Principles of Selling Exam 1 Notes
Principles of Selling Exam 1 Study Guide Ch. 1-5 Contract Law/ Agency Ch. 1: Selling and Salespeople * Personal Selling- is a person to person business activity in which a salesperson uncovers and satisfies the needs of a buyer to the mutual, long-term benefit of both parties. * Helping a customer identify problems, offering information about potential solutions, and providing after-sale service to ensure long-term satisfaction. “Customer Centric” * Everyone sells- Presidents, engineers…etc. Go-to- market strategy- ex: internet, field sales representatives, business partners, resellers, manufacturer agents, franchises, telemarketers, and other. Those who rely heavily on salespeople are called sales force-intensive organizations. Those who use multiple strategies are called multichannel strategy. * Impersonal paid- Advertising/ sales promotion. Impersonal unpaid- Publicity * Personal paid- Personal Selling/ e-mail. Personal unpaid- Word of mouth (More control from paid, however word of mouth and publicity are seen as more credible but is hard to control.
Advertising, Internet sites, and sales promotions give companies control over content and timing. Personal selling is more flexible but more costly. ) * Integrated marketing communications- communication programs that coordinate the use of various vehicles (I. P. , P. P. , I. UP. , P. UP) to maximize the total impact of the programs on customers. Ex: Stouffer’s new spa cuisine classics, used salespeople to call the supermarkets and wholesale clubs while advertising was created to generate awareness in consumers’ mind. * Many industrial companies place far more emphasis on personal selling than on advertising. Sellers sell to make a profit (selling price- COGS), buyers also buy to make a profit (benefit received-selling price and time and effort to purchase). * Client Relationship Manager- 35% of time is spend on-site face to face meetings with customers while the rest of the time is spent in meetings, working with support people in their companies, traveling, waiting for sales interview, doing paperwork and servicing customers. When salespeople fail in maintaining these relationships, the result is catastrophic. The salespersons job does not end when the customer places an order.
Sales representatives must make sure customers get the benefits they expect from the product. * Account Team Manager- Salespeople also coordinate the activities within their firms to solve customer problems. * Vendor and Channel Managers- Interacting with other partners and vendors to meet a customer’s needs. Ex: Boeing Jet getting another feature from a third-party vendor. * Information Provider to their Firm- Eyes and ears of the company in the market place. * Distribution Channels- is a set of people and organizations responsible for the flow of products and services from the producer to the ultimate user.
Business to business channel Direct Channel- Salespeople (trade salespeople) working for the manufacturer call directly on other manufacturers Ex: Nucor salespeople sell steel directly to the automobile manufacturers Missionary salespeople work for a manufacturer and promote the manufacturer’s products to other firms. Ex: Driltech a manufacturer of mining equipment, call on mine owners to promote their product. Consumer Channels MSalespersonConsumer MTrade salespersonretailerretail salespersonConsumer MT. SDistributorT. S. retailer retail salespersonConsumer Describing sales jobs * The stage of the buyer-seller relationship- New or continuing * The salesperson’s role- Taking orders or creating new solutions * The importance of the customer’s purchase decision * The location of the salesperson-customer contact-Field (face) or Inside (phone) Sale * The nature of the offering sold by the salesperson- Products or Services * The salesperson’s role in securing the customer commitment- Information or Placing an Order * Characteristics of Successful Salespeople * Self- Motivated- Most SP work in the field without direct supervision.
