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CHAPTER 2: RELATIONSHIP MARKETING

2.0 RELATIONSHIP MARKETING: WHERE PERSONAL SELLING FITS


2.1 CUSTOMER ORIENTATIONS EVOLUTION

A. The Production Concept. (Pre-Great Depression, 1930) The job of salesperson was to take customers order and inform them of the availability of the product (order taker) The statement that describe this era If you build a better mouse trap,

the world will beat a path to your door.

B. The Selling Concept. (Early 1940s through WW2) Order taker shifted to being order getter Let be sure we sell all we

make
The salespersons face the challenge of persuading buyers to purchase a specific brand among a variety of competing brand. Salespeople was viewed as individual who high pressured customer into buying Products were produced without regard for customer needs. This era also shows the beginning of the use in advertising and personal selling which emphasized product knowledge.

C. The Marketing Concept. (1950s) The idea was to discover customers needs first and then develop a product to fill those needs - Let be sure we make only what we can sell The emphasis changed from talking a prospective buyer into making a purchase to finding out what the prospects problems were.

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Three fundamental beliefs: Customer oriented planning and operations. The companys goal should be profitable sales volume. Organizationally coordinated marketing.

Customers want and satisfaction is the center of sales

The Difference between Selling and Marketing Concept Selling Concept 1. Emphasis is on the product. 2. Company first makes the product and then figures out how to sell it. Marketing Concept 1. Emphasis is on customers wants. 2. Company first determines customers wants and then figures out how to make and deliver a product to satisfy those wants. 3. Management is profit oriented.

3. Management is sales-volume oriented. 4. Planning is short run. 5. Stresses needs of seller.

4. Planning is long run 5. Stresses wants of buyers.

2.2 THE RELATIONSHIP BETWEEN SELLING AND MARKETING MIX


MARKETING MIX

PRODUCT

PRICE

PROMOTION

PLACE

ADVERTISING

PERSONAL SELLING

PUBLIC RELATION

SALES PROMOTION

The diagram shows how personal selling fits into marketing mix. To satisfy buyer needs and make a profit for their companies, marketing managers must recognize opportunities and develop marketing strategies. Two basic considerations they should be concerned with are target market and marketing mix

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PRODUCT Brand name Features Image Packaging Quality level Returns Services Sizes Warranties

PRICE Credit terms Discounts List price Promotional allowances

PLACE Business partners Channels Distributors Inventory Locations Retailers Transportation wholesalers

PROMOTION Advertising Coupons Customer service Direct mail Internet Public relations Telemarketing Telesales Trade shows

A. Selling and Product Product planning is concerned with developing the right product for the right target market. This may include decision about package design, branding, trademarks, warranties, service and product lines. Amount and kind of selling needed vary for different products.

B. Selling and Pricing Pricing strategy deals with methods of determining prices that will be both attractive to the target market and profitable for the company. If price of companys product is relatively high, quality and service should be highlighted to offset price disadvantage. Some salespeople use offers of price reductions in their sales presentation to entice customer to buy large quantities of product.

C. Selling and Distribution Distribution/place strategy involves choosing the channels of distribution through which goods and services reach the customer. Any sequence of marketing institutions from producer to final user, including any number of middlemen, is called a channel of distribution. It may include retailers, wholesalers, and institutional middlemen. Salesperson must know companys distribution system to avoid problems such as out of stock and late deliveries. Personal selling is more important when the channels are relatively short.

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D. Selling and Promotion Promotions task is to communicate to the target market in the most effective way possible. The components of the promotional mix are personal selling and nonpersonal selling (including advertising, sales promotion and public relations.). Variable Conditions that favor personal selling Consumers are geographically concentrated There are few customers Product The product has a high value It is a custom-made product The product is technically complex Price Distribution Examples The price is relatively high Channel is relatively short Insurance policies, computer Conditions that favor advertising Customers are geographically dispersed There are many customers The product has a low value It is a standardized product The product is simple to understand The price is relatively low Channel is relatively long Soap, magazines, t-shirts

