marketing exam- part 5A-5B, 6 (ch17-19)
Exhibit 17.5: Common CRM Marketing Database Applications
see slide 33 •Data can be applied to marketing messages for specific audiences. This helps facilitate enhanced relationships with customers in those market segments. There are several database applications that are listed on this slide. •Campaign management involves monitoring and leveraging customer interactions to sell a company's products and to increase customer service. •Interactions among customers must focus on individual experiences, expectations, and desires.
EXHIBIT 19.1: Two Ways to Measure Market Share (Units and Revenue)
see slide 9
Step 7: Following Up
•A salespersons responsibilities do not end with making the sale and placing the order •Follow-up: the final step of the selling process, in which the salesperson ensures delivery schedules are met, goods or services perform as promised, and the buyers' employees are properly trained to use the products •Most businesses depend on repeat sales, and repeat sales depend on follow-up by the salesperson. Furthermore, today's customers are less loyal to brands and vendors. Therefore, follow-up is critical in relationship building. •Marketers are using automated email follow-up marketing in an effort to enhance customer satisfaction.
Distribution Strategies
•Adequate distribution for a new product can be attained by: -Offering a larger-than-usual profit margin to distributors •Giving distributors a large trade allowance to help: -Offset the costs of promotion -Stimulate demand at the retail level
Markup pricing
•Markup pricing: the cost of buying the product from the producer, plus amounts for profit and for expenses not otherwise accounted for •To use markup based on cost or selling price effectively, the marketing manager must calculate an adequate gross margin -Margin must provide adequate funds to cover selling expenses and profit •Markups often based on experience -Keystoning: the practice of marking up prices by 100 percent, or doubling the cost
Pricing objectives (19)
•Need to be specific, attainable, and measurable •Categories of pricing objectives: -Profit oriented -Sales oriented -Status quo
Evaluating the Sales Force
•Sales managers must evaluate the effectiveness and performance of the sales force •Performance measures include sales volume, contribution-to-profit, calls per order, sales or profits per call, or percentage of calls achieving specific goals such as sales of products that the firm is heavily promoting •Performance information helps the sales manager monitor a salesperson's progress through the sales cycle
How to set a price on a product
•Setting a price on a product is a four-step process: 1.Establish pricing goals 2.Estimate demand, costs, and profits 3.Choose a price strategy to help determine a base price 4.Fine-tune the base price with pricing tactics
Status Quo Pricing Objectives
•Status quo pricing: a pricing objective that maintains existing prices or meets the competition's prices -Leads to suboptimal pricing as it ignores customers' perceived value of the firm's goods or services and goods or services offered by the competitors -Ignores demand and costs
The impact of Technology on Personal Selling
•Technology can help to improve the relationship between the salesperson and customer •Cell phones, laptops, text messaging, and electronic organizers allow salespeople to be more accessible •For customers, the Web has become a powerful tool, providing accurate and up-to-date information on products, pricing, and order status
Tactics for Fine-tuning the base Price
•The base price is the general price level at which the company expects to sell a good or service. The general price level is correlated with the pricing policy: above the market, at the market, or below the market. The final step is to fine-tune the base price. •Fine-tuning techniques include discounts, geographic pricing, and other pricing tactics.
Establish Pricing goals (19)
•The first step in setting the right price is to establish pricing goals •A good understanding of the marketplace and of the consumer can sometimes tell a manager very quickly whether a goal is realistic •Trade-offs for each pricing objective that managers must consider in light of the target customer, the environment, and the company's overall objectives
Price Transparency
•The growth of the Internet has resulted in an increase in price transparency -Allows consumers to compare prices in real time online
The Social Media Plan (18)
•The social media plan is linked to promotional plans or marketing plans •Six stages involved in creating an effective social media plan: -Listen to customers -Set social media objectives -Define strategies -Identify the target audience -Select the tools and platforms Implement and monitor the strategy
Social Behaviors of Consumers(18)
•Understanding an audience necessitates understanding how that audience uses social media •Six categories of social media users: •Creators—Produce and share online content like blogs, websites, articles, and videos •Critics—Post comments, ratings, and reviews of products and services on blogs and forums •Collectors—Use RSS feeds to collect information and vote for websites online •Joiners—Maintain a social networking profile and visit other sites •Spectators—Read blogs, listen to podcasts, watch videos, and consume media •Inactives—Do none of these things •Conversationalists—People who post status updates on social networking sites and microblogging services •Social networking "rookies" are classified as joiners •These classifications help marketers understand who is using social media and how to engage them
Social Media and Integrated Marketing Communications(18)
•Unique consequence of social media is the shift from one-to-many communication to many-to-many communication. •Interaction between producer and consumer becomes less about entertaining and more about listening, influencing, and engaging. •Marketers can use social media to have conversations with consumers, forge deeper relationships, and build brand loyalty •Consumers connect with each other, share opinions, and collaborate on new ideas according to interests •With social media, the audience is often in control of the message, the medium, the response, or all three •Crowdsourcing: using consumers to develop and market products •Companies get feedback on marketing campaigns, new product ideas, and other marketing decisions by asking customers to weigh in
Step 2: Qualifying Leads
•When a prospect shows interest in learning more about a product, the salesperson has the opportunity to qualify the lead. •Lead qualification: determination of a sales prospect's (1) recognized need, (2) buying power, and (3) receptivity and accessibility •Recognized need: preliminary questioning can often provide the salesperson with enough information to determine whether there is a need •Buying power: buying power involves both authority to make the purchase decision and access to funds to pay for it •Receptivity and accessibility: the prospect must be willing to see the salesperson and be accessible to the salesperson •Lead qualification is usually handled by prequalification systems. These systems help the sales force spend more time with interest customers.