They may be tempted to get up late, take long lunch breaks, and stop work early. Successful SP are self-starters who do not need the fear to inspire them * Dependability and trustworthiness- SP should not only be interested in what the consumer will buy this time but also in getting orders in the years to come. When SP say a product will work a certain way, it better. * Ethical sales behavior- honesty and integrity are critical for developing effective relationships. * Customer and product knowledge- how their products work and how the features are related to the benefits customers are seeking. Analytical Skills and the Ability to use Information Technology- Need to know how to use the internet, databases, and software to effectively sell. * Communication Skills- Talking and listening skills. They must be able to ask questions that uncover problems and needs and pay attention to responses. * Flexibility and Agility- Be able to adapt from customer to customer. Same sales approach will not work for everyone. * Creativity- is the trait of having imagination and inventiveness and using them to come up with new solutions and ideas. Confidence and Optimism- About themselves, company and product and that their efforts will lead to success. * Emotional intelligence- the ability to effectively understand and regulate one’s own emotions and to read and respond to the emotions of others and this is an important trait for salespeople. Chapter 2: Ethical and Legal Issues in Selling * Ethics- the principles governing behavior of an individual or group. What’s ethical can vary from country to country and industry to industry. Ethical principles become increasingly important as firms move toward longer-term relationships. Manipulation eliminates or reduces the buyer’s choice unfairly. * Persuasion- one may influence the buyer’s decision, but the decision remains the buyers * Factors Influencing the Ethical Behavior of SP * Company policy- Provides guidelines in making ethical decisions. Code of ethics * Values of Significant others- Acquired values and attitudes from relatives and friends, other salespeople, and their sales managers. * Laws- dictate which activities society has deemed to be clearly wrong. * Personal Code of Ethics- * All SP behave this way (unethically) * No one will be hurt by this behavior * This behavior is the lesser of two evils This conduct is the price one has to pay for being in business SP who use such reasoning want to avoid feeling responsible for their behavior and being bound by ethical consideration. * Choices you can make if your manager asks you to act unethically * Ignore your personal values, and do what your company asks you to do. But you’ll probably feel guilty and quickly become dissatisfied with yourself and job. * Take a stand, and tell you employer what you think. * Refuse to compromise your principles. Relationships with customers * Deception- Deliberately presenting inaccurate information, or lying to a customer is illegal.
This includes telling half-truths and withholding important information. * Bribes, gifts and entertainment- Bribes are payments made to buyers to influence their purchase decisions. Kickbacks are payments made to the buyers based on the amount of orders placed. Taking a customer to lunch is commonly accepted business practice. However some companies take customers out to play golf, sporting events, or even overnight trips. * Special treatment, Confidential Information (Information about a competitors) and Backdoor selling (not getting the purchasing agents approval before speaking with others behind their back)
Relationships with the SP Company * Expense accounts- “Act as though you were spending your own money” getting reimbursed by the company for expenses on the job * Reporting work time information and activities- Not wasting time on coffee breaks and long lunches. They are working on a salary and if they abuse this, then they are wasting their companies’ money. * Switching Jobs- * Give ample notice * Offer assistance during the transition phase * Don’t burn your bridges * Don’t take anything that belongs to the company. Relationships with Colleagues Sexual Harassment- Unwelcome sexual advances, request for sexual favors, etc. * Taking advantage of other SP- It is unethical to steal potential new customers from a colleague Relationship with Competitors * Don’t make false claims * Don’t criticize LEGAL ISSUES * Statutory law- Based on legislation passed either by state legislature or Congress. UCC and Antitrust laws * Administrative laws- established by local, state, or federal regulatory agencies. * Common law- grows out of court decisions. * Uniform commercial code (UCC)- is the legal guide to commercial practice in the U. S. Agency- Authorized agents of a company have the authority to legally obligate their firm in a business transaction. * Sale- “The transfer of title to goods by the seller to the buyer for a consideration know as price” Contract to sell and invitation to negotiate * Title and Risk of loss- Free on board (FOB) destination, the seller has title until the goods are received at the destination. In the case of any loss or damage incurred during transportation is the responsibility of the seller. * Oral vs. Written agreements- Just as binding as written. A normally written agreement is required for sales over $500. Obligations and Performance * Warranties- an assurance by the seller that the products will perform as represented. (expressed- oral or written; implied- not actually stated) * Misrepresentation of Sales Puffery * Sales Puffery- Glowing descriptions such as “our service can’t be beat” are considered to be opinions. “This is a top-notch product, or this product will last a lifetime” * Misrepresentation- Statements about the inherent capabilities of products or services, such as “our system will reduce your inventory by 40%” may be treated as statements of fact and warranties. False Claims Act, or Lincoln Act- was passed in 1863 during Civil war to encourage citizens to press claims against vendors that fraudulently sold to the U. S. government. 