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MGT301 - Principles of Marketing - Lecture Handout 37

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SALES FORCE MANAGEMENT
DIRECT MARKETING

e) Supervising Salespeople

 

Through supervision, the company directs and motivates the sales force to do a better job. The extent of the involvement of the sales management in helping salespeople to manage their territories depending on a variety of factors:

  1. Develop customer targets and call norms by dividing accounts into categories.
  2. Develop prospect targets.
  3. Using sales time efficiently. Aids can come from:
    • An annual call plan.
    • A time and duty analysis.
    • Technological equipment aids (such as cell phones, computers, and sales force automation systems).
    • The fastest growing technology tool used by the sales force is the Internet.

Motivating the salespeople is one of the most important tasks of sales management. Factors that should be considered in preparing a motivation plan and strategy include:

  1. The organizational climate. This describes the feeling that salespeople have about their opportunities, value, and rewards for a good performance within the company.
  2. Sales quotas are standards set for salespeople, stating the amount they should sell and how sales should be divided among the company’s products. Compensation is many times tied to quotas.
  3. The company can use several positive incentives to increase the sales force effort.
    • Sales meetings provide social occasions, breaks from routine, chances to meet and talk with company managers, and opportunities to air feelings and to identify with a larger group.
    • Sales contests can also be used to spur the sales-force to make a selling effort above what would normally be expected. Incentives could be:
      • Honors.
      • Merchandise and cash awards.
      • Trips.
      • Profit-sharing plans.

f) Evaluating Salespeople

Evaluating Salespeople

Evaluating the salespeople is an important process in the sales force management function. This process requires good
feedback. Management gets information about salespeople in several ways. A company knowledgebase should include
sales performance by individual salespeople. Feedback is an important aspect of formal evaluation, followed by mutually agreed remedies to problems. Benchmarking between salespeople is good where there is the ability to compare apples with apples in terms of such factors as territory size or numbers of active customers.

  1. an important source of information is the sales report (including call reports and expense reports). Additions to this report can come from:
    • Personal observation.
    • Customer surveys.
    • Talks with other salespeople.
  2. Salespeople are generally evaluated on their ability to “plan their work and work their plan.”

D. Direct Marketing

Direct marketing consists of direct communications with carefully targeted individual consumers to obtain an immediate response. Interactivity is essential to this process. The marketing manager must remember that direct marketing is not new. Catalog companies, direct mailers, and telemarketers have been using the approach for years. However, improved database technologies and new media (computers, modems, fax machines, e-mail, the Internet, and online services) have
changed the direction and nature of direct marketing. Most direct marketers see direct marketing as playing an even broader role than simply selling products and services. Mass marketing is targeting broadly with standardized messages and marketing offers distributed through intermediaries. Today, there is a trend toward more narrowly targeted or one-to-one marketing (called direct marketing). This approach is being accepted as both a primary and supplemental approach.

a. What is Direct Marketing?

Mass marketers have typically sought to reach millions of buyers with a single product and a standard message delivered through the mass media. Under this mass-marketing model, most marketing involved one-way Communications aimed at consumers, not two-way interactions with them.
Direct marketing consists of direct communication with carefully targeted individual consumers to both obtain an immediate response and cultivate lasting

Customer relationships. Direct marketers communicate directly with consumers, often on a oneto- one, interactive basis. Today, improved databases permit more sophisticated direct marketing and tailoring of marketing efforts. Beyond brand and image building, direct marketers seek a direct, immediate, and measurable consumer response.

b. The New Direct Marketing Model

Early direct marketers--catalog companies, direct mailers, and telemarketers--gathered customer names and sold goods mainly through the mail and by telephone. Today, advancement in database technologies and new marketing media—especially the Internet and other electronic channels-- direct marketing has undergone a dramatic transformation. Direct marketing may be perceived as being a distribution function (direct distribution) and a communication function (direct contact with the consumer). Some firms use direct marketing as a supplemental medium. However, for many companies today, direct marketing is more than just a supplemental channel or medium. The Internet and electronic commerce now constitute a new and complete model for doing business. Some say the Internet is the foundation for a new industrial order. Some firms (and the number is growing) use the new direct model as their only approach. Experts envision the day when all buying and selling will involve direct connections between companies and their customers. The new model will change customer’s expectations about convenience, speed, comparability, price, and service.