Dynamic Pricing
•When competitive pressures are high, a company must know when it should raise or lower prices to maximize its revenues •Dynamic pricing: the ability to change prices very quickly, often in real time -Aids brick-and-mortar retailers to compete more efficiently with online alternatives
Social Media and Mobile Technology (18)
•Worldwide, there are more than 6 billion mobile phones in use, 17 percent of which are smartphones. •The mobile platform is such an effective marketing tool, especially when targeting a younger audience. •Reasons for recent popularity of mobile marketing •Effort to standardize mobile platforms has resulted in a low barrier to entry •Consumers are acclimating to privacy and pricing policies •Effective at garnering consumer attention in real time because people carry their smartphones at all times •Mobile marketing is measurable: metrics and usage statistics make it an effective tool for gaining insight into consumer behavior •In-store notification technology—can send promotional messages based on real-time interactions •Higher response rate than traditional media types •Common mobile marketing tools: •SMS (short message service): 160 character text messages sent to and from cell phones •MMS (multimedia messaging service): similar to SMS but allows attachment of images, videos, ringtones, and other multimedia to text messages •Mobile website (MOBI and WAP website): designed specifically for viewing and navigation on mobile devises •Mobile ads: visual advertisements integrated into text messages, applications, and mobile websites •Bluetooth marketing: signal sent to Bluetooth-enabled devises, allowing marketers to send targeted messages to users based on their geographic locations •Smartphone applications (apps): software designed specifically for mobile and tablet devices •Apps •Perform platform-specific or convert existing content to mobile-ready format •Can generate buzz and customer engagement •Widgets •Called gadgets and badges •Run within existing online platforms •Allow customers to display company information on their own websites or smartphone home screens •Cheaper than apps to develop •Extend reach beyond existing platforms •
Exhibit 17.1: Comparison of Personal Selling and Advertising or Sales Promotion
see slide 6 •Personal selling becomes more important as the number of potential customers decreases, as the complexity of the product increases, and as the value of the product grows. Exhibit 17.1 compares the effectiveness of personal selling and advertising, or sales promotion, based on certain customer and product characteristics
Exhibit 19.3 Steps in setting the right price on a product
slide 29
Exhibit 17.4: Customer-Centric Approach for Managing Customer Interaction
slide 30 •The customer-centric approach for managing customer interactions. Following a customer-centric approach, an interaction can occur through different communication channels, such as a phone, the Internet, or a salesperson. •Any activity or touch point a customer has with an organization, either directly or indirectly, constitutes an interaction.
The Legality of Price Strategy
•Some pricing decisions are subject to government regulation: -Unfair trade practices: laws that prohibit wholesalers and retailers from selling below cost -Price fixing: an agreement between two or more firms on the price they will charge for a product -Price discrimination -Predatory pricing: the practice of charging a very low price for a product with the intent of driving competitors out of business or out of a market
Step 4: Developing and Proposing Solutions
•After compiling information about the client's needs and wants, the salesperson develops a solution in which the salesperson's product or service solves the client's problem or need. These solutions are typically presented as a sales proposal during a formal sales presentation. •Sales proposal: a formal written document or professional presentation that outlines how the salesperson's product or service will meet or exceed the prospect's needs •Sales presentation: a meeting in which the salesperson presents the sales proposal to a prospective buyer •Usually, there is only one opportunity to present solutions and salespeople must be able to present the proposal and handle any customer objections confidently and professionally. •The salesperson should handle objections as requests for information and should use it in a positive way to close the sale.