Consumer

Personal selling

Personal communication of information to unselfishly persuade a prospective customer to buy something a good and service, idea that satisfies an individual needs Nonpersonal communication of information paid for by an identified sponsor such individual or an organization. Modes of advertising include television, radio, direct mail, catalogs, newspaper, and outdoor advertising such as billboards Communication is used to maintain a positive image and educate the public about companys goal and objectives, introduce new product and help support the sales effort. Marketing activities that stimulates immediate (short term) increase in buying the product

Advertising

Public relation

Sales promotion

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Relationship between advertising and selling The most crucial promotional decision facing the marketing manager is to decide the proper mix between personal selling and advertising. Advertising and personal selling are generally planned to complement one another Advertising is often used to pave the way for salespeople by introducing a company and its products before a salesperson calls on the potential customer. For example OSIM concentrates on media advertising but maintains a field sales person to follow up on the advertising.

Relationship between sales promotion and selling Sales promotion helps gain interest of prospective customers. Samples give firsthand exposure of product to prospects while contest and gift attract prospects to buy product. For example buying an OSIM chair will entitle the purchaser to get another massage chair for free.

2.3 RELATIONSHIP MARKETING TERM: Relationship marketing: The creation of customer loyalty Relationship selling: When the seller contacts the customer after the purchase to determine if the customer is satisfied and has future needs. Relationship marketing is the creation of customers loyalty throughout the life of the product or service with the emphasis on service and value added activities. The emphasis is shifting from selling customers today to creating customers for tomorrow. The longer the customers are retained by a company, the more profitable they become because of increased purchases, reduced operating costs, referrals, price premiums and reduced customer acquisition costs. Personal selling is an important element to build relationship. They generate revenue and provide service to help make customer satisfied with their purchase. Salespeople are responsible for making those products available for customers. Since personal selling involved person to person discussions, salespeople can customize their sales presentation to the individual needs of specific people and organizations.

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Level of relationship marketing A. Transaction selling: customers are sold to and not contacted again B. Relationship selling: the seller contacts customers after the purchase to determine if they are satisfied and have future needs. C. Partnering: the seller works continually to improve its customers operation, sales, and profits.

2.4 PARTNERING WITH CUSTOMERS Partnering is a strategically developed, high quality, long-term relationship that focuses on solving the customer's buying problem. The criteria which encourage buyers and sellers to share information are: A. Individual Excellence - both partners add value, and their motives are positive rather than negative. B. Importance - both partners want the relationship to work because it helps them meet long-term strategic objectives. C. Interdependence - the partners need each other to reach their goal. D. Investment - the partners devote financial and other resources to the relationship. E. Information - the partners communicate openly about goals, technical data, problems and changing situations. F. Integration - the partners develop shared ways of operating; they teach each other and learn from each other. G. Institutionalization responsibilities. the relationship has formal status with clear

H. Integrity - both partners are trustworthy and honorable.

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2.5 THE NEW CONSULTATIVE SELLING A. Consultative Selling Consultative Selling - the process of helping the customer achieve strategic short and long-term goals through the use of the sellers good and/or service. A highly interactive dialogue between a salesperson and a customer A balanced exchange of information It focuses on the salespersons ability to provide customer satisfaction by adding value to the sales transaction.

B. Three Roles of Consultative Selling: i. Team leaders Salesperson coordinates information, resources, and activities needed to support customers before, during, and after the sale.

ii. Business Consultants Salesperson gives advice and service; and uses internal and external resources to gain an understanding of the customers business and marketplace.

iii. Long-term allies Salesperson creates a win-win situation The ability of a salesperson to fulfill the role of long term ally is a pivotal factor in determining whether a sales transaction is just a transaction or the beginning of a relationship.

The Customer-Seller Relationship Gaps may occur after the sale. During post sale activity the salespersons interest in the customer declines while the customers interest increases after purchase. This is one reason why service after the sales is so important.

