Relationship Marketing: Where Personal Selling Fits

1. Relationship Marketing: Where Personal Selling Fits Chapter 2

2. 2 Chapter 2-2

3. Main Topics • What Is the Purpose of Business? • What Is Marketing? • Customer Orientation’s Evolution • Marketing’s Importance in the Firm • Essentials of a Firm’s Marketing Effort • Relationship Marketing • Relationship Marketing and the Sales Force • Levels of Relationship Marketing

4. Main Topics • Partnering with Customers • The New Consultative Selling • E-Selling: Technology and Information Build Relationships • What’s a Salesperson Worth? • The Key to Success

5. In Chapter 2 We Will See What is Meant by the Terms... • Business • Marketing • Product, Price, Place, Promotion • Personal Selling

6. The Purpose of Business is to: • Increase the general well being of humankind through the sales of goods and services

7. This Requires • Making a profit in order to operate the business and to provide beneficial products to the marketplace

8. Profit is a Means to an End • Profit is needed to serve humankind • Profit is needed to operate the business • Profit is needed to provide products to the marketplace

9. The Two Basic Functionsof Business • Two Basic Functions of Business • Production of goods or creating of services • Marketing those goods and services • The Primary Goal of Business • Transform marketplace and workplace into an environment where everyone is treated fairly

10. What is Marketing? • Marketing is a process of planning: • The conception, pricing, promotion, and distribution of goods, services, and ideas • To create exchanges that satisfy individual and organizational objectives

11. Customer Orientation’s Evolution • The production concept • The selling concept • The marketing concept

12. The Production Concept • Companies were production oriented We know what people want – they want our product.

13. The Selling Concept • Characterized by product demonstrations and unsophisticated sales techniques • Emphasis on the product • Product created and then sold • Management is sales-volume oriented • Stresses needs of the seller

14. The Marketing Concept • Emphasis is on customer’s wants • Customer’s wants drive production • Management is profit-oriented • Planning is long-term • Stresses wants of buyers

15. Exhibit 2-1: The Difference Between Selling and Marketing Concepts

16. Marketing’s Importance in the Firm • Marketers have four main objectives: • Maximize the sales for existing products in existing markets • Develop and sell new products • Develop new markets for existing or new products • Provide quality service to ensure repeat business

17. Exhibit 2-2: The Marketing Group is the Link Between Customers and the Organization

18. Product: It’s More Than You Think • A good is a physical object that can be purchased • A service is an action or activity performed for a fee • Value-added refers to benefits received that are not included in the purchase price of a good or service

19. Exhibit 2-3: Four Elements of the Marketing Mix and Four Promotion Activities

20. Exhibit 2-4: Examples of Business-To-Business Value-Adding • Help customer reduce process costs • Improve yields • Reduce waste (through recycling, etc.) • Reduce rework • Reduce direct labor • Reduce indirect labor (inspection, handling) • Reduce energy costs

21. Exhibit 2-4: Examples of Business-To-Business Value-Adding • Help customer reduce inventory • Consignment • Just-in-time delivery • Reduced cycle time

22. Exhibit 2-4: Examples of Business-To-Business Value-Adding • Help customer reduce administrative costs • Simplify billing • Improve tractability • Use electronic data interchange

23. Exhibit 2-4: Examples of Business-To-Business Value-Adding • Improve safety for customer and his employees • Reduce price to the customer • Substitute certain product components • Improve company processes and supplier processes

24. What is Meant by the Term “Product?” • A product is a bundle of tangible and intangible attributes, including package, color, and brand, plus the services and even the reputation of the seller

25. The Term “Product” May Refer to a Good or Service • Examples • Goods - a physical object for sale • Automobile • Cell phone • Prescription medicine • Services - an action or activity done for others for a fee • Automobile repair • Wireless phone plan • Health insurance

26. The Good and the Service: • Automobile - repair services • Cell phone - wireless phone plane • Prescription medicine - health insurance

27. We Will Use the Terms Follow-up and Service. What do They Mean?* • Follow-up refers to maintaining contact with a customer in order to evaluate the effectiveness of the product and the satisfaction of the customer (More on this in Chapter 14)

28. The Term “Service” May Refer to A: • Product, as insurance and advertise which is sold by someone • Service, as customer service which is an activity offered by a seller in conjunction with the purchase of a product, such as delivery, repair, credit cards accepted, 800 telephone number, web site, salesperson available to help customer (More on this in Chapter 14)

29. Customer Service by the Salesperson Include: • Salesperson goes to customer’s business to help: • Resell products • Customer use product • Handling complaints • Return damaged products • Provide samples • Suggest further business opportunities (Above discussed in Chapter 1)

30. People Buy More Than the Product • People buy want-satisfaction as • Image of owning as a • Polo shirt vs. Wal-Mart shirt • Dodge Viper* vs. Volkswagen Vanagon* • What the product will do • Its quality *products and associated images used for illustrative purposes only

31. There Are Two General Types of Products - Consumer and Industrial Products • What is a consumer product? • A consumer product is produced for, and purchased by, households or end consumers for their personal use • What is an example of a consumer product? • Toothpaste • Television • Clothes

32. There Are Two General Types of Products- Consumer and Industrial Products Cont… • What is industrial product? • An industrial product is sold primarily for use in producing other products. Industrial users are profit nonprofit organizations that buy good and services for one of three purposes* • To make other goods and services • To sell to consumer or other industrial users • To conduct the organization’s operations*

33. Consumer product - personal use Industrial product - producing other products What is an example of an industrial product? Airlines purchase airplanes Boeing sells their airplanes to airlines University buys computers The Key Phrases That Differentiate Between Consumer and Industrial Products are:

34. What Is Another Name for an Industrial Product?* • Business product • Organizational product

35. Price: It’s Important to Success • Price refers to the value or worth of a product that attracts the buyer to exchange money or something of value for the product

36. Distribution Moves Products to Customers • Three Customer Groups • A household refers to a decision-making unit that buys for personal use • A firm is an organization that produces goods and services • A government is an organization that has two functions: • The provision of goods and services to households and firms • The redistribution of income and wealth

37. Consumer and Industrial Products are Often Distributed Through Resellers • What are Resellers? • Resellers, such as wholesalers or retailers, purchase products and then sell to organizations and/or individuals

38. What Is a Wholesaler? The Wholesaler (May Be Referred to as a Distributor) • Primarily engaged in buying, taking title to, usually storing and physically handling goods in large quantities, and reselling the goods, usually in smaller quantities to • Retailers • Wholesalers • Manufacturers

39. Exhibit 2-5: Examples of Distribution Channels for Consumer and Industrial Products

40. Promotion Tells People • Promotion increases sales by communicating product information to potential customers • The four basic components of a firm’s promotional effort are: (PAPS) • Personal selling • Advertising • Publicity • Sales promotion

41. Exhibit 2-6: Promotion Activities • Personal Selling is… personal communication of information to persuade • Advertising is… non-personal communication of information paid for by an identified sponsor such as an individual or an organization (Methods include TV, newspapers, catalogs and the radio)

42. Exhibit 2-6: Promotion Activities • Publicity is… non-personal communication of information that is not paid for by an individual organization. Information appears in media such as television, radio and newspapers • Sales promotion involves… activities or materials used to create sales for goods or services

43. Exhibit 2-6: Promotion Activities • Two types of sales promotion • Consumer - includes free samples, coupons, contests, and demonstrations to consumers • Trade - encourages wholesalers and retailers to purchase and to sell aggressively using devices such as sales contests, displays, special purchase prices, and free merchandise

44. Exhibit 2-6

45. Exhibit 2-7: Examples of Each Marketing Mix Element

46. Relationship Marketing • Relationship marketing is the creation of customer loyalty • Targets a major customer that it wants to sell to now and in the future • Establishes a long-term collaborative relationship

47. Relationship Marketing andthe Sales Force • Four basic questions used as guidelines in defining the role of the sales force: • How much selling effort is necessary to gain and hold customers? • Is the sales force the best marketing tool? • What type of sales activity will be necessary? • Can the firm gain strength relative to its competition with its sales force?

48. Relationship Marketing andthe Sales Force • Personal selling builds relationships! • Two main functions of personal selling are to: • Generate revenue • Provide services to satisfy customers • Flexible in operation • Focused on prospective customers • Results in actual sales

49. Relationship Marketing andthe Sales Force implement relationship marketing • Salespeople

50. Summary of Relationship Marketingand the Sales Force • What is the role of the sales force in the marketing effort? • Personal selling builds relationships • Salespeople implement relationship marketing