The Nature of Demand
•After pricing goals are established, specific prices are set. •Pricing depends on the demand for a good or service and the cost to the seller for that good or service. •Demand is the quantity of a product that will be sold in the market at various prices for a specified period. •The lower the price, the higher the demand for a product or service and vice versa •Supply is the quantity of a product that will be offered to the market by a supplier at various prices for a specified period. •At higher prices, supply increases as manufacturers earn more capital and vice versa
Social Media Tools: Costumer- and Corporate- generated Content(18)
•Blog: a publicly accessible web page that functions as an interactive journal, whereby readers can post comments on the author's entries •Blogs allow companies to create content which build trust and a sense of authenticity in customers •Two types: •Corporate blogs: blogs that are sponsored by a company or one of its brands and maintained by one or more of the company's employees •Many companies have moved away from corporate blogs in favor of Facebook, Twitter, or Tumblr •Noncorporate blogs: independent blogs that are not associated with the marketing efforts of any particular company or brand •Contain information not controlled by marketers •Microblog: blogs with strict post length limits •Twitter is most popular microblogging platform •Effective for breaking news, sharing links, announcing events, promoting sales, etc. •Social networking sites: websites that allow individuals to connect—or network-with friends, peers, and business associates -A company may create a brand-specific social network or community -Facebook can help a brand increase its social media presence and optimize search engine results -LinkedIn is used primarily by professionals who wish to build their personal brands online and businesses that are recruiting employees and freelancers •Media sharing sites: websites that allow users to upload and distribute multimedia content like videos and photos •Photo sharing sites allow users to archive and share photos. •Video creation and distribution have gained popularity among marketers because of video's rich ability to tell stories. •A podcast is a digital audio or video file that is distributed serially for other people to listen to or watch. •Social news sites: allow users to decide which content is promoted on a given website by voting that content up or down •Marketers have found that these sites are useful for promoting campaigns, creating conversations around related issues, and building website traffic. •If marketing content posted to a crowdsourced site is voted up, discussed, and shared enough to be listed among the most popular topics of the day, it can go viral across other sites, and eventually, the entire web Location-based social networking sites: Combine the fun of social networking with the utility of location-based GPS technology -Location-based micronetworking as a game: Users earn badges and special statuses based on their number of visits to particular locations -Foursquare updates can be posted to linked Twitter and Facebook accounts for followers and friends to see • •Review sites: websites that allow consumers to post, read, rate, and comment on opinions regarding all kinds of products and services •According to Nielsen Media Research, more than 70 percent of consumers seek opinions before buying, and 82 percent of Millennials do. Online reviews are important for marketers hoping to influence consumers in the early stages of the purchase cycle who don't yet have an established plan for what and how to purchase. •By giving marketers the opportunity to respond to their customers directly and put their businesses in a positive light, review sites certainly serve as useful tools for local and national businesses •Online gaming presents additional opportunities for marketers to engage with consumers •Massive multiplayer online (MMO) games such as World of Warcraft, Destiny, and EVE Online •Competitive online games such as League of Legends, Overwatch, and Street Fighter V •Online communities (or virtual worlds) such as Second Life, Poptropica, and Habbo Hotel •
Break-even Pricing
•Break-even analysis: a method of determining what sales volume must be reached before total revenue equals total costs •Provides a quick estimate of: -How much the firm must sell to break even -How much profit can be earned if a higher sales volume is obtained •Limitations -Hard to determine if a cost is fixed or variable -Ignores demand
Customer Relationship Management and the Sales Process
•CRM is the ultimate goal of a new trend in marketing that focuses on understanding customers as individuals instead of as part of a group •CRM assumes two key points: •Customers must take center stage in the organization. •The business must manage the customer relationship across all points of customer contact throughout the organization. •By identifying customer relationships, understanding the customer base, and capturing customer data, marketers and salespeople can leverage customer information to develop deeper relationships and close more sales with loyal customers in a more efficient manner
Methods of Lead Generation
•Cold calling: a form of lead generation in which the salesperson approaches potential buyers without any prior knowledge of the prospects' needs or financial status •Referral: a recommendation from a customer or business associate •Networking: a process of finding out about potential clients from friends, business contacts, co-workers, acquaintances, and fellow members in professional and civic organizations to identify potential clients
Creating and Leveraging Social Media Campaign(18)
•Companies should start with a strategy before diving head first into social media -Start with a marketing or communications plan -Situation analysis, objectives, and evaluation are still essential •Marketers can categorize media types into owned, earned, and paid media •To leverage all three types, markets must: -Maximize owned media -Public relations do not translate to earned media Paid media must drive customer engagement
Competition, Price Matching, and Customer Loyalty
•Competition varies during the product life cycle, of course, and so at times it may strongly affect pricing decisions •Although a firm may not have any competition at first, the high prices it charges may eventually induce another firm to enter the market •Companies attempt to build customer loyalty in many ways. One approach is to offer discounts to regular patrons •Discounts can be an excellent tool to build customer loyalty, but care must be taken not to compromise profit goals
Consumer Penalties
•Consumer penalties: an extra fee paid by the consumer for violating the terms of the purchase agreement - businesses impose penalties when: -They suffer an irrevocable revenue loss -They incur significant additional transaction costs if customers are unable or unwilling to complete their purchase obligations More businesses are adopting consumer penalties—extra fees paid by consumers for violating the terms of a purchase agreement.
