MGT 4303 Exam 1

external environment

1. economic environment 2. legal/political environment 3. technological environment 4. social/cultural environment 5. natural environment

organizational buying decision stages

1. anticipation or recognition of problem or need 2. determination and description of traits and quantity of needed item 3. search for and qualification of potential suppliers 4. acquisition and analysis of proposals or bids 5. evaluation of proposals and selection of suppliers 6. selection of an order routine 7. performance evaluation and feedback

why are sales job so rewarding

1. autonomy- freedom of action and opportunities for personal initiative 2. job variety- multifaceted and challenging activities ~salespeople must frequently adjust their sales presentations and activities to shifts in economic and competitive conditions 3. opportunities for rewards- sales compensation being directly linked to performance ~intrinsic rewards- rewards inherent to satisfaction derived from elements of the job or role itself ~extrinsic rewards- financial rewards bestowed on the salesperson by the company 4. favorable working conditions- less minute to minute direct supervision than other careers 5. excellent opportunities for career development/ability to move up in the organization

internal environment

1. goals/objectives/culture ~strong defined mission driven by top managements belief and values leads to development of strong corporate culture ~culture shapes employees attitudes and actions and helps determine plans/policies/procedures salespeople implement 2. human resources ~difficult to expand sales force rapidly to take advantage of new products or growing markets b/c takes time to recruit highly qualified salespeople and train them ~firm can compensate for lack of knowledgeable employees by hiring outside agencies 3. financial resources ~tight budget can constrain firms ability to develop new value adding products as well as size of promotional budget and sales force 4. production and supply chain capabilities ~company may be prevented from expanding b/c it doesnt have capacity to serve increased demand or b/c transportation costs make products price uncompetitive 5. service capabilities ~ability to provide high level of service is important source of value added ~great service gives strong competitive advantage in marketplace and makes it difficult for other firms to compete for same customers and customers to switch to competitors even if they offer price advantages 6. technological capabilities ~customers are attracted to innovators and industry leaders (helps avoid trap of over-relying on price to get the sale)

sales management

1. motivating salespeople ~motivation- individuals choice to initiate action on certain task, expend a certain amount of effort on that task and persist in expending effort over period of time ~expectancy theory- holds salespersons estimate of probability that expending effort on task will lead to improved performance and rewards 2. selecting and training salespeople ~key success factors- listening skills, follow up skills, ability to adapt sales style from situation to situation, tenacity (sticking with task), organization skills, oral communication skills, ability to interact w/ people at all levels of customers org ~training is building species skill sets needed to succeed in the job while development is providing long term career track for salespersons professional goals 3. compensating and evaluation salespeople

selling process

1. prospecting and sales call planning ~prospects- set of potential customers you identified as very likely future customers 2. communicating the sales message ~with a hard sell approach (transactional selling) little trust exists between parties and they are not working for long term or win-win solutions ~solution selling- salespersons primary role is to move the buyer toward visualization of a solution to his or her problem or need (relationship selling) 3. negotiating for win-win solutions ~objection- concern that some part of your product offering or solution does not fully meet the buyers need (may be over price, delivery, terms of agreement, timing, etc) 4. closing and follow up ~effective follow up (service after the sale) can improve customers perceptions of service quality, customer satisfaction and customer retention/loyalty ~customer delight- exceeding customer expectations to a large degree is a powerful way to gain customer loyalty 5. self management

selling activities

1. selling function- plan selling activities, search out leads, call on potential accounts, indentify decision makers, prepare sales presentation, make sales presentation, overcome objections, introduce new products, call on new accounts 2. working with others- write up orders, expedite orders, handle back orders, handle shipping problems, find lost orders 3. servicing the product- learn about the product, test equipment, supervise installation, train customers, supervise repairs, perform maintenance 4. managing information- provide technical info, receive feedback, provide feedback, check w/ superiors 5. servicing account- stock shelves, set up displays, take inventory for client, handle local advertising 6. attending meetings- attend sales conferences, attend regional sales meetings, work at client conferences, set up product exhibitions, attend periodic training sessions 7. training/recruiting- recruit new sales reps, train new salespeople, travel with trainees 8. entertaining- entertain clients by taking them to dinner/lunch/drink/throw parties 9. distribution- establish good relations with distributors, sell to distributors, handle credit, collect past due accounts ~job enlargement- sales role today is broader and contains substantially more activities ~ensure all salespeople receive proper training and support so they can use available technology ~reallocating sales effort to customer retention and purifying sales job by eliminating nonessential task are strategies used to reduce selling costs and increase sales force efficiency

types of B2B sales jobs

1. trade servicer- increase business from current and potential customers by providing them w/ merchandising and promotional assistance 2. missionary seller- increase business by providing product information and other personal selling assistance (often dont take orders from customers directly but persuade customers to buy their firms products from distributors) 3. technical seller- increase business by providing technical and engineering information and assistance 4. new business seller- identify and obtain business from new customers (securing and building the customer relationship)

abuse of salespeoples rights

~(1) following the policies and procedures related to termination (2) maintaining confidentiality and security of personal information (3) creating work environment free of any form of discrimination or bias (4) following established policies and rules regarding performance appraisals/compensation/benefits

participants in organizational buying process

~buying center- represents all the people who participate in purchasing or influencing the purchase of a particular product ~buying center is smaller when reordering products the firm has purchased in the past than when buying something for the first time ~perceived risk- based on complexity of product and situation, relative importance of the purchase, time pressure to make decision, degree of uncertainty of products efficacy 1. initiators- people who perceive problem or opportunity that may require purchase of product ~start the buying process ~can be almost anyone at any level in the firm 2. users- people who must use or work w/ product or service often influence decision 3. influencers- provide info for evaluating alternative products and suppliers ~often play role in determining specifications and criteria to use in making purchase decision ~usually technical experts from various departments 4. gatekeepers- control type and amount of info provided to other people involved in the purchasing process [filters info by choosing to pass along some but not all info to influence decision] ~screens- who decide whose phone call is put through to purchasing agent ~filters- gathers proposals from companies and decides what to tell others in buying center about each company 5. buyer- person who actually contacts selling org and places order 6. decider- person w/ final authority to make a purchase decision ~sometimes buyers have authority but it is often top level executives 7. controller- person who determines budget for purchase

communicating value in sales message

~categories for commincating value- (1) product quality (2) channel deliverables/supply chain (3) IMC (4) synergy b/w sales and marketing (5) execution of marketing mix programs (6) quality of buyer seller relationship/trust (7) service quality (8) salesperson professionalism (9) brand equity (10) corporate image/reputation (11) application of technology (12) price

unlawful business activities

~collusion- when competing companies get together and fix prices, divide up customers or territories, or act in a way to harm a third party (usually a customer) [any activity b/w two competitors that serves to lessen competition is illegal] ~restraint of trade- forcing a dealer or other channel member to stop carrying its competitors products as part of arrangement w/ the dealer ~reciprocity- practice of suppliers buying from one another [not illegal unless it effectively shuts out other competitors] ~competitor obstruction- practice of impeding competitor access to customer ~competitor defamation- illegal to harm competitor by making unfair or untrue statements about the company/its products/the people who work for it [unfair statements are difficult to prove/disprove and put competitor at disadvantage in the marketplace while untrue statements are deliberate falsehoods] ~2 types of defamation- (1) slander- unfair or untrue oral statements that materially harm reputation of competitor (2) libel- unfair or untrue written statements that harm reputation ~price discrimination- giving different prices or discounts to different customers who purchase the same quality and quantity of the product ~companies are allowed to charge different prices if (1) they reflect differences in the cost of operations (2) they meet competitor pricing to same customer (3) reflect differences in quality or quantity of product