c. Benefits and Growth of Direct Marketing

Direct marketing brings many benefits to both buyers and sellers. As a result, direct marketing is growing very rapidly.

i. Benefits to Buyers

Direct marketing benefits buyers in many ways:

  1. It is convenient.
  2. Buying is easy and private.
  3. Greater product access and selection.
  4. Provides a wealth of comparative information.
  5. Online buying is interactive and immediate.

ii. Benefits to Sellers

Sellers benefit by:

  1. Direct marketing is a powerful tool for customer relationship building.
  2. Direct marketing can also be timed to reach prospects at just the right moment.
  3. Because of its one-to-one, interactive nature, the Internet is an especially potent marketing tool. Continuous relationships can be developed.
  4. Reduce costs and increase speed and efficiency.
  5. Online marketing offers greater flexibility.
  6. The Internet is a truly global medium.

d. The Growth of Direct Marketing

Sales through traditional direct marketing channels have been growing rapidly. Sales through direct marketing channels are growing at about 8 percent annually (as compared to only 6 percent overall sales growths). Online marketing is growing explosively. Sales on the Internet have been growing at about 60 percent per year for the last five years. Trends that seem to moving our society toward even more direct marketing include:

  1. Degasification--focus is toward mini markets.
  2. Lack of time and congestion. Higher costs of driving.
  3. Growth of delivery services and the support infrastructure.
  4. Growth of computer power and databases.
  5. Growth has also occurred in the business-to-business sector.

e. Forms of Direct Marketing

Major forms of direct marketing are summarized below:

Forms of Direct Marketing

i. Face-to-Face Selling

The original and oldest form of direct marketing is the sales. Today, many companies’ still use salespersons or representatives to reach their prospects, develop them into customers, build lasting relationships, and grow the business.

ii. Telemarketing

In telemarketing telephone is used to sell directly to consumers. Two general types of telemarketing include:

  1. Outbound telephone marketing to sell directly to consumers.
  2. Inbound toll-free 800 numbers to receive orders from television and radio ads, direct mail, or catalogs.

900 numbers are used to sell consumers’ information, entertainment, or the opportunity to voice an opinion on a pay-per-call basis. Many customers appreciate the offers they receive by telephone, however, because of the recent explosion in unsolicited telephone marketing, lawmakers are responding with efforts to control unsolicited telemarketing during certain hours of the day. Most telemarketers support some form of legislation.

iii. Direct-Mail Marketing

Direct mail marketing involves sending an offer, announcement, reminder, or other item to a person at a particular address. Direct mail is well suited to direct, one-to-one communication. Advantages include:

  1. High target-market selection
  2. Personalized.
  3. Flexible.
  4. Allows easy measurement of results.

Even though the cost per thousand can be high, the people who reached through direct marketing are better prospects than those who reached with other media. New forms of direct mail include:

  1. Fax mail.
  2. E-mail.
  3. Voice mail.

iv. Catalog Marketing

Catalog marketing involves selling through catalogs mailed to a selected list of customers or made available in stores. A catalog is a printed, bound piece of at least eight pages, selling multiple products, and offering a direct ordering mechanism. Some stores offer a complete line of goods through their catalogs. Most direct retailers have put their catalogs on the World Wide Web. Web catalogs are passive and must be marketed themselves.

v. Direct-Response Television Marketing

Direct-response television marketing takes one of two major forms.

  1. Direct-response advertising occurs when marketers air television spots or infomercials.
  2. Home shopping channels are entire programs or channels dedicated to selling goods and services.