The Relationship of Price to quality
•Consumers tend to rely on high price as a predictor of good quality when a purchase decision involves uncertainty •Higher prices increase expectation and set a reference point against which people can evaluate their consumption experiences
Identifying Customer Relationships
•Customer-centric: a philosophy under which the company customizes its product and service offerings based on data generated through interactions between the customer and the company •Knowledge management: the process by which customer information is centralized and shared in order to enhance the relationship between customers and the organization •Interaction: the point at which a customer and a company representative exchange information and develop learning relationships •Companies with CRM systems follow a customer-centric focus •A customer-centric company customizes its product and service offerings based on data generated through interactions between the customer and the company. •Companies using CRM rely on knowledge management. It is the process by which customer information is centralized and shared in order to enhance the relationship between customers and the organization. •Information collected includes experiential observations, comments, customer actions, and qualitative facts about the customer. •With CRM, the terms of interaction are defined by the customer and not the organization. Social media have created numerous ways for companies to interact with customers.
Step 6: Closing the Sale
•Customers often give signals if they are ready to buy or are not interested •Negotiation: the process during which both the salesperson and the prospect offer special concessions in an attempt to arrive at a sales agreement •Effective negotiators avoid: •Using price as their negotiation tool and show increased value in their products or services instead •Giving unilateral concessions •In foreign markets, the sales efforts should be tailored to the appropriate way of doing business for that culture. •In European and South American cultures, it is customary to kiss a business associate on both cheeks instead of shaking hands.
Leverage Customer Information
•Data mining can be used to identify the most profitable customers and prospects •Campaign management: developing product or service offerings customized for the appropriate customer segment and then pricing and communicating these offerings for the purpoase of enhancing customer relationships •If a company has identified its best customers, it should make every effort to maintain and increase their loyalty •CRM provides opportunities to cross-sell related products •Marketers can use data to target marketing communications to each customer
Understand Interactions of the current Customer Base
•Data provided by customers affect a wide variety of touch points •Touch points: areas of a business where customers have contact with the company and data might be gathered -Web-based interactions -Social CRM -Point-of-sale interactions: a touch point in stores or information kiosks that uses software to enable customers to easily provide information about themselves without feeling violated •In a CRM system, touch points are all areas of a business where customers have contact with the company and data might be gathered. •Touch points might include a customer registering for a particular service; a customer communicating with customer service for product information; a customer completing and returning the warranty information card for a product; or a customer talking with salespeople, delivery personnel, and product installers. •Web-based interactions: Web-based interactions are an increasingly popular touch point for customers to communicate with companies. •Social CRM: As social media have become more popular, many companies have begun to use these media for "social CRM." •Point-of-sale interactions: Another touch point is through point-of-sale interactions in stores or at information kiosks. •As social media have become more popular, many companies have begun to use these media for social CRM. Many point-of-sale software programs enable customers to easily provide information about themselves without feeling violated.
The Listening System(18)
•Developing an effective listening system is necessary in understanding and engaging an online audience •Social media monitoring: the process of identifying and assessing what is being said about a company, individual, product, or brand •Can involve sentiment analysis or text mining specific keywords on social networking website, blogs, discussion forums, and other social media •Failure to respond to criticism leads to a larger crisis
Sales Management
•Effective sales management stems from a success-oriented sales force that accomplishes its mission economically and efficiently •Sales managers' responsibilities and decisions •Defining sales goals and the sales process: A quota is a statement of the salesperson's sales goals, usually based on sales volume alone. •Determining the sales force structure: HP salespeople might also be assigned to specific industries or markets. •Recruiting and training the sales force: GE uses its website to provide prospective salespeople with explanations of different career entry paths. •Compensating and motivating the sales force: Mary Kay Cosmetics offers a unique type of incentive, whereby salespeople can earn the use of different types of vehicles. •Evaluating the sales force: The final task of sales managers is evaluating the effectiveness and performance of the sales force. • •Effective sales management begins with a determination of sales goals -Sales force goals are usually stated in terms of dollar sales volume, market share, and/or profit level -Quota: a statement of the salesperson's sales goals, usually based on volume •Sales departments are most often organized by geographic regions, product lines, marketing functions performed, markets, industries, individual clients, or accounts -Market or industry-based structures and key account structures are gaining popularity
Estimate Demand, Costs and profits
•Elasticity is a function of the perceived value to the buyer relative to the price •The types of questions managers consider when conducting marketing research on demand and elasticity are key •After establishing pricing goals, managers should estimate total revenue at a variety of prices •Next, they should determine corresponding costs for each price and then estimate how much profit and market share can be earned at each possible price
Elasticity of Demand
•Elasticity of demand: consumers' responsiveness or sensitivity to changes in price •Elastic demand: a situation in which consumer demand is sensitive to changes in price •Inelastic demand: a situation in which an increase or a decrease in price will not significantly affect the demand for a product
The Cost Determinant of Price
•Sometimes companies minimize or ignore demand and price their products largely or solely on the basis of costs •Variable cost: a cost that varies with changes in the level of output •Fixed cost: a cost that does not change as output is increased or decreased •Sometimes the importance of demand is ignored when prices are decided largely or solely on the basis of costs. •Prices set on the basis of cost may be too high for the target market, and if prices are set too low, the firm will earn a lower return than it should. •Variable and fixed costs are important aspects of price determination.