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EXERCISES MULTIPLE CHOICE QUESTIONS 1. Before the Great Depression of the 1930s, companies were typically: A. production oriented C. sales oriented B. consultative oriented D. marketing oriented 2. The headline of an advertisement for a 1930s automobile manufacturer read, We know what our customers want! They want our new luxury Sedan! You can infer from reading this headline that the manufacturer had a _____ orientation. A. customer C. marketing B. selling D. production 3. Businesses that have a selling orientation: A. emphasize the product over all other marketing mix elements B. train their salespeople by providing them extensive customer, industry, and product knowledge C. emphasize long-term planning D. assume the wants of their customers is as important as the satisfaction of those customers 4. The major thrust of the marketing concept is to: A. sell the product at a low cost to a customer B. satisfy the customer, no matter what the costs C. determine and satisfy customer wants, while still making a profit D. distribute products more equitably 5. A marketing-oriented firm: A. emphasizes the needs of the seller B. first makes the product, then figures out how to sell it C. has a profit-oriented management D. uses short-term planning 6. The elements of the marketing mix are: A. promotion, price, place, and product B. product, presentation, place, and promotion C. price, production, presentation, and place D. production, price, product, and promotion

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7. The development of package design, brands, and service policies is associated with the ______ element of the marketing mix. A. product C. place B. price D. promotion 8. _____ purchase products and then sell to organizations and/or individuals. A. Transactional intermediaries C. Manufacturers B. Resellers D. Ultimate consumers 9. The appearance of actress Sharifah Amani in commercial for perfume Hope , is an example of the use of _____ element of the marketing mix. A. price C. promotion B. product D. place 10. The activities that a firm can use when promoting its products are: A. advertising, production, pricing, and distribution B. personal selling, pricing, public relations, publicity, direct marketing, and sales promotion C. personal selling, advertising, branding, discounts, billboards, rebates, and service warranties D. personal selling, advertising, publicity, and sales promotion 11. ______ involves activities or materials (including samples, contests, and displays) to create sales for goods and services. A. Personal selling C. Sales promotion B. Publicity D. Advertising 12. Which of the following statements about personal selling is true? A. It falls under the marketing mix category of promotional activities. B. It is a good example of nonpersonal communication. C. It is often listed under the broad category of sales promotion in a company's marketing mix. D. It is the communication of information that is not paid for by the firm. 13. Relationship marketing: A. creates social responsibility B. eliminates cognitive dissonance C. creates customer loyalty

D. only occurs with transaction selling

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14. Relationship marketing is based on the idea that: A. important customers need continuous attention B. a salesperson can never really know too many people C. the burden of quality rests with the seller of the product D. your buyer's competitors may be your best prospects 15. Two main functions of personal selling are to: A. support advertising and collect past due accounts B. plan and control all marketing activities C. provide service and generate income D. meet quota and maintain customer records 16. Which of the following is NOT one of the general levels of relationships with customers? A. Transaction selling C. Relationship selling B. Benefit selling D. Partnering 17. With ___ customers are sold to and not contacted again. A. Benefit selling C. Partnering B. Relationship marketing D. Transaction selling 18. When you visit a gift shop when on vacation, your purchase of a t-shirt is an example of _____ selling. A. benefit C. partnership B. relationship D. transaction 19. A seller who works continually to improve its customers operations, sales, and profits is practicing: A. Sequential selling C. Partnering B. Relationship selling D. Transaction selling 20. With ____, the seller contacts customers after the purchase to determine if they are satisfied and have future needs. A. benefit selling C. partnering B. relationship selling D. transaction marketing 21. Kelley Pritchett sells cars. After she makes the sale, she contacts her customers regularly to determine if they are satisfied and if they have any other automotive needs. This is an example of _____ selling. A. benefit C. partnership B. relationship D. transaction

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22. Which of the following is NOT a criterion for building partnerships between a buyer and a seller? A. Independence C. Integrity B. Integration D. Investment 23. _____ is the process of helping the customer achieve strategic short- and longterm goals through use of the seller's good and/or service. A. Consultative selling C. Strategic bundling B. Transformational selling D. Service quality optimization 24. Which of the following skills is the consultative salesperson expected to have? A. the ability to work in teams B. strategic problem-solving skills C. ability to demonstrate how solutions meet strