Personal Selling and the Marketing Concept

Kim Fernandez, Director of Natural Food Sales at Alta Dena Certified Dairies (urunualtadenadairy.com), uses the consultative selling approach exclusively. She takes pride in her ability to look through the eyes of her retail and wholesale customers and answer the question "What can I do to help them improve sales of natural dairy foods?" Although she is employed by Alta Dena, her first obligation is to her customers.

Many years ago Amgen (uruno.amgen.com) was a pharmaceutical company with nothing to sell. Over the years the research and development (R&D) staff began to develop life-saving medical products. At that point Amgen began to recruit and train a team of professional salespeople. Deborah Karish ~A was one of the first salespeople hired to calion doctors, pharmacists, ~ and other health professionals. Karish found that one of her greatest challenges was winning acceptance of Amgen and its new line of medical prod-

ucts. Prospects were accustomed to buying products from well-established pharmaceutical companies. Karish also had to sell herself. Health care professionals needed assurance that she was qualified to give accurate information on the applications of complex medical products.

Kim Fernandez and Deborah Karish represent just two of the many careers in personal selling. Today, sales offer a broad range of career opportunities requiring a wide variety of skills and expertise. Success in sales requires a strong commitment to the roles of consultant and problem solver. Salespeople like Fernandez and Karish seek to become an extension of the client's business-a true partner. They are constantly searching for ways to create value for the customer.'

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C HAP T E R 1 Personal Selling and the Marketing Concept 5

A highly competitive one-world market exists for products ranging from consulting services to automobiles. To stay competitive, many salespeople need to adopt a global perspective. A sales representative employed by United Parcel Service, for example, must compete with Federal Express, DHL Worldwide Express, and Emery for the opportunity to serve customers throughout the world.

-I PERSONAL SELLING IN THE AGE OF INFORMATION

The restructuring of America from an industrial economy to an information economy began in the 1950s (Fig. l.1). John Naisbitt, author of the popular book Megatrends, noted that during this period our economy began shifting from an emphasis on industrial activity to an emphasis on information processing. He recognized that industrial America was giving way to a new society where most of us would work with information instead of producing goods.2 We live in an age in which the effective exchange of information is the foundation of most economic transactions. Today we are in the latter stages of the age of information, and the implications for personal selling are profound. We will describe the four major developments that have shaped the information economy and discuss the implications for personal selling.

Major Advances in Information Technology

The information age has spawned the information technology revolution. Salespeople and other players in the information age use personal computers, e-mail, faxes, mobile phones, and other forms of technology to obtain and process information. Explosive growth of electronic commerce and other Internet activities has changed the way in which computers are used. Stan Davis, futurist and co-author of Blur: The Speed of Change in the Connected Economy, says that we now use the computer less for data crunching and more for connecting. These connections involve people to people, machine to machine, product to service, organization to organization, and all these in combination.3 Without these connections, information age workers cannot do their jobs. People who work extensively with information, such as salespeople, need these connections to conduct their information gathering and information management responsibilities.

Industrial Economy 1860-1960

Information Economy 1%0-2020

• Major advances occur in manufacturing and transportation

• Strategir I"CC:'nIlr'f':o,c lc t",=,ni+,=,1 -:::lInn ne+ure! rccmllrt"cc:>

• Busines

• Sales su

echnology

- UUo:Jlllv;:J;:J I;:' UvlllivU uy "'U;:J~Ulllvl 'V'U~,onships

• Sales success depends on adding value

FIGURE 11.1

The age of information has greatly influenced personal selling. Today, salespeople use a variety of information technology tools to gather and process information of value to the customer. They recognize that information is a strategic resource and relationship skills are needed to build a conduit of trust for information acceptance.

6 PA R T 1 Developing a Personal Selling Philosophy for the New Economy

Michael Hammer is credited with popularizing the concept of reengineering the corporation. The drivingfactors hehind reengineering are lower costs, better quality, better use of information and improved customer satisfaction.

Salespeople can play an important role in this management practice.

Strategic Resource Is Information

Advances in information technology have increased the speed at which we acquire, process, and disseminate information. David Shenk, author of Data Smog: Surviving the Information Glut, notes that we have moved from a state of information scarcity to one of information ovcrload.f The information age is dynamic, but it also can be disorienting. In an era of limitless data, informed salespeople are expected to help us decide which information has value and which information should be ignored. Customers who have less time to adjust to new products and circumstances value this assistance.

Business Is Defined by Customer Relationships

Michael Hammer, consultant and author of The Agenda, says the real new economy is the customer economy. As scarcity gave way to abundance, as supply exceeded demand, and as customers became better informed, we have seen a power shift. Customers have taken more control of their own destinies.P

On the surface, the major focus of the age of information seems to be the accumulation of more and more information and the never-ending search for new forms of information technology. It's easy to overlook the importance of the human element. Humans, not computers, have the ability to think, feel, and create ideas. It is no coincidence that relationship selling and relationship marketing, which emphasize long-term, mutually satisfying buyer-seller relationships, began to gain support at the beginning of the information age. Personal selling provides a counterbalancing human response to the impersonal nature of technology.

Sales Success Depends on Adding Value

Value-added sdling can be defined as a series of creative improvements within the sales process that enhance the customer experience. Salespeople can create value by developing a quality relationship, carefully identifYing the customer needs, and then configuring and presenting the best possible product solution. Value is also created when the salesperson provides excellent service after the sale. Neil Rackman, author of Rethinking the Sales Force, and other experts in sales and marketing say that success no longer depends on merely communicating the value of products and services. Success in personal selling rests on the critical ability to create value for customers.

The value added by salespeople today is increasingly derived from intangibles such as the quality of the advice offered and the level of trust that underlies the relationship between the customer and the salesperson. The value of these intangibles can erode with shocking speed when the customer feels deceived or discovers that the competition is able to add more value to the sales proccss.i'

-I PERSONAL SELLING-A DEFINITION AND A PHILOSOPHY

Personal selling involves person-to-person communication with a prospect. It is a process of developing relationships; discovering needs; matching the appropriate products with these needs; and communicating benefits through informing, reminding, or persuading. The term

CHAPTER

Personal Selling and the Marketing Concept

7

II

"One question: If this is the Information Age, how come nobody knows anything?"

product should be broadly interpreted to encompass information, services, ideas, and issues. Increasingly, personal selling is viewed as a process that adds value. In an ideal situation the salesperson diagnoses the customer's needs and custom fits the product to meet these needs.

Preparation for a career in personal selling begins with the development of a personal philosophy or set of beliefs that provides guidance. To some degree this philosophy is like the rudder that steers a ship. Without a rudder the ship's direction is unpredictable. Without a personal philosophy the salesperson's behavior also is unpredictable.

The development of a personal selling philosophy for the information age involves three prescriptions: adopt the marketing concept, value personal selling, and assume the role of a problem solver or partner in helping customers make buying decisions (Fig. l.2). These three prescriptions for success in personal selling are presented here as part of the Strategic/Consultative Selling Model. This model is expanded in future chapters to include additional strategic steps in the selling process.

-I PERSONAL SELLING AS AN EXTENSION OF THE MARKETING CONCEPT

A careful examination of personal selling practices during the past 40 years reveals some positive developments. We have seen the evolution of personal selling from an era that emphasized pushing or peddling products to an era that emphasizes partnering. Throughout

STRATEGIC/CONSULTATIVE SELLING MODEL

Strategic step

Prescription

Develop a Personal Selling Philosophy

D Adopt Marketing Concept D Value Personal Selling

D Become a Problem Solver/Partner

©2003 Gregory/New Yorker Magazine/cartoonbank.com. All rights are reserved.

FIGURE 11.2

Today, salespeople use a strategic plan based on a personal philosophy that emphasizes adopting the marketing concept, valuing personal selling, and becoming a problem solver/partner.

8 PA R T 1 Developing a Personal Selling Philosophy for the New Economy

this period we have seen the emergence of new thinking patterns concerning every aspect of sales and sales management. Today, salespeople are no longer the flamboyant product "pitchmen" of the past. Instead they are increasingly becoming diagnosticians of customers' needs and problems. A growing number of salespeople recognize that the quality of the partnerships they create is as important as the quality of the products they sell.

Evolution of the Marketing Concept

What is the marketing concept? When a business firm moves from a product orientation to a consumer orientation, we say that it has adopted the marketing concept. This concept springs from the belief that the firm should dedicate all of its policies, planning, and operation to the satisfaction of the customer.

The era of marketing and the age of information began in the 1950s (Table I.L). J. B.

McKitterick, a General Electric executive, is credited with making one of the earliest formal statements indicating corporate interest in the marketing concept. In a paper written in

TABLE 11.1

SALES AND MARKETING EMPHASIS

EVOLUTION OF PERSONAL SELLING (1950 TO PRESENT)

SELLING EMPHASIS

Marketing Era Begins (Mid-1950s)

Organizations determine needs and wants of target markets and adapt themselves to delivering desired satisfaction; product orientation is replaced by a customer orientation

Consultative Selling Era (Late 1960s to early 1970s)

Salespeople are becoming diagnosticians of customers' needs as well as consultants offering well-considered recommendations; mass markets are breaking into target markets

Strategic Selling Era (Early 1980s)

The evolution of a more complex selling environment and greater emphasis on market niches create the need for greater structure and more emphasis on planning

Partnering Era (1990 to the present)

Salespeople are encouraged to think of everythi ng they say or do in the context of their long-term, high-quality partnership with individual customers; sales force automation provides specific customer information

• More organizations recognize that the salesperson is in a position to collect product, market, and service information concerning the buyer's needs

• Buyer needs are identified through two-way communication

• Information giving and negotiation tactics replace manipulation

• Strategy is given as much attention as selling tactics

• Product positioning is given more attention

• Customer supplants the product as the driving force in sales

• Greater emphasis on strategies that create customer value

C HAP T E R 1 Personal Selling and the Marketing Concept 9

1957 he observed that the principal marketing function of a company is to determine what the customer wants and then develop the appropriate product or service. This view contrasted with the prevailing practice of that period, which was to develop products and then build customer interest in those products.

The foundation for the marketing concept is a business philosophy that leaves no doubt in the mind of every employee that customer satisfaction is of primary importance. All energies are directed toward satisfYing the customer. As Peter Drucker once observed, "The customers define the business."

Although the marketing concept is a very basic business fundamental, some companies ignore it and suffer the consequences. Ford Motor Company was a leader in quality control during the 1980s and early 1990s but then seemed to shift its focus to other areas. The result was a drop in J. D. Power and Associates quality rankings and a drop in sales. Ford also failed to stay in touch with consumer taste?

Business firms vary in terms of how strongly they support the marketing concept.

Some firms have gone the extra mile to satisfy the needs and wants of their customers:

• UPS founder Jim Casey adopted the marketing concept when the company was first established. He described the firm's customer focus this way: "Our real, primary objective is to serve-to render perfect service to our stores and their customers. If we keep that objective constantly in mind, our reward in money can be beyond our fondest dreams." 8

• Marriott Hotels uses a blend of "high tech" and "high touch" to build customer goodwill and repeat business. Each of the 5,500 sales representatives can sell the services of 10 motel brands in Marriott's portfolio. The customer with a small meeting budget might be encouraged to consider a Fairfield Inn property. The customer seeking luxury accommodations might be introduced to a Ritz-Carlton hotel (acquired a few years ago). All reservations go through the same system, so if one Marriott hotel is full, the sales representative can cross-sell rooms in another Marriott hotel in the same city,"

Today we recognize that a personal philosophy needs to include a commitment to huilding quality relationships.

10 PART 1 Developing a Personal Selling Philosophy forthe New Economy

Nordstrom views personal selling as an important dimension of its marketing program. This company encourages its salespeople to create value

for the customers.

FIGURE 11.3

Each of the elements that make up the marketing mix must be executed effectively for a marketing program to achieve the desired results.

Marketing Concept Yields Marketing Mix

Once the marketing concept becomes an integral part of a firm's philosophy, its management seeks to develop a network of marketing activities that maximize customer service and ensure profitability. The combination of elements making up a program based on the marketing concept is known as the marketing mix (Fig. l.3). The marketing mix is a set of controllable, tactical marketing tools that consists of everything the firm can do to influence the demand for its product. The many possibilities can be organized into four groups of variables: product, price, place, and promotion. 10

One of the four P's shown in Figure 1.3-promotion-can be further subdivided into advertising, public relations, sales promotion, and personal selling. When a company adopts the marketing concept, it must determine how some combination of these elements can result in maximum customer satisfaction.

CHAPTER 1 Personal Selling and the Marketing Concept 11

Important Role of Personal Selling

Every marketer must decide how much time and money to invest in each of the four areas of the marketing mix. The decision must be objective; no one can afford to invest money in a marketing strategy that does not provide continuing customer satisfaction. Personal selling is often the major promotional method used-whether measured by people employed, by total expenditures, or by expenses as a percentage of sales. Firms make large investments in personal selling in response to several major trends: Products and services are becoming increasingly sophisticated and complex; competition has greatly increased in most product areas; and demand for quality, value, and service by customers has risen sharply. In response to these trends, personal selling has evolved to a new level of professionalism. Since the beginning of the information age, personal selling has evolved through three distinct developmental periods: the consultative selling era, the strategic selling era, and the partnering era. Next we examine each of these developments.

-I EVOLUTION OF CONSULTATIVE SELLING

Consultative selling, which emerged in the late 1960s and early 1970s, is an extension of the marketing concept (see Table i.n. This approach emphasizes need identification, which is achieved through effective communication between the salesperson and the customer. The salesperson establishes two-way communication by asking appropriate questions and listening carefully to the customer's responses. The salesperson assumes the role of consultant and offers well-considered recommendations. Negotiation replaces manipulation as the salesperson sets the stage for a long-term partnership. Salespeople who have adopted consultative selling possess a keen ability to listen, define the customer's problems, and offer one or more solutions. 11

Although consultative selling is emphasized throughout this text, it is helpful to understand the role of transactional selling in our economy. Transactional selling is a sales process that most effectively matches the needs of the value-conscious buyer who is primarily interested in price and convenience. Because the transaction-based buyer tends to focus primarily on low price, some marketers are adopting lower-cost selling channels. Low-cost transaction selling strategies include telesales, direct mail, and the Internet. This approach to selling is usually used by marketers who do not see the need to spend very much time on customer need assessment, problem solving, relationship building, or sales follow-up.l+ It is an unattractive alternative to consultative selling in situations involving high-value customized products with relatively long and complex decisionmaking processes.

Service, retail, manufacturing, and wholesale firms that embrace the marketing concept already have adopted or are currently adopting consultative selling practices. The major features of consultative selling are as follows:

1. The customer is seen as a person to be served, not a prospect to be sold. Consultative salespeople believe their function is to help the buyer make an intelligent decision. They use a four-step process that includes need discovery, selection of the product, a need-satisfaction presentation, and servicing the sale (Fig. l.4). These customer-centered strategies are fully developed and explained in Chapters 9 to 14.

2. The consultative salesperson, unlike the peddler of an earlier era, does not try to overpower the customer with a high-pressure sales presentation. Instead the buyer's needs are identified through two-way communication. The salesperson asks questions in an attempt to learn as much as possible about the person's needs and perceptions.

12 PART 1 Developing a Personal Selling Philosophy forthe New Economy

FIGURE 11.4

The Consultative Sales Presentation Guide

This contemporary presentation guide emphasizes the customer

as a person to be served.

Sales success in the new economy requires us to think of ourselves as a problem solver/partner throughout the sales process.

3. Consultative selling emphasizes information giving, problem solving, and negotiation instead of manipulation. This approach leads to a more trusting relationship between buyer and seller. Helping the buyer make an informed and intelligent buying decision adds value to the sales process.

4. Consultative selling emphasizes service after the sale. Theodore Levitt, author-consultant, recognizes that the relationship between a seller and a buyer seldom ends when a sale is made. In an increasing number of transactions the relationship actually intensifies because the customer has higher expectations after the sale. The personalized service provided after the sale may include making credit arrangements, supervising product delivery and installation, servicing warranties, and following up on complaints.

At first glance, it may appear that consultative selling practices can be easily mastered.

The truth is, consultative selling is a complex process that puts great demands on sales perso nnel.l ' This approach to personal selling requires an understanding of concepts and principles borrowed from the fields of psychology, communications, and sociology. It takes a great deal of personal commitment and self-discipline to become a sales consultant/adviser.

-I EVOLUTION OF STRATEGIC SELLING

Strategic selling began receiving considerable attention during the 1980s (see Table i.n. During this period we witnessed the beginning of several trends that resulted in a more complex selling environment. These trends, which include increased global competition, broader and more diverse product lines, more decision makers involved in major purchases,

CHAPTER 1 Personal Selling and the Marketing Concept 13

STRATEGIES FOR BUILDING GLOBAL RELATIONSHIPS

The authors of Comp/ete Business Etiquette Handbook state, "The key to being successful in international business revolves around knowing where you've come

from as well as where you are headed." Keep in mind these tips when hosting an international visitor or visiting another country.

• Be respectful and nonjudgmental about the cultural differences you encounter. Try to react positively to unusual experiences.

• Understand your own viewpoint. International travel provides an opportunity to examine your own beliefs, values, and habits.

• Be flexible and patient. If you are too rigid or set in your ways, international travel will be difficult.

• Know enough about the etiquette in the country you plan to visit so you do not unwittingly offend its customs."

and greater demand for specific, custom-made solutions, continue to influence personal selling and sales training in the age of information.

As companies face increased levels of complexity in the marketplace, they must give more attention to strategic planning. The strategic planning done by salespeople is often influenced by the information included in their company's strategic market plan. A strategic market plan is an outline of the methods and resources required to achieve an organization's goals within a specific target market. It takes into consideration all the major functional areas of the business that must be coordinated, such as production, marketing, finance, and personncl.lf Almost every aspect of the plan directly or indirectly influences the sale of products.

The strategic market plan should be a guide for a strategic selling plan. This plan includes strategies that you use to position yourself with the customer before the sales call even begins. The authors of Strategic Selling point out that there is a difference between a tactic and a strategy.lS Tactics are techniques, practices, or methods you use when you are face-to-face with a customer. Examples are the use of questions to identify needs, presentation skills, and various types of closes. These and other tactics are discussed in Chapters 9 to 14.

A strategy, on the other hand, is a prerequisite to tactical success. If you develop the correct strategies, you are more likely to make your sales presentation to the right person, at the right time, and in a manner most likely to achieve positive results.

A selling strategy is a carefully conceived plan that is needed to accomplish a sales objective. Let's assume you are a sales representative employed by a pharmaceutical company. In an ideal situation, you want to establish a dialogue with the physician and learn about the types of patients she sees, diseases she treats, and challenges facing her practice. However, you do not want to call on busy doctors who may have no use for the drugs offered by your company. A strategy might include a careful study of the entire physician population in your territory. This analysis will help you identify those who need information about the drugs your company offers. 16 With this information you can select the most appropriate selling tactic (method), which might be to present samples to doctors who are not currently prescribing your drug.

Strategic planning sets the stage for a value-added form of consultative selling that is more structured, more focused, and more efficient. The result is better time allocation, more precise problem solving, and a greater chance that there will be a good match between your product and the customer's needs. Andrew Parsons, director of consumer marketing for McKinsey and Company, notes that in the current selling environment salespeople

14 PA R T 1 Developing a Personal Selling Philosophy for the New Economy

Salespeople who huild partnering relationships are rewarded with repeat business and referrals. These relationships require a strategic approach to selling.

pT"C<1ueJ

must choose from a sophisticated range of alternatives. He points out in general terms that personal selling has moved from "a game of checkers to a game of chess." For many salespeople, strategic planning is not an option but the key to survival.

Strategic/Consultative Selling Model

When you study a value-added approach to personal selling that combines strategic planning, consultative selling practices, and partnering principles, you experience a mental exercise that is similar to solving a jigsaw puzzle. You are given many pieces of information that ultimately must form a complete picture. Putting the parts together isn't nearly as difficult if you can see the total picture at the beginning. Therefore, a single model has been developed to serve as a source of reference throughout the entire text. Figure 1.5 shows this model.

The Strategic/Consultative Selling Model features five steps, and each step is based on three prescriptions. The first step involves the development of a personal selling philosophy. Each of the other steps relates to a broad strategic area of personal selling. Each makes an important and unique contribution to the selling/buying process. A brief introduction to each strategic area follows.

Developing a Relationship Strategy

Success in selling depends heavily on the salesperson's ability to develop, manage, and enhance interpersonal relations with the customer. People seldom buy products or services from someone they dislike or distrust. Harvey B. Mackay, founder of Mackay Envelope Corporation, says, "People don't care how much you know until they know how much you care." Most customers are more apt to openly discuss their needs and wants with a salesperson with whom they feel comfortable.

A relationship strategy is a well-thought-out plan for establishing, building, and maintaining quality relationships. This type of plan is essential for success in to day's marketplace, which is characterized by vigorous competition, look-alike products, and customer loyalty dependent on quality relationships as well as quality products. The rela-