Factors that affect elasticity of demand
•Factors that affect elasticity of demand •Availability of substitutes—When many substitutes are available, it is easy to switch products. This makes demand elastic. •Price relative to purchasing power - If a price is so low that it is an inconsequential part of an individual's budget, demand will be inelastic. •Product durability—Repairing durable products rather than replacing them prolongs their useful life. Thus, people are sensitive to the price increase, and the demand is elastic. •Product's other uses—The greater the number of uses for a product, the more elastic demand tends to be. If a product has only one use, the quantity purchased probably will not vary as price varies.
Compensating and Motivating the Sales Force
•Good planning will ensure that compensation attracts, motivates, and retains good salespeople •Companies with low levels of compensation suffer higher turnover rates and higher costs •Compensation-based plans should be paired with rewards or incentives •Recognition at ceremonies, plaques, monetary-based awards such as vacations, merchandise, pay raises, or cash bonuses. •Recognition and rewards can help increase overall sales volume, add new accounts, improve morale and goodwill, move slow items, and bolster slow sales •Managers must be careful not to encourage unethical behavior
Capture Customer Data
•In a CRM system, the issue is not how much data can be obtained, but rather what types of data should be acquired •The traditional approach for acquiring data is through channel interactions, which include store visits, conversations with salespeople, interactions via the Web, phone conversations, and wireless communications •The large volume of data resulting from a CRM initiative can be managed effectively only through technology
Stages in the Product Life Cycle
•Introductory stage •Usually prices are high in hopes to recover development costs quickly •Demand originates in the core of the market and is relatively inelastic •If the target market is price sensitive, prices should be lower •Growth stage •Prices begin to stabilize because: competitors have entered the market, increasing the supply; the product appeals to a broader market; economies of scale economies of scale are lowering costs and savings are passed on to the customer in the form of lower prices •Maturity stage •Further price decreases as competition increases and inefficient, high-cost firms are eliminated •Distribution channels become a significant cost factor •Price increases are cost initiated, not demand initiated •Decline stage •Further price decreases as few remaining competitors try to salvage the last vestiges of demand •When only one firm is left in the market, prices stabilize •Prices may eventually rise dramatically if product survives and moves into specialty goods category
How Consumers Use Social Media(18)
•It is important for marketers to understand which social media consumers are using and how they are using them -Young adult singles use Match.com, OkCupid, and Tinder -Teens use Snapchat, Instagram, Twitch, and Tumblr -Older teens and adults use Facebook •Increased use of smartphones and tablet computers has contributed to the spread of social media usage
Step 1: Generating Leads
•Lead generation (prospecting): Identification of those firms and people most likely to buy the seller's offerings •Sales leads in many different ways -Advertising -Trade shows and conventions -Social media -Webinars -Direct mail and telemarketing programs
Demands of Large Customers
•Manufacturers find that their large customers such as department stores often make specific pricing demands that the suppliers must agree to •Walmart is the largest retailer in the world and uses its size to encourage companies to meet its needs -The company recently instituted a policy requiring suppliers to evaluate and disclose the full environmental costs of their products
Other Determinants of Price
•Other factors besides demand and costs can influence price -Stages in the product life cycle -Competition, price matching, and customer loyalty -Distribution strategy -Impact of the Internet and extranets -Promotion strategy -Demands of large customers -Relationship of price to quality •Following are the other determinants of price: •The demand for a product and the competitive conditions tend to change as a product moves through its life cycle. This leads to price changes. •Competition varies during the product life cycle. Although a firm may not have competition at first, the high prices it charges may induce other firms to enter the market and sometimes competition can lead to price wars. •A competitor's prices can be countered using price matching. Price matching can also be a tool for building customer loyalty. •An effective distribution network helps overcome minor flaws in the marketing mix. •The Internet, extranets (private electronic networks), and wireless setups allow sellers to collect detailed data about customers, which enable them to tailor products and prices. •Pricing is used as a promotional tool to increase consumer interest. •Specific pricing demands from large customers such as department stores may affect the profits of the manufacturers. •Price promotions of higher priced, higher quality brands and products such as perfumes and fine watches tend to attract more business.