In the near future, two-way interactive television and linkages with Internet technology will make television shopping much different from what it is today and it will become one of the major forms of direct marketing.

vi. Kiosk Marketing

Some companies place information and ordering machines (called kiosks) in stores, airports, and other locations (in contrast to machines which dispense products--vending machines). Business marketers can also use kiosks (such as at trade shows). Kiosks are also going online as companies merge real-world and virtual worlds of commerce. The Gap interactive kiosk is a great example of this technology.

vii. Online Marketing and Electronic Commerce

Online marketing is conducted through interactive online computer systems, which link consumers with sellers electronically.
There are two types of online channels:

  1. Commercial online services offer information and marketing services to subscribers who pay a monthly fee. The best known is America Online.
  2. The commercial online services are now being overtaken by the Internet as the primary online marketing channel. The Internet is a vast and burgeoning global web of computer networks. The World Wide Web is a popular meeting place for consumer and business commerce.

Rapid Growth of Online Marketing

Although still in their infancy, Internet usage and online marketing are growing explosively. Electronic commerce is the general term for a buying and selling process that is supported by electronic means. This would include electronic marketplaces (these are “market spaces” in which sellers offer their products and services electronically, and buyers search for information, identify what they want, and place orders using a credit card or other means of electronic payment).

The Online Consumer

The Internet user is not a pasty-faced computer nerd. As a whole, Internet users are an elite group. They tend to be younger, more affluent, better educated, and more male than the general population. However, female usage almost equals males. Net users come from all age groups, about half are 40 years or older, they differ psycho graphically from the general population, and they differ in their approaches to buying and in their responses to marketing. Teens are still a
targeted group. The seniors group is also expected to grow in the next several years.

Creating Online Marketing

Marketers can conduct online marketing in four ways:

  1. By creating an electronic online presence. Using this method, a company can:
    • Buy space on a commercial online service.
    • Company can open its own Web site.
  2. Web sites vary in purpose and content.
    • The most basic type is a corporate Web site. These sites are designed to handle interactive communication initiated by the consumer. They seek to build customer good will and to supplement other sales channels rather than to sell the company’s products directly.
    • The marketing Web site is designed to engage consumers in an interaction that will move them closer to a purchase or other marketing outcome. With this form of site, the marketer initiates communication and interaction.
  3. Creating a Web site is one thing; getting people to visit the site is another. The key is to create enough value and excitement to get consumers to come to the site, stick around, and come back again. High involvement products (such as new cars, computers, or financial services) have greater success than do lower involvement products.

The second method is to place advertisements online. Companies can place online advertisement in several ways:

  1. The company can put online ads that pop up while subscribers are surfing online services or Web sites.
  2. Content sponsorship allows a company to sponsor a specific report on one of the services.

The third method is to participate in Forums, Newsgroups, and Web Communities.

  1. Forums are discussion groups located on commercial online services.
  2. Newsgroups are the Internet version of forums.
  3. A Bulletin board system (BBS) is specialized online services that center on a specific topic or group.
  4. Web communities are sites that provide a place where members can congregate online and exchange views on issues of common interest. Visitors to these Net neighborhoods develop a strong sense of community. Web communities can be either social or work-related.

The final method is to use E-mail and Web casting.

The normal method used is to encourage prospects and customers to send questions, suggestions, and even complaints to the company via e-mail. Quick response to such messages is a key.

The Promise and Challenges of Online Marketing

Online marketing offers great promise for the future but is still years away from reaching its potential. Online marketing is still just one important approach to the marketplace. The Web is still not a moneymaking proposition for many firms.
Challenges that online marketers face include:

  1. Limited consumer exposure and buying.
  2. Skewed user demographics and psychographics.
  3. Chaos and clutter.
  4. Security.
  5. Ethical concerns.

f. Customer Databases and Direct Marketing

There are differences between mass marketing and so-called one-to-one marketing. A customer database is an organized collection of comprehensive data about individual customers or prospects, including geographic, demographic, psychographics, and behavioral data. The database can be used to locate potential customers, tailor products and services to the special needs of targeted customers or/and maintain long-term customer relationships.
Database marketing is the process of building, maintaining, and using customer database and other database for the purposes of contacting and transacting with customers. A customer database is much more than just a list of names (i.e., customer mailing list). Business-to-business marketers and service retailers most frequently use database marketing.
Companies use their databases in four ways:

  1. Identifying prospects.
  2. Deciding which customers should receive a particular offer.
  3. Deepening customer loyalty.
  4. Reactivating customer purchases.

Like many other marketing tools, database marketing requires a special investment.

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