1. Sherman Antitrust Act of 1890 2. Clayton Act of 1914 3. Federal Trade Commission Act of 1914 4. Robinson-Patman Act of 1934 * Business Defamation- occurs when a salesperson makes unfair or untrue statements to customers about a competitor, its products, or its salespeople. – Statements are illegal when they damage a competitors reputation or the reputation of it salespeople. Reciprocity- Two companies agree to buy products from each other * Tying Agreement-In order to have the product they want, they have to carry the whole line of other products as well * Conspiracy and Collusion- An agreement between competitors before customers are contacted is a conspiracy, whereas collusion refers to competitors working together while the customer is make a purchase decision. Ex: Competitors dividing up a territory. Collusion is when competitors agree to charge the same price for equipment that a prospect is considering. Interference with Competitors- Trying to get a customer to break contract, tampering with a competitor’s product, confusing a competitors market research by buying merchandise from stores. * Restrictions on resellers- resale price maintenance. * Price discrimination- giving unjustified special prices, discounts or services to some customers and not to others. * Privacy Laws- limit the amount of information that a firm can obtain about a consumer and specify how that information can be used or shared. * Do not call law- limits the conditions under which anyone on the registry may be telephone at home or on cell phone. International Ethical and legal issues- * Lubrication- involves small sums of money of gifts, typically made to low-ranking managers or government officials, in countries where these payments are not illegal. * Subordination- involves paying larger sums of money to higher-ranking officials to get them to do something that is illegal or to ignore an illegal act. * Resolving cultural differences- SP need to corporate support and guidance * Legal Issues- U. S. SP are subject to U. S. laws CHAPTER 3- BUYING BEHAVIOR AND THE BUYING PROCESS Types of Customers- * Producers- Buy products and services to manufacture and sell their products and services to customers * OEM Purchasers- Buyers for original equipment manufacturers (OEMs) purchase goods to use in making their products. * End Users- Goods and services to support their own production and operations. Capital equipment – items are major purchases, such as mainframe computers and machine tools that the producer uses for a number of years. MRO Supplies- include paper towels and replacement parts for machinery. Resellers- Finished Products or services with the intention to resell them to businesses and consumers. Profit margin- how much they will make, turnover- how quickly an item sells and effort. * Government agencies- Spend more than $1 Trillion annually. Very strict. * Institutions- Churches, hospitals, and colleges. Have purchasing rules and procedures that are as complex and rigid as those used by government agencies. * Consumers- Products or services for use by themselves or by their families. A lot of SP sell insurance, automobiles, clothing and real estate to consumers. Complexity of the Organizational Buying Process- * Often involve extensive evaluations and negotiations over time. (About five months) * Steps in the buying process 1. Recognition of a need- When someone realizes a problem exists. 2. Defining the Type of Product needed- organization members develop a general approach to solving it. 3. Developing Product Specification- The specifications for the product needed to solve the problem are prepared. Potential suppliers will use these specifications to develop proposals. 4. Searching for Qualified Suppliers- The customer looks for potential suppliers.
The customer may simple contact previous suppliers or go through an extensive search procedure: calling SP, asking for a list of customers, and checking with the customers on each supplier’s financial stability and performance 5. Acquiring and Analyzing Proposals- Qualified suppliers are asked to submit proposals. 6. Evaluating Proposals and Selecting a Supplier- After a preferred supplier is selected, further negotiations may occur concerning price, delivery, or specific performance features. 7. Placing an order and receiving the product- The order goes to the supplier who acknowledges receipt and commits to a delivery date 8.
Evaluating Product Performance- May be formal or informal assessment made by people involved in the buying process. * Creeping commitment- customer becomes increasingly committed to a particular course of action while going through the steps in the buying process. -As decisions are made at each step, the range of alternatives narrows; the customer becomes more and more committed to a specific course of action and even to a specific vendor. -Critical that SP be involved in the initial steps * Types of Organizational Buying Decisions New tasks- a customer purchases a product or service for the first time * Straight rebuys- a customer buys the same product from the original source * Modified rebuys- the customer has purchased the product in the past but is looking for new information * Who makes the buying decision? The buying center Users- such as the manufacturing personnel for OEM products and capital equipment, typically do not make the ultimate purchase decision but have considerable influence Gatekeepers- control the flow of information and may limit the alternatives considered Initiators- The person who starts the buying process.