Other Pricing Tactics
•Other pricing tactics defy neat categorization •May be used for various reasons -Single-price tactic: a price tactic that offers all goods and services at the same price (or perhaps two or three prices) -Flexible pricing (variable pricing): a price tactic in which different customers pay different prices for essentially the same merchandise bought in equal quantities -Professional services pricing -Price lining: the practice of offering a product line with several items at specific price points -Leader pricing (loss-leader pricing): a price tactic in which a product is sold near or even below cost in the hope that shoppers will buy other items once they are in the store -Bait pricing: a price tactic that tries to get consumers into a store though false or misleading price advertising and then uses high-pressure selling to persuade consumers to buy more expensive merchandise -Off-even pricing (psychological pricing): a price tactic that uses odd-numbered prices to connote bargains and even-numbered prices to imply quality -Price bundling: marketing two or more products in a single package for a special price -Two-part pricing: a price tactic that charges two separate amounts to consume a single good or service -Pay what you want -Package content reduction
Personal Selling
•Personal selling is a purchase situation involving a personal, paid-for communication between two people in an attempt to influence each other. •Advantages of personal selling: •Provides detailed explanation or demonstration of the product •Sales message can be varied according to motivations and interests of each prospective customer •Directed only to qualified prospects •Costs can be controlled by adjusting the size of the sales force in one-person increments •More effective in obtaining a sale and gaining a satisfied customer in comparison to other forms of promotion • •Limitations of personal selling: -Cost per contact is much greater than for mass forms of communication -If the sales force is not properly trained, the message provided can be inconsistent and inaccurate, so continual sales force management and training are necessary -Salespeople can convince customers to make unnecessary purchases
Step 3: Approaching the customer and Probing Needs
•Preapproach: a process that describes the "homework" that must be done by a salesperson before he or she contacts a prospect -Visiting website, social media sites, and standard reference sources -Determining if the client should be approached by a personal visit, a phone call, or a letter •Needs assessment: a determination of the customer's specific needs and wants and the range of options the customer has for satisfying them •Before approaching customers, the salesperson should learn as much as possible about the prospect's organization and its buyers. This process, called the preapproach, describes the homework that must be done by the salesperson before contacting the prospect. •Visiting website, social media sites, and standard reference sources •Determining if the client should be approached by a personal visit, a phone call, or a letter •The salesperson's ultimate goal during the approach is to conduct a needs assessment to find out as much as possible about the prospect's situation. •Needs assessment: a determination of the customer's specific needs and wants and the range of options the customer has for satisfying them •During the needs assessment, the salesperson must know about: -The product or service: product knowledge is the cornerstone for conducting a successful needs analysis -Customers and their needs: the professional salesperson brings each client business-building ideas and solutions to problems -The competition: the salesperson must know as much about the competitor's company and products as he or she knows about his or her own company -The industry: knowing the industry requires active research by the salesperson •Creating a customer profile during the approach helps salespeople optimize their time and resources •Approach is concluded by summarizing the prospect's need, problem, and interest -Salesperson should get a commitment from the customer to some kind of action
Promotion Strategy
•Price is often used as a promotional tool to increase consumer interest •Price promotion alone does not always create a low price image •Upscale ambiance, expensive specialty offerings, premier locations, a high level of service, and a lack of price matching contribute to a high price image as well
Choose a Price strategy
•Price strategy: a basic, long-term pricing framework that establishes the initial price for a product and the intended direction for price movements over the product life cycle •The price strategy sets a competitive price in a specific market segment based on a well-defined positioning strategy •A company's freedom in pricing a new product and devising a price strategy depends on the market conditions and other elements of the marketing mix •Companies often use price skimming for new products when the product is perceived as having unique advantages. Over time, the price will be lowered. •Price skimming: a pricing policy whereby a firm charges a high introductory price, often coupled with heavy promotion •Price skimming is successful when: •There is strong demand for a good or service •Product is legally well protected, represents a technological breakthrough, or has blocked the entry to competitors •This strategy enables the management to recover product development costs quickly. •Penetration pricing: a pricing policy whereby a firm charges a relatively low price for a product when it is first rolled out as a way to reach the mass market -Requires a higher volume of sales to reach break-even point -Low prices can attract additional buyers to the market -Increased sale can justify production expansion or the adoption of new technologies •Status quo means charging a price identical to or very close to the competition's price -Simplicity is an advantage -A disadvantage is that this strategy ignores demand or cost or both
What is price? (19)
•Price: that which is given up in an exchange to acquire a good or service •Opposing effects -The sacrifice effect of price -The information effect of price •Value is based upon perceived satisfaction -"Reasonable price" means "perceived reasonable value" at the time of the transaction •Price means one thing to the consumer and another to the seller. To the consumer, the price is the cost of something; to the seller, price is the source of profits. •Marketing mangers find the task of setting prices a challenge. •Price plays two roles in the evaluation of product alternatives: as a measure of sacrifice and as an information cue. •Sacrifice can be money used to get a good or service or the time lost while waiting to acquire the good or service, what is given up •Higher price can convey higher product quality and the prominence and status of the purchaser. •Consumers are interested in obtaining a reasonable price, which means a perceived reasonable value at the time of the transaction.
