Professional Selling Exam 2

Price Strategy Objectives

* Maximize profit * Maximize market share * Maximize product trial - Price, promotion, product, and place are the four elements that make up the marketing mix. - often reflect the product's position in the product life cycle. When large, high-definition, flat-screen TVs were in the new and emerging stage, customers who wanted this innovative product were willing to pay $5,000 or more for a unit.

"elevator presentations"

- 30 second message that summarizes you, your company, and your product line

Benefits

- A feature that provides the customer with personal advantage or gain - This usually answers the question, "how will the customer benefit from owning or using the product - include whatever gain is provided to the customer * General * Specific

Solution Selling

- A process by which the salesperson uncovers and clarifies a customer's problem, works with the customer to create a vision of how things could be better, and then develops a plan for implementing the vision.

The buyer resolution theory

- A selling theory that recognizes a purchase will be made only after the prospect has made five buying decisions involving specific affirmative responses to the following items: need, product, source, price, and time. - is sometimes referred to as the 5 W's Theory. It focuses attention on questions the customer may need answers to before making a purchase. An absence of an answer to any of these will likely result in a customer objection. Why should I buy? What should I buy? Where should I buy? What is a fair price? When should I buy?

modified rebuy

- A situation where the customer wishes to modify product specifications, change delivery schedules, or renegotiate prices. - which will require some research

Bridge Statement

- A transitional phrase that connects a statement of features with a statement of benefits. This method permits customers to connect the features of your product to the benefits they will receive

Potential product

- After the value-added product has been developed, the salesperson should begin to conceptualize the______________. This refers to what may remain to be done, that is, what is possible

emotional buying motive

- An is one that prompts the prospect to act because of an appeal to some sentiment or passion. When customers buy expensive Harley-Davidson motorcycles, they are paying for much more than a high-flying hog. They are purchasing entry into a community of like-minded enthusiasts who share a passion for all things Harley. Emotions can be powerful and often serve as the foundation of the dominant buying motive. - Acts due to passion or sentiment - Emotional appeals common - If two products are identical, the salesperson who "connects" has the advantage

Pipeline dashboards

- At-a-glance visualizations that define, monitor, and analyze the relationships existing in the pipeline.

Consumer buyer behavior

- Buying behavior of individuals and households who buy goods and services for personal consumption

Reference group influences

- Categories of people you see yourself belonging to

Trade or functional discounts

- Channel intermediaries, such as wholesalers, often perform credit, storage, or transportation services. - discounts cover the cost of these services

Advantage

- Characteristics of the product (features) that can be used or will help the buyer

Strategic alliance process buyers

- Companies team up to gain mutual competitive advantage

New/Emerging Products

- Develop new expectations - Change habits - Establish new standards - Build product desire - Create new markets

Strategic Alliance

- Developing a product strategy for the _________________ customer usually offers the greatest challenge. Study of the proposed alliance partner can be very time consuming, but the rewards of a successful alliance may be substantial.

Differentiation and Value Proposition extra info

- Differentiating the product is necessary to win against the competition. - The salesperson must be able to vocalize why his or her product has a meaningful advantage over the competition's product. Importantly, it isn't enough for a product to be different. - That difference must be meaningful and relevant to the target audience in order to provide the much desired competitive advantage. - The differential advantage should work to create the positioning the product holds in the mind of the customer. When the position and differential advantage have value, the product is said to have a value proposition.