The user can be the initiator, for example: the machine is broken; we need a new one Deciders- Make the final choice. For straight rebuys, the purchasing agent usually selects the vendor and places the order; however for new tasks many people influence the decision. Influencers-People inside or outside the firm who directly or indirectly provide information during the buying process. * Organizational needs and criteria * Economic criteria- life cycle costing (total cost of ownership) * Quality criteria- What are organizational buyers looking for? Service criteria- Value analysis- an example of a program in which suppliers and customers work together to reduce costs and still provide the required level of performance. * Supply Chain Management 1. Logistics 2. Managing inventory while controlling costs 3. Just in time inventory control system- minimize its inventory by having frequent deliveries, sometimes daily, just in time for assembly into the final product 4. Automatic replenishment- is a form of JIT where the supplier manages inventory levels for the customer. 5.
Electronic data interchange- computer systems that share data across companies * Supplier Relationship Management -Strategy by which organizational buyers evaluate the relative importance of suppliers and use that information to determine with whom they want to develop partnerships -Identify the annual spend -Summarize the benefits and needs satisfied by a supplier * Reverse Auction- an auction, but instead of a seller offering a product and buyers bidding, a buyer offers a contract and sellers bid -instead of prices rising, they fall as sellers compete to win the sale BASIC CONTRACT LAW: CONTRACT DEFINED A contract is an agreement between competent legal parties to do or to abstain from doing some legal act in exchange for consideration. Classifications of Contracts * Express vs. implied (kids and sidewalk) * Unilateral vs. bilateral- buyer and seller are bound to a bilateral, only one party is involved in unilateral * Executory vs. executed * Valid, enforceable or enforceable, void or voidable. Essential Elements of Contract 1. Offer and acceptance- Another name is “meeting of the minds” This happens when the parties reach agreement on the terms to be included in the contract. -Agreement of the parties/ “Mutual Assent” The offer must be definite and specific -An acceptance that varies from the offer is a “counteroffer” 2. Consideration- The “giving of value” Two types, good or valuable -Each party to the contract must do something or promise to do something 3. Legal capacity of the parties-Contracts entered into by parties lacking legal capacity are voidable by the party lacking capacity 4. Reality of consent-Based on parties having an accurate knowledge of the facts concerning the terms and conditions of the contract -Fraud- intentional deceit or lying -Misrepresentation: unintentional misstatement THE DIFFERENCE IS INTENT! 5.
Legality of object- The contract must be of legal purpose -Ex of illegal contracts- Restraint of trade and contracts to promote or stifle litigation or competition 6. Possibility to complete- The parties must be able to complete the contract without interference from the operation of law or acts of God Ex: effects of natural disasters or declarations of war Operation of Law * Rights and liabilities of the parties may be changed with the co-operation or agreement of the parties (or not) * Statute of Limitations/ 5 years in PA * Bankruptcy * Alteration of the contact/ must be material and intentional The agency relationship
FIDUCIARY relationship: The principal (your employer) has faith, trust, and confidence in (you) the agent hired Types of Agency (defines the authority) -Universal -General -Special Agency An AGENT is one who enters into a contract to act on behalf of another The person who selects the agent is referred to as the PRINCIPAL, CLIENT or EMPLOYER A CUSTOMER is someone who is not a client but who must be treated fairly Duties of Agents (to your employer) Loyalty * Obedience * Skill, care, and diligence * Disclosure of information * Accounting Effects of Violating an Agency Relationship – Liability (Agent and Principal) Discharge CHAPTER 4- USING COMMUNICATION PRINCIPLES TO BUILD RELATIONSHIPS * Building Relationships through two way communication * The communication process * Communication breakdowns caused by: * Encoding and decoding problems * The environment in which the communications occur At different times in the interaction, both parties will act as sender and receiver. This two way process enables salespeople to adapt their sales approach to the customer’s needs and communication style * Sending Verbal Messages Effectively * Choice of words * Voice characteristics * Rate of speech * Loudness * Inflection * Articulation Stories * Include conflicts, trials, and crises * Paint a word