legal/political environment

~common legal issues involve antitrust, truth in advertising, restriction of telemarketing and spam, product liability, issuance of credit, transportation of materials, product claims, etc ~differing political administrations at all levels of gov can bring changes to marketplace ~mindful of laws relevant to doing business in each country and must take laws into account when developing strategies there

model for contemporary selling

~customer centric- put customer at center of everything that occurs both inside and outside the firm (w/o customers you have no sales, profits and ultimately no business) ~firms that are customer centric have high level of customer orientation- (1) instill organization wide focus on understanding customers requirements (2) generate understanding of the marketplace and disseminate that knowledge to everyone in the firm (3) align system capabilities internally so org responds w/ innovative, differentiated, satisfaction generating products and services ~customer mindset- salespersons belief that understanding and satisfying customers is central to doing their job well

dishonesty

~dishonest- provide false or deliberately inaccurate information to customers ~caveat emptor- in 20th century it was generally considered the buyers responsibility to uncover any untruths in the sellers statements ~successful contemporary selling is based on mutual trust and ethical behavior which means salesperson should not hold back any truths ~long term damage of half truths to relationship may be worse than any short term pain from being honest

social/cultural environment

~firms develop new products in response to trends in customers tastes and preferences ~demographic trends in US affect selling- aging society, more minorities as percentage of total pop, two income households, greater mobility, more desire for leisure and convenience oriented products

gifts/entertainment/bribes

~gift- nonfinancial present ~bribe- financial present given to a buyer to manipulate the purchase decision ~gifts can affect whether or not the order is given and the size of the order

6. selection of an order routine

~goods must be received, inspected, paid for, and entered into firms inventory records (these activities represent additional costs that may not be apparent to the buying firm) ~slotting allowances- fees for privilege of having the retailer set up a new item in its IT system, program into inventory and distribute into stores

3. search for and qualification of potential suppliers

~if item has been purchase before the search may be limited to suppliers that have performed satisfactorily in the past ~advantage to cultivating strong long term buyer relationships is that this step is often skipped ~single source suppliers whenever possible to minimize variation in quality of production inputs ~if purchase involves new item or complex/expensive item- buyers often search for potential suppliers and select one w/ best product and most favorable terms

misuse of company resources

~if salespeople misrepresent their business expenses to generate additional income ~when salesperson believes compensation is not adequate or company policies are not sufficient to cover legitimate business expenses ~not always clear whether use of business resources for personal use is unethical [some companies permit the personal use of business assets]

value proposition

~in transactional selling- goal is to strip costs and get to lowest possible sale price ~relationship selling- value proposition works to add value through all possible means ~perceived value- whether or not something has value is in the eyes of the beholder

ethical concerns for salespeople

~issues with customers- dishonesty, gifts/entertainment/bribes, unfair treatment, breaking confidentiality ~issues with employers- cheating, misuse of company resources, inappropriate relationships w/ employees and customers

ethical concerns for management

~issues with salespeople- sales pressure, deception, abusing salesperson rights ~issues with company policies- unethical climate, unfair corporate practices

lifetime value of customer

~margin- profit made by firm ~lifetime value of customer- present value of stream of future profits expected over customers lifetime of purchases [subtract expected costs of securing/building/maintaining the customer relationship] ~firing a customer- customer needs to find alternative sources from which to secure products [selling to this customer is a money losing proposition in the long run] ~retention rate- keeping customers longer ~much less costly to retain existing customers than it is to acquire new ones

role of selling in marketing

~marketing concept- overarching business philosophy of the company (turn to customers themselves for input in making decision about what products to market, where to market, at what price and how to communicate w/ customers about these products) ~marketing mix- promotion, place, price, product (toolkit used to develop marketing strategy) ~factors that affect marketing communications mix- size and importance of purchase, complexity of product, how much info buyers need, degree of price negotiation, number and dispersion of buyers, whether postpurchase contact is required ~internal marketing- provides consistency of message among employees and shows that management is unified in supporting them of adding value through reliability