Explosion of Product Options

- Domestic and global markets overflowing >30,000 consumer products produced each year - Good news: buyers have a choice - Bad news is: More choices makes buying process more complicated

Mature Products

- Emphasize brand superiority - Emphasize company superiority - Point out unique features - Provide quality customer service - Sustain existing market share

Balanced funnel

- Enables salespeople to know how many prospects and how much revenue will be needed at each stage in the sales process to meet projections and quotas

Role influences

- Expectations associated with position

Features Versus Benefits

- Features make benefits possible. They are advantages of a product that have value to the customer. But customers don't care about features. They care about what they get from using the product. One of the features is "stabilizing PVC insert." Would a shoe prospect care about that feature? No. The buyer might care, though, that because of that stabilizing PVC insert, the wearer of the shoe is less likely to turn her ankle when walking and will be less likely to sustain an injury when wearing these shoes. That's a benefit. In fact, the statement used to explain how the feature relates to a benefit. It's also important to note that buyers are more concerned with specific benefits over general ones. Specific benefits relate directly to the needs the buyer has expressed while general ones explain benefits that are helpful but may not be of specific concern to a prospect.

new-task rebuy

- First time purchase of a product of service which may require extensive research

Sales intelligence

- Gives salespeople access to insights into the prospects' marketplace, their firm, their competitors, even about the prospects themselves.

Cultural influences

- Group with common language, environment, also subcultures

Social class influences

- Group with similar values, interests, lifestyles

"unbundle" product features.

- Let's assume that a price-conscious customer wants to schedule a conference that will be accompanied by a banquet-style meal. To achieve a lower price, the salesperson might suggest a cafeteria-style meal, thereby eliminating the need for servers.

Networking

- Making and profiting from personal connections - Guidelines: * Meet as many people as you can * Tell them what you do * Do not do business while networking * Offer business card * Edit contacts and conduct follow-ups

written proposals

- Many clients ask for _________ __________and some provide detailed guidelines - A specific plan of action based on facts, assumptions, and supporting documentation included in the sales presentation. They vary in terms of format and content - Most _________ ____________ include: Budget and overview Objective Strategy Schedule Rationale

Value-Added Product-Selling Model

- Most high-performing salespeople have adopted sales strategies that emphasize value-added selling. - Salespeople can add value to their product with one or more intangibles: with improved insights and knowledge of customer needs, products benefits, and competitive offerings; stronger relationship and partnership building; better use of sales technologies; more dependable product deliveries; better service after the sale; and innovations that truly improve the product's value in the eyes of the customer. - In today's highly competitive marketplace, these value-added benefits give the salesperson a unique niche and a competitive edge. Salespeople who don't make selling and delivering high-value solutions a high priority will consistently lose sales to competitors. - is made up of four "possible" products: the generic product, the expected product, the value-added product, and the potential product.

Salespeople

- Need clarity on how decisions are being made

Social needs

- Needs that reflect a person's desire for affection, identification with a group, and approval from others.

Business buyer behavior

- Organizations that buy goods and services for use in the production of other products and services that are sold, rented, or supplied to others

Market Shares

- Other firms set a___________market share objective. - Management may decide that the strategic advantage of an increased _____________ outweighs a temporary reduction in profits. Many of the new companies doing business on the Internet adopt this approach.

Physiological needs

- Primary needs or physical needs, including the need for food, water, sleep, clothing, and shelter.

- Product development and quality improvement processes - Performance data and specifications - Maintenance and service contracts - Price and delivery

- Product Information Categories - Each is important as a potential source of knowledge concerning the product or service. A survey reported in Sales & Marketing Management ranked product knowledge as the number-one characteristic of salespeople who are able to build trust. Ideally, a salesperson possesses product knowledge that meets and exceeds customer expectations, increasing sales effectiveness and willingness to pay.

Referral

- Prospect recommended by current satisfied customer or one familiar with product or service - Endless chain: ask contact who else could benefit from product - letters and cards - organizations: facilitate networking - Centers of influence

Transactional process buyers

- Salespeople can eliminate any unnecessary costs or delays

Consultative process buyers

- Salespeople focus attention on needs awareness - customer evaluate solutions

Product Life Cycle

- Salespeople may need to treat the sales situation and the development of a value proposition differently for products at different stages. - refers to the stages a product goes through from the time it is first introduced, through a growth phase, maturity phase, and ultimately decline as it is replaced by something better. - As products move into different stages, the strategies for promoting the product may need to change. The nature and extent of the ___________________ stages are determined by several factors

Extra info on the 3D Product Solutions Selling Model

- Salespeople who are knowledgeable in all areas of the 3D Product Solutions Selling Model are better able to position their product solution. This knowledge also helps to achieve product differentiation, understand the competition, and prepare an effective value proposition. The competitive analysis worksheet shown in Table 7.1 can help you discover ways to position and differentiate your product as the superior choice over your competition.

Extra info on Transactional Selling Tactics Focuses on Price

- Some marketers have established a positioning plan that emphasizes low price and the use of transactional selling tactics. These companies maintain a basic strategy that focuses on meeting competition. - If the firm has meeting competition, as its pricing goal, it makes every effort to charge prices that are identical or close to those of the competition. - Once this positioning strategy has been adopted, the sales force is given several price tactics to use. Salespeople can alter (lower) the base price through the use of discounts and allowances. Discounts and allowances can take a variety of forms.

The buying process

- Systematic series or a series of defined, repeatable steps, intended to achieve a result - it would be inappropriate to view the ______________as a uniform pattern of decision making. However, there is a model—a form of decision making that buyers usually apply to their unique circumstances.

Product development

- Testing, modifying, and retesting an idea for a product several times before offering it to the customers

Pipeline analytics

- The ability to conduct sophisticated data analysis and modeling; found in most CRM systems.

Habitual Buying Variety-seeking buying Complex buying

- The amount of time consumers devote to a purchase decision can vary greatly depending on the cost of the product, familiarity with the product, and the importance of the item to the consumer. Few buyers invest much effort in selecting a tube of toothpaste, but the purchase of a new automobile or a home will involve extensive decision making. - Consumer buying situations can fall into one of three categories depending on the degree of buyer involvement.

Consultative Buyers

- The buyer may lack needs awareness and will usually welcome need clarification. This customer will want help evaluating possible solutions and usually needs a customized product solution.

Esteem needs

- The desire to feel worthy in the eyes of others, to develop a sense of personal worth and adequacy, or feeling of competence and importance

Quality Control

- The evaluation or testing of products against established standards. this has important sales appeal when used by the salesperson to convince a prospect of a product's quality

Telemarketing

- The practice of marketing goods and services through telephone contact

Account or business Development

- The process of identifying and developing potential customers in the business to business (B2B) market. Is also referred to as prospecting.

Social Network

- Your set of direct and indirect contacts

Website

- a collection of web pages maintained by a single person or organization. It is accessible to anyone with a computer and a modern

Buying Center

- a cross-functional team of decision makers who often represent several departments

Social Classes

- a group of people who are similar in income, wealth, educational background, and approval from others

Role

- a set characteristics and expected social behaviors based on the expectations of others. All the roles we assume may influence our buying behavior

Quantity Discount

- allows the buyer a lower price for purchasing in multiple units or above a specified dollar amount.

Customized Solution

- appeals to the customer's desire for choices that are tailored to his or her needs - If the customer has complex buying needs, the salesperson may have to develop a _______________. - This process is often referred to as product configuration. A major element of product configuration is quotation management.

Group Influence

- buyer behavior is influenced by the people around us. Is the forces that other people exert on buying behavior

Transactional Buyers

- buyers are usually well aware of their needs. - Most of these customers have conducted their own research and have a good understanding of the product that will meet their needs. - The office manager who frequently buys a large amount of copy paper knows that this standard item can be purchased from several vendors. The quality of the paper usually does not vary from one vendor to another.

Complex buying

- decisions are characterized by a high degree of involvement by the consumer. Consumers are likely to be highly involved when the product is expensive, purchased infrequently, and highly self-expressive.

Variety-seeking buying

- decisions are characterized by low customer involvement, but important perceived brand differences.

Habitual buying

- decisions usually require very little consumer involvement and brand differences are usually insignificant. For frequently purchased, low-cost items such as shampoo, copy paper, or laundry detergent, consumer involvement in the decision-making process is very low.

product

- encompasses information, services, ideas, tangible products, or some combination of these that satisfy the customer's needs with the right solution

Account Analysis

- estimates the sales potential for each prospect

Value-added product

- exists when salespeople offer customers more than they expect and may not even know exists

Prospecting

- identifying potential customers

The Three-Dimensional (3-D) Product Solutions Selling Model

- illustrates the product, company, and salesperson features available to satisfy the customer's potential 3-D cluster of satisfactions. - To develop and sell solutions with many competitive "look alike" products, salespeople must be familiar with the unique satisfactions that meet the needs of each customer.

Features

- include data, facts, and characteristics of product or service - Anything that a customer can feel,see,taste,smell, or measure to answer the question

Positioning

- involves those decisions and activities intended to create and maintain a certain concept of the product in the customer's mind. - requires developing a sales and marketing strategy that can influence how a particular market segment perceives a product in comparison to the competition. -In a market saturated with many types of SUVs, Land Rover has positioned itself as a dependable vehicle that can climb steep rocks and maneuver sand with ease. To position itself, Land Rover has developed Land Rover Experience Driving Schools and Land Rover Adventures during which Land Rover owners or prospects can drive Land Rovers in extreme conditions designed to show off the SUV's capabilities.

Customer strategy

- is a carefully conceived plan that results in understanding the customer's perceptions and maximizing customer satisfactions and responsiveness. - It requires that salespeople * Understand the buying process * Understand buyer behavior * Develop a prospect base - is the part of the strategic/consultative selling model that ensures that salespeople understand the needs of their prospects and the context within which they make the buying decision

Organizational culture

- is a collection of beliefs, behaviors, and work patterns held in common by people employed by a specific firm

Promotional Allowances

- is a price reduction given to a customer who participates in an advertising or a sales support program.

product strategy

- is a well-conceived plan that emphasizes becoming a product expert, selling specific benefits, and configuring value-added solutions

Buying Motives

- is an aroused need, drive, or desire that stimulates behavior to satisfy the aroused need

Value-added product selling strategy

- is enhanced when based on a comprehensive analysis of the competitive situation including: * The product * Its attributes * The benefits it offers

Patronage buying

- is one that causes the prospect to buy products from one particular business. - Buy from a particular firm - Past experience positive - Relevant elements: superior service, product selection, competent sales staff

product buying motive

- is one that leads a prospect to purchase one product in preference to another. - Buyer believes one product is superior to others - Preferences for: specific brands, quality, price, design/engineering

Generic product

- is the basic, substantive product you are selling. .

Qualifying

- is the process of identifying prospects who appear to have a need for your product and should be contacted.

Value Proposition

- is the set of benefits and values the salesperson configures to meet and exceed customers' specific needs

Prospect base

- made up of current customers and potential customers

Systems selling

- means that a packaged solution is sold to eliminate the need for many separate decisions to be made in a complex buying situation.

Pricing decisions

- must be made at each stage of the product life cycle. - Therefore, setting the price can be a complex process. The first step in establishing price is to determine the firm's pricing objectives. Some firms set their prices to maximize their profits. - They aim for a price as high as possible without causing a disproportionate reduction in unit sales.

Security needs

- needs that represent our desire to be free from danger and uncertainty

Prospect

- potential customer that meets the qualification criteria established by your company - Someone who has three basic qualifications. * First- the person must have a need for the product or service * Second- the individual must be able to afford the purchase * Third- the person must be authorized to purchase the product

Differentiation

- refers to the ability to separate the product from that of the competition in a way that builds a competitive advantage - Source of _____________ may be quality, price, convenience, economy, service...

cold calling

- salespeople select a group of people they believe will make good prospects and then call upon them (by phone or personal visit). - rely upon "elevator presentations"

Culture

- the arts, beliefs, institutions, transmitted behavior patterns, and thoughts of a community or population

Sales Data

- the information seen in most CRM systems, including the contact name, title, address, phone number, email, and so forth

Self-actualization

- the need for self-fulfillment; a full tapping of one's potential to meet a goal; the need to be everything one is is capable of being. The is one of the needs in Maslow's hierarchy

Pipeline management

- the process of managing all the prospects in the salesperson's sales funnel to ensure that sales objectives are being met

Seasonal Discounts

- the salesperson adjusts the price up or down during specific times to spur or acknowledge changes in demand. Off-season travel and lodging prices provide examples.