Importance of Price to Marketing Manager
•Prices are the key to revenues, which in turn are the key to profits for an organization •Revenue: the price charged to customers multiplied by the number of units sold •Price × Units = Revenue •Profit: revenue minus expenses
Profit-Oriented Pricing Objectives
•Profit maximization means setting prices so that total revenue is as large as possible relative to total cost •Satisfactory profits are profits that are satisfactory to the stockholders and management •Return on investment (ROI): net profit after taxes divided by total assets •ROI = Net profits after taxes/Total assets •Generally, firms seek ROIs in the 10 to 30 percent range •In addition, the manager must weigh the risk of a given strategy even if the return is in the acceptable range ROI= Net profits after taxes ---------------------- Total assets
What are social media?(18)
•Social media: Any tool or service that uses the Internet to facilitate conversations •It can also be defined relative to traditional advertising like television and magazines, but social media offer a more one-to-one interaction with customers •Social media have several implications for marketers and the ways that they interact with their customers: •Marketers must realize that they often do not control the content on social media sites •Customers share their thoughts and experiences •A great ad campaign is not enough, the product or service must be great, too •The ability to share experiences quickly and with such large numbers of people amplifies the impact of word of mouth in a way that can affect a company's bottom line •Social media allow marketers to listen •Social media provide more sophisticated methods of measuring how marketers meet and interact with consumers than traditional advertising does •Social media allow marketers to have much more direct and meaningful conversations with customers • •Social media have changed how and where conversations take place, globalizing human interaction •Companies are also beginning to understand the implications of their employees' activities on social media •Companies now have social media policies as to what can be posted and what is inappropriate
Discount, Allowances, rebates, and value-based pricing tactics
•Quantity discount: a price reduction offered to buyers buying in multiple units or above a specified dollar amount -Cumulative quantity discount: a deduction from list price that applies to the buyer's total purchases made during a specific period -Noncumulative quantity discount: a deduction from list price that applies to a single order rather than to the total volume of orders placed during a certain period •Cash discount: a price reduction offered to a consumer, an industrial user, or a marketing intermediary in return for prompt payment of a bill •Functional discount (trade discount): a discount to wholesalers and retailers for performing channel functions •Seasonal discount: a price reduction for buying merchandise out of season •Promotional allowance (trade allowance): a payment to a dealer for promoting the manufacturer's products •Rebate: a cash refund given for the purchase of a product during a specific period •Coupons are discounts offered via paper, a printable web page, or an electronic code •Zero percent financing offers no interest charge in order to increase sales •Free shipping helps to lower the price for the consumer •Shipping through Amazon can provide shipping discounts for merchants •Value-based pricing: setting the price at a level that seems to the customer to be a good price compared to the prices of other options -The basic assumption is that the firm is customer driven, seeking to understand the attributes customers want in the goods and services they buy and the value of that bundle of attributes to customers
Step 5: Handling Objections
•Rarely does a prospect say "I'll buy it" right after a presentation •The potential buyer may insist that the price is too high or that the good or service will not satisfy the present need •A good salesperson considers objections a legitimate part of the purchase decision
The Sales Environment
•Sales people can be consumer-focused or business-focused •The sales environment changes constantly as new competitors enter the market and old competitors leave •Rapid increase in new sales technologies are changing the ways in which customers interact with salespeople and learn about products and suppliers •In order for companies to successfully sell products or services, they must be effective at personal selling, sales management, customer relationship management (CRM), and technology Traditionally, salespeople engage in direct face-to-face contact with customers. Consumer-focused salespeople require customers to come directly to a retail store, but some salespeople travel to their customers' locations. Business-focused salespeople call on other companies to sell their products.
Sales-oriented Pricing objectives
•Sales-oriented pricing objectives are based either on market share or maximizing sales. •Market share is a company's product sales as a percentage of total sales for that industry. Many companies believe that maintaining or increasing market share is an indicator of the effectiveness of their marketing mix. •Companies with the objective of maximizing sales ignore profits, competition, and the marketing environment as long as sales are increasing. •Maximization of cash should never be a long-run objective, because cash maximization may mean little or no profitability. Without profits, a company cannot survive. Online Target vs. Walmart vs. JC Penney Shop for some kind of electronic device (such as a Blu-ray player, digital camera, or MP3 player) on the Target, Walmart, and JCPenney websites. Compare the prices of the same device on the three websites. Do they all even carry the same product? Compare the price on the Web with the price offered at the physical store and explain the discrepancies, if any.