types of organizational buying situations

~new task purchase- customer is buying relatively complex and expensive product or service for the first time ~modified rebuy- customer wants to modify the product specs, prices or other terms it has been receiving from existing suppliers (will consider dealing w/ new suppliers to make these changes if necessary) ~straight rebuy- customer is reordering item they have purchase many times (repeat purchase tends to be more routine than new task purchase or modified rebuy) ~outsupplier- objective is to move customer away from automatic reordering procedures of straight rebuy towards more extensive evaluation process of modified rebuy

technological environment

~opportunity for new product development ~rapid development of new products- new selling plans must be developed to appeal to customers, salespeople must be retrained to update technical knowledge, new salespeople must be hired to augment sales effort, new performance evaluation systems to match new sales roles ~improvements in transportation/communications/information management changes the way customers are targeted, sales territories are defined, salespeople are deployed and salesperson performance is evaluated

implied warranties

~warranty that goods shall be merchantable is implied in contract for their sale if seller is a merchant ~for goods to be merchantable they must (1) pass w/o objection in trade under contract description (2) are of fair average quality within description (3) are fit for ordinary purposes for which such goods are used (4) of even kind/quality/quantity within each unit and among all units involved (5) adequately contained/packaged/labeled as agreement may require (6) conform to promise or affirmations of fact made on container or label

(1) product quality

~performance- products primary operating characteristics ~features- characteristics that supplement basic performance or functional attributes of product ~reliability- probability of product malfunctioning/failing within specified time period ~conformance- degree to whcih products design and operating characteristics meet established standards of quality control ~durability- how long product lasts and how much use customer gets out of product before it breaks down ~serviceability- speed/courtesy/competence/ease of repair for product ~aesthetics- how product looks/feels ~perceived quality- how accurately customers perceptions of products quality match its actual quality

5. evaluation of proposals and selection of suppliers

~product quality tends to be more important in purchase of technically complex products while price is more important for standardized/commodity products ~buyers evaluate offerings and select suppliers after negotiating various aspects of the deal

express warranties

~promise/description/model made by seller to buyer that relates goods and becomes part of the basis of the bargain [creates express warranty that goods shall conform to promise] ~not necessary that seller use formal words such as "warrant" or "guarantee" or that they have specific intention to make warranty but an affirmation merely of the value of goods or the sellers opinion doesnt create a warranty

unfair treatment

~providing special treatment to customers is costly and may not be a good use of salespersons time ~providing special services to some customers will lead other customers to feel as though they are not important enough- leading to a weaker relationship w/ those customers

1. anticipation or recognition of problem or need

~purchases are motivated by requirements of firms production processes, merchandise inventory, or day to day operations ~derived demand- needs are derived from firms customers demands for good or services it produces ~derived demand makes markets quite volatile because small change in market can result in large change in organizations sales ~new needs might evolve when focus of forms operations changes (new product line)

selling in B2C versus B2B markets

~retail selling- selling goods and services to end user consumers for their own personal use (B2C) ~industrial selling- sale of goods and services to buyers who are not the end users (B2B) ~3 types of B2B- (1) sales to resellers [sells product to retail stores which in turn resells the goods to its customers] (2) sales to business users [sell materials or parts to org which uses them to produce another product] (3) sales to institutions [sells product to nonprofit hospital or government agency] ~many goods and services sold in B2B are more expensive and technically complex than in B2C ~B2B customers tend to be larger and engage in decision making processes involving many people