Sales process model

- the total set of accounts being pursued at any given time

Reference group

- two or more people who have well established interpersonal communications and tend to influence the values, attitudes, and buying behaviors of one another. they act as a point of comparison and a source of information for a prospective buyer

rational buying motive

- usually appeals to the prospect's reason or judgment based on objective thought processes. - Some common motives include profit potential, quality of service, and availability of technical assistance. - Acts on reason or judgment - Relatively free of emotion - Salespeople gather, interpret, and disseminate customer-specific information

straight rebuy

- which is a fairly routine purchase of items needed to by a business-to-business customer.

- Transactional - Consultative - Customized solution - Strategic alliance partner

A product strategy should be tailored to the customer's buying needs by........

Understanding a Feature-Benefit Strategy

As salespeople, we must convert product features into buyer benefits. A classic example of this is the needs of a person buying a drill. Does the customer need a drill? No, the story goes. He needs a hole.

- Salespeople = Become an industry expert - Be a business analyst versus product specialist - Industry knowledge must be both current and detailed

Be an Industry Expert

Are you selling to high or low-involvement buyers? How important is quality in the minds of buyers? How important is service? - Pricing is a critical factor and the company should be certain it wants to compete on price prior to make this move. These questions can help you determine whether a low price approach is a good choice. High-involvement buyers are typically less price sensitive. Buyers who want quality are typically less price sensitive. - Finally, buyers who want good quality service are typically less price sensitive. In these cases, the best move may be to take a "value-added pricing strategy" approach. Ritz Carlton is an example of a company that has used the value-added model to offer customers more than expected for the price charged.

Before A Low-Price Approach, Ask...

- Individual customers perceive the product in their own terms - The customer is a person; not a statistic - Companies that fully accept this basic truth are likely to adopt a one-to-onemarketing strategy

Complex Nature of Customer Behavior

- High/low involvement buyers? * High emotional involvement with brand * Low-involvement buyers focus on price - Importance of quality? * Role of price-quality relationship in sale - Importance of service? * Many buyers, particularly business-to-business, rank service above absolute price

Consequences of Low Price Tactics

Consumer: * Purchase for individual or household consumption * Decisions made by one * Purchase based on brand reputation or personal recommendation * Purchase based on emotion * Buyer may have little product experience Business: * Purchase for something other than personal consumption * Decisions made by many * Decisions made to meet precise technical specs * Purchase is rational * Decision may be slow and complex

Differences Between Consumer and Business Buyers

- Customer may have a one-time need - Customer may move outside the salesperson's territory - Firm may go out of business or merge - Loyal buyer or purchasing agent may leave the position - Sales may be lost to the competition

Every salesperson must cope with customer attrition:

- All meetings will be held in rooms that are attractive and comfortable - People can order food and beverages at their convenience, anytime of day or night

Example of Benefits

- The hotel conference rooms were recently redecorated - Hotel offers 24-hour room service

Examples of Features

- For a customer with a complex problem, the salesperson's problem-solving ability may be the product they need. A McKinsey survey of 1200 B2B purchasing managers noted that the second most detrimental habit of a salesperson was to lack knowledge of their products.

Extra Info

- Product's perceived advantage over available substitutes - Product's benefits and importance of related needs - Competitive activity including pricing, development of substitutes, and promotional effectiveness - Changes in technology, fashion, and/or demographics

Factors Determining Product Life Cycle Stage

Consumers who make habitual buying decisions often skip or reverse some of these stage. Needs awareness is the first stage in the buying process. The buyer recognizes that something is imperfect or incomplete. There are several solutions that the customer needs to study. At the resolution stage of the buying process, the customer is aware of a need and has evaluated one or more solutions. The customer has resolved to do something. However, the customer is likely to have issues and concerns that must be resolved before moving ahead. After all the customer's obstacles and concerns have been overcome, the purchase decision is made. Professional salespeople create value in many ways at this stage of the buying process. The first sale is only the beginning of the relationship with the buyer. Repeat sales occur when the supplier has demonstrated the ability to add value in various ways after the sale. Value creation can take the form of timely delivery, superior installation, accurate invoicing, follow-up contacts by the salesperson, or something else that is important to the customer

Figure 8.3 shows the typical stages in the buying decision process: needs awareness, evaluation of solutions, resolution of problems, purchase, and implementation. This model is especially helpful in understanding organizational buying decisions and large consumer acquisitions. .

Prospecting Account development Business development

Identifying and developing potential customers

Product Configuration

If the customer has complex buying needs, then the salesperson may have to bring together many different parts of the company's product mix in order to develop a custom-fitted solution. The product selection process is often referred to as ________________________

- Be able to discuss your strengths and weaknesses relative to the competition - Do not refer to competition directly during sales presentation - Only discuss competition if you know your facts - Never criticize the competition - Be prepared to add value - Salespeople must be industry experts, not just experts of the products they sell. You must acquire facts about the competing products before the sales presentation. Helpful guidelines are included in the slide.

Know the Competition

- Position as new or mature - Position based on price - Position based on value-added

Product-Positioning Options

LinkedIn Twitter FollowerWonk TweetDeck HootSuite SproutSocial And more....

Prospecting with Social Media

have a need for my product? have the authority to buy my product? have the financial resources to buy my product? have the willingness to buy my product?

Qualifying Questions

- Mutually shared answers to recognized customer problems - More encompassing than specific products - Those that provide measurable results - Those that require greater effort to define and diagnose the customer's problems

Selling solutions are:

Referrals Friends and family Directories Trade publications Trade shows Direct-response marketing Website Databases Cold calling Networking Educational seminars Non-sales prospecting

Sources of Prospects

Satisfactions

The positive benefits that customers seek when making a purchase. This arise from the product itself, from the company that makes or distributes the product, and from the salesperson who sells and services the product.

Quantifying the Solution

The process of determining whether or not the proposal adds value.It is especially important in situations where the purchase represents a major buying decision

Feature Dump

The process of talking about all the great things product X or service Y has without enabling a customer to see what it means to him or her.

- Use the Internet to get instant, comprehensive information - Have immense choices from every corner of the world - Can get real-time price comparisons - In the age of information, salespeople are faced with customers who have access to immense amounts of information including competing products and price points. This means they may not rely upon the salesperson in the same ways they once did.

Today's Customers

* Quantity discounts * Seasonal discounts * Promotional allowances * Trade or functional discounts * Unbundling of product features

Transactional Selling Tactics Focuses on Price

- new-task buy - straight rebuy - modified rebuy - The amount of time and effort organizational buyers spend on a purchase usually depends on the complexity of the product and how often the decision must be made. - When selling to strategic alliances, systems selling may be used.

Types of Business Buying Situations

- Company culture and organization - Product information - Past performance - Depending upon how well-known your company is, you may need to spend considerable time providing information about your company. Even the organization's culture can help reinforce your sales message. Most organizations take on distinct norms and practices over time. These norms can actually add value.

What kind of information is needed in most selling situations?

- Web-based sources, catalogs, and marketing-related sales support information - Plant tours - Internal sales and sales support team members - Use the products - Read and study publications

Where Can You Find Information?

An individual or business who meets the qualification criteria established by you or your company

Who is a prospect?

Expected product

everything that represents the customer's minimal expectations