picture * Active listening “What the customer is saying, and how to draw out more information” Repeat, restate, clarify, summarize the customer’s comments and demonstrate an interest in what the customer is saying. * 80-20 listening rule * Salespeople should listen 80 percent of the time and talk no more than 20 percent of the time. * Speaking-listening differential * People can speak at a rate of only 120-160 words per minute, but they can listen to more than 800 words per minute. * Repeating information * Restating or rephrasing information Clarifying information * Summarizing the conversation * Tolerating silences * Concentrating on the ideas being communicated * Body Language Patterns * Signals that customers may be hiding their true feelings: * Contradictions and verbal mistakes * Differences in two parts of a conversation * Contradictions between verbal and nonverbal messages * Nonverbal signals- body angle, face, arms, hands, and legs * Encouraging Forthright Discussion * “Perhaps there is some reason you cannot share the information with me. ” * “Are you worried about how I might react to what you are telling me? * “I have a sense that there is really more to the story than you are telling me. Let’s put the cards on the table so we can put this issue to rest. ” * Appearance * Two priorities in dressing for business are: 1. Getting customers to notice you in a positive way 2. Getting customers to trust you. * Consider the geography * The temperature * The local cultural norms * Consider your customers * Their appearance * Their expectations of your appearance * Consider your corporate culture * Norms for your industry * Consider your aspirations * Top levels of your organization * Dress above your position Consider your own personal style * Wait until you have the halo effect * Be reasonable CHAPTER 5: ADAPTIVE SELLING FOR RELATIONSHIP BUILDING Standard Memorized Presentation * Also called a canned presentation * Completely memorized sales talk * Ensures salespeople will provide complete and accurate information * Limited effectiveness -Presents same selling points in the same order to every customer -Can help bring new SP up to speed -An example of non-adaptive selling *Cheaper but no opportunity to tailor the presentation to specific needs Outlined Presentation * Prearranged presentation that usually includes: Standard introduction * Standard answers to common objections * Standard method for getting the customer to place an order * Effective because it is well organized -more informal and natural -more opportunity for customers to participate Customized Presentation * Written and/or oral presentation based on a detailed analysis of the customer’s needs * Allows the salesperson to demonstrate empathy * Provides greatest opportunity to adapt to customer needs * Sales rep is helping * Demonstrates empathy * Can be costly, requiring highly skilled people to analyze customer needs Adaptive Selling and Sales Success Adaptive selling- forces the salesperson to practice the marketing concept. * It emphasizes the importance of satisfying customer needs. * Being adaptable increases buyer trust and commitment and results in higher sales performance. * Adaptive selling means salespeople should alter the content and form of their sales presentation so customers will be able to absorb the information easily and find it relevant to their situation – forces seller to practice the marketing concept -opportunity to be the most effective sales rep but requires skills -uncovering needs, designing/delivering Knowledge Management- Product and company knowledge Salespeople need to have a lot of information about their products, services, company, and competitors. Knowledge about sales situations and customers -Gives sales people self-confidence, gain buyers trust, satisfy customer needs, practice adaptive selling How to create knowledge -Top company salespeople -Performance feedback, diagnostic feedback -Product knowledge is the number one attribute of SP -need to know about competitors -categories SP use -Benefits customers’ seek -persons role in the buying center -stage in buying process -type of buying situation Other sources of knowledge * Web * Company sales manuals and newsletters Sale meetings * Plant visits * Business and trade publications * Competitor displays at trade shows * Viewing competitor’s Web pages -Get feedback from sales manager Retrieving knowledge from the knowledge management system * Customer relationship management systems * “genius management” -tap knowledge of in-house experts The Social Style Matrix- Merrill and Reid * Popular training program that companies use to help sales people adapt their communication styles * Adjust your behavior to mirror or match your customer’s social style – People that recognize and adjust to patterns of communication have better relationships