creating value/building relationships

~return on customer investment- ratio of how much time/money/other resources should be invested in a particular customer versus the anticipated return on that investment ~lifetime value of a customer- customers long term value to the sales organization ~value- what does each party get out of a sale compared to what they invest (investment might be time, money, labor, production, etc) ~transactional selling- give little consideration to using value creation to build relationships w/ customers and content to simply conduct business as series of discrete transactions (no additional benefits seller can bring to the party beyond price) [creates its value by stripping cost and making acquisition easy- neither party making much investment in the process of buying or selling] ~consultative selling- sales force creates value by (1) helps customers understand their problems or opportunities in new ways (2) helps customers arrive at new or better solutions to their problems (3) acts as customers advocate inside sales org ensuring to deliver customized or unique solutions that meet customers special needs ~enterprise selling- leverage any and all corporate assets of the sales org to contribute to customers strategic success [initiated at very high levels in each org and are deeply tied to customers strategic direction] ~relationship selling requires more time developing understanding of buyers needs (more front loaded selling process) where info, analysis and communication become more important to success w/ customer ~transactional selling focuses on price (much more time and energy must be put into closing the sale)

economic environment

~sales managers must consider amount of growth, unemployment rate, level of inflation and GDP when analyzing market opportunities and developing sales forecasts ~existing distribution structure in an industry [includes number, types and availability of wholesalers, retailers and other intermediaries a firm might use to distribute its product] [firms selling effort is directed at persuading intermediaries to stock and provide sales for company's products] ~amount of competition in industry- number of competing firms and relative strength of each in the marketplace

sales pressure

~salespeople are evaluated on how much they have sold, how profitable the order is, the configuration of the sales order ~when sales pressure is applied unfairly or too forcefully management may be crossing the line ~expect management to define clear sales goals w/o threatening undue pressure ~setting unrealistic goals demotivates salespeople especially if they feel there is nothing they can do to reach sales goals

corporate code of ethics

~salespeople use both their own personal code of ethics and company's ethical code ~not all companies have written codes of ethics but use culture to define what is acceptable ethical behavior ~important because (1) framework for company's approach to doing business (2) serve as point of reference for individual employee behavior (3) strong corporate code can have positive effect on customers and other organizations that interact w/ company

cheating

~salesperson is primary source of direct communication w/ customer [companies must have confidence in that info in order to make sound business decisions] ~salespeople report on number of sales calls, expenses and how sales are recorded to the company and this info is assumed to be accurate

selling centers

~selling center approach brings together individuals from around organization as a team to join salesperson who has primary responsibility for a customer ~different members of buying center may be active at different stages of the purchase process ~important part of sales planning involves determining who the sales org should contact, when each contact should be made, who within the selling team should make the contact, what kinds of info and communication each buying center member is likely to find useful and persuasive ~team selling is expensive and requires lots of human resources so it is appropriate for the largest customers (especially those w/ buying centers) whose potential business represents enough revenue to justify high costs ~these customers are referred to as key accounts

unethical corporate culture/climate

~senior management style, established culture of the organization and external pressures can create climate where unethical or illegal behavior is tolerated ~managers need to create culture where ethical behavior is the norm ~ethical climate can improve salespeoples job satisfaction, organizational commitment, and willingness to stay with the company

(7) service quality

~services have these unique properties: ~intangibility- services cant be seen/felt before they are bought ~inseparability- services are typically produced and consumed simultaneously ~variability- quality of services depends largely on who provides them and when/where they are provided ~perishability- cant be stored for later use ~dimensions of service quality- (1) relaibility [providing service in consistent/accurate way] (2) responsiveness [readiness and willingness to help customers and provide service] (3) assurance [conveyance of trust and confidence] (4) empathy [caring individualized attention to customers] (5) tangibles [physical appearance of service providers business/website/IMC materials/etc]

Uniform Commercial Code

~significant set of laws affecting selling- 9 articles and is modified by each state ~sets out rules and procedures for almost all business practices in US ~salesperson- person who sells or contracts to sell goods ~buyer- person who buys or contracts to buy goods ~sale- consists in passing of title from seller to buyer for a price ~contract for sale- includes both present sale of goods and a contract to sell goods at a future time ~goods- all things (including specially manufactured goods) that are movable at the time of identification to the contract for sale other than the money in which the price is to be paid, investment securities and things in action ~person in the position of a seller includes agent who has paid or become responsible for the price of goods on behalf of his or her principal or anyone holds security interest or other right in goods

unfair corporate policies

~sometimes policies and procedures that work fine for the rest of the organization create a problem in the sales area ~must be flexible enough to consider unique situation of salespeople when enforcing company policies [submitting business expenses- salespeople travel so much they cant wait whole month to be reimbursed]

