solution Approach

Stimulus Response Approach

This is based on the notion that every sensory stimulus produces a response. Sales recruits thus learn what to say (stimulus) and what buyers are likely to say in most circumstances 9response). In a well-planned sales model, most of the unfavourable responses are known, allowing the company to train representatives to respond appropriately. The emphasis in training is on standardized sales presentation, the likely responses by customers, and the possible rejoinders to overcome their objections.

Advantages :

-ensures that the salesperson will give smooth, complete talk that covers all the important selling points in a logical order.

-Enables a firm to hire inexperienced salespeople and get them ready for the field with only minimal training.

Disadvantages :

-Limits appropriateness for many types of personal selling.

-Ignores differences in the needs and interests of different customers

-Failure to adjust presentation to feedback provided by the customer, particularly one for which he has not been trained

Characteristics of effective Sales Presentations :

-Conserves the prospects’ time

-Tells the complete story

-Delivers and accurate, authoritative and ethical message

-Persuades the prospect

-Anticipates objections

-Facilitates training of salespeople

-Increases salesperson’s self-confidence

-Facilitates supervision of salespeople

Mental Sales Approach

This approach is based on the idea that a buyer’s mind passes through several successive stages before deciding to make a purchase. It is based on the AIDA theory of persuasion, which stresses that promotional messages must attract the prospect’s attention, gain interest, create desire and stimulate action to complete a sale successfully.

Firms using this approach emphasise the use of a selling formula in designing a presentation that organizes selling points to coincide with the buyer’s movement through the stages of attention, interest, desire and action.

Advantages :

-salesperson can tailor the sales pitch to each individual prospect

This selling strategy is used most commonly by firms with products or services that are complicated and difficult for prospective customers to understand and when repeat calls are likely to be required to close a sale. Most common in industrial markets than in retail or consumer goods markets.

Disadvantage :

-Salesperson oriented rather than customer oriented

-No general agreement among psychologists that mental states exist in the minds of potential buyers or that all buyers proceed through the same states in the same sequence.

-Difficult to train salespeople to figure out the prospect’s current state of mind.

-Hard to decide when to leave selling points related to one state and move to the next.

Need satisfaction approach

Here, the customer’s needs are the starting point in making a sale.The salesperson’s task is to identify the prospect’s need, make the prospect aware of that need, and then convince the prospect that the rep’s product or service will satisfy that need better than any other alternative.

Advantages :

-Customer-oriented and flexible

-Provides the basis for friendly buyer-seller relationship with two-way communication

Disadvantages :

-Highly qualified saleepeople with an excellent understanding of potential customers required

-Time consuming

-Should be used only when the value of the potential sale justifies the expense

-Can be adopted when overall business philosophy of the firm is customer-oriented rather than product-oriented.

More common in the sale of consumer durables than in the sale of industrial goods.

Problem-Solution approach

The sales person provides an extension of the need-satisfaction approach by helping the prospect identify several alternative solutions, analyse their advantages and disadvantages and select the best solution.

The emphasis is more on expert advice rather than on product offering. The primary objective is to build long-term relationships with customers in which sales rep is seen as a trusted source of technical information and advice.

Requires extremely competent , well-trained and experienced sales representatives who spend a great deal of time with each prospect. Hence, it is a very expensive selling method. However, it builds the foundation for long-term relationships that are most likely to be satisfied and loyal customers over time.