Geographic Pricing
•Sellers may use geographic pricing tactics to moderate the impact of freight costs on distant customers: -FOB origin pricing: a price tactic that requires the buyer to absorb the freight costs from the shipping point ("free on board") -Uniform delivered pricing: a price tactic in which the seller pays the actual freight charges and bills every purchaser an identical, flat freight charge -Zone pricing: a modification of uniform delivered pricing that divides the United States (or the total market) into segments or zones and charges a flat freight rate to all customers in a given zone -Freight absorption pricing: a price tactic in which the seller pays all or part of the actual freight charges and does not pass them on to the buyer -Basing-point pricing: a price tactic that charges freight from a given (basing) point, regardless of the city from which the goods are shipped •In freight absorption pricing, the seller pays all or part of the actual freight charges and does not pass them on to the buyer. •May be used in intensely competitive areas or as a way to break into new markets •Basing-point pricing involves charging freight from a given point, regardless of the city from which the goods are shipped. •Has waned in popularity •Freight fees charged when none were actually incurred, called phantom freight, have been declared illegal
Social Commerce(18)
•Social commerce: a subset of e-commerce that involves the interaction and user contribution aspects of social online media to assist online buying and selling of products and services •Social commerce sites -Include ratings and recommendations -Help consumers make more informed decisions on purchases and services •Types of social commerce -Peer-to-peer sales platforms -Social networking websites driven by sales -Group buying platforms -Peer recommendation sites -User-curated shopping sites -Participatory commerce platforms -Social shopping sites Shoppable videos
Evaluation and Measurement of Social Media(18)
•Social media have the potential to revolutionize the way organizations communicate with stakeholders •Social media are difficult to measure, as there is no common denominator to measure ROI •Five steps to help gauge the effectiveness of a social media effort: •Identify your key performance indicators (KPIs) •Align your social media goals with your business objectives •Set up Google Analytics to track conversions •Assign values to your KPIs (such as lifetime value or average sales) •Benchmark against your competitors
Social Media Metrics(18)
•Social media metrics: •Buzz: volume of consumer-created buzz for a brand based on posts and impressions, by social channel, by stage in the purchase channel, by season, and by time of day •Interest: number of "likes," fans, followers, and friends; growth rates; rate of virality or pass along; and change in pass along over time •Participation and engagement: number of comments, ratings, social bookmarks, subscriptions, page views, uploads, downloads, embeds, retweets, Facebook posts, pins, and time spend with social media platform •Search engine ranks and results: increases and decreases on searches and changes in key words •Influence: media mentions, influences of bloggers reached, influences of customers reached, and second-degree reach based on social graphs •Sentiment analysis: positive, neutral, and negative sentiment; trends of sentiment; and volume of sentiment •Website metrics: clicks, click-through rates, and percentage of traffic
Impact of Internet and Extranets
•The Internet connects sellers and buyers quickly and allows product and price comparison, putting them in a better bargaining position. •Extranets are private electronic networks that link companies with their suppliers and customers. •A shopping bot searches the web for the best prices for a particular item that one wishes to purchase •The two types of shopping bots are broad-based types and niche-oriented types. The broad-based type searches a wide range of product categories, and the niche-oriented type searches for prices for only one type of product. •Internet auctions •Business-to-business auctions may be the dominant form in the future
Social Media Objectives(18)
•The organization should develop a list of objectives for its social media team to accomplish •Considerations when setting objectives: •Listen and learn •Monitor what is being said about the brand and competitors, glean insights about audiences •If company has a listening strategy, this objective is already accomplished •Build relationships and awareness •Engage in conversations and answer questions candidly •Promote products and services •Getting customers talking about products and services will translate to sales •Manage your reputation •Respond to comments and criticism that appear on blogs and forums •Improve customer service •Use social media to search out displeased customers and engage them directly to solve their issues
Recruiting and Training the Sales Force
•Traits sales managers look for in applicants: •Ego strength •Great salespeople have a strong, healthy self-esteem and the ability to bounce back from rejection •Sense of urgency and competitiveness •These traits push their sales to completion, as well as help them persuade people •Assertiveness •Effective salespeople have the ability to be firm in one-to-one negotiations, to lead the sales process, and to get their point across confidently without being overbearing or aggressive •Sociable •Wanting to interact with others is a necessary trait for great salespeople •Risk takers •Great salespeople are willing to put themselves in less-than-assured situations, and in doing so, often are able to close unlikely sales •Capability to understand complex concepts •Quick thinking and comprehension allow salespeople to quickly grasp and sell new products or enter new sales areas •Creativity •Great salespeople develop client solutions in creative ways •Empathy •The ability to place oneself in someone else's shoes, enables salespeople ot understand the client •Sales training includes instruction on company policies and practices, selling techniques, product knowledge, industry and customer characteristics, and nonselling duties •Training can take place in a classroom environment, in the field, or using online modules
Relationship Selling
•Until recently, personal selling focused almost entirely on a planned presentation for the purpose of making a sale. In contrast, modern views of personal selling emphasize the relationship that develops between a salesperson and a buyer. •Relationship selling (consultative selling):a sales practice that involves building, maintaining, and enhancing interactions with customers in order to develop long-term satisfaction through mutually beneficial partnerships •The focus is on building mutual trust between the buyer and seller. •Relationship salespeople become consultants, partners, and problem solvers. This form of selling helps retain loyal customers who purchase from the company often with an increased share of purchase.