7. performance evaluation and feedback

~suppliers performance can be evaluated on promptness of delivery, quality of product and service after sale

internal marketing communications (IMC)

~to ensure that the message about a company and its products are consistent ~keeps message about value proposition consistent which in turn supports the overall brand and marketing strategy ~key characteristics- (1) comprehensive [all elements of marketing mix are considered] (2) unified [messages delivered by all media and communication among internal customers] (3) targeted [elements of mix employed all have same or related targets for message] (4) coordinated execution (5) productivity [reaching designated targets when selecting channels and allocating resources] ~internal customers- people within your firm who may not have external customer contact but who nonetheless add value that will ultimately benefit external customers

2. determination and description of traits and quantity of needed item

~types and quantities of goods to be purchased are dictated by demand for firms outputs and requirements of its production process and operations ~quantities needed must be carefully considered to avoid excessive inventories

natural environment

~unseasonable weather can damage or enhance sales depending on the type of product ~source of all raw materials and energy sources needed to make, package, promote and distribute a product ~during sales shortages company may engage in demarketing part or all of its product line- sales force administers rationing programs which allocates scare supplies according to customers purchase history ~growing social concern about impact of products and production processes on natural environment has important implications for selling ~sustainability impacts relationships w/ client firms as well as the public at large

value is related to customer benefits

~utility- want satisfying power of a good or service [think of customer benefits/value in terms of utilities they provide to customer] ~4 kinds of utility- form, place, time and ownership ~form utility- created when firm converts raw materials into finished products that are desired by the market ~place/time/ownership utilities are created by marketing- created when products are available to customers at convenient location/when they want to purchase them/facilities of exchange allow transfer of product ownership ~seller can increase value of customer offering by raising benefits, reducing costs, raise benefits and reduce costs, raise benefits by more the the increase in costs, lower benefits by less than the reduction in costs ~customer satisfaction- how much customer likes product/service/relationship ~customer loyalty- value proposition is strong enough to move customers past satisfaction and into commitment to your products for the long run

value

~value/value proposition- represents net bundle of benefits the customer derives from product you are selling ~low prices may enhance value but so does expertise, quality and service ~customer loyalty- giving your customers many reasons not to switch to competitors (keep customers coming back again and again) ~relationship selling- central goal is securing, building and maintaining long term relationships with profitable customers (oriented towards the long term) ~sales management- the way the various aspects of selling are managed by salespersons firm ~customer relationship management (CRM)- organization wide customer focus that uses advanced technology to maximize firms ability to add value to customers and develop long term relationships

value chain

~ways to create more customer value within selling firm [approach to understanding delivery of value and satisfaction] ~primary activities are inbound logistics (how firm goes about sourcing new materials for production), operations (how firm converts raw materials into final products), outbound logistics (how firm transports and distributes final products to marketplace), marketing/sales (how firm communicates value proposition to marketplace), service (how firm supports customers during and after sale) ~support activities are firm infrastructure (how firm is set up for doing business), human resource management (how firm ensures it has right people/trains them and keeps them), technology development (how firm embraces tech use to benefit customers), procurement (how firm deals w/ quality issues) ~work to align elements of value chain- all facets if company work together to eliminate problems that may impair firms long term relationships w/ profitable customers ~if value chain is working well customers tend to see results- quality products, on time delivery, good people, etc

inappropriate relationships w/ other employees and customers

~what happens when relationship ends, could the company be charged with sexual harassment, if the relationship is w/ a customer how will it affect the business relationship b/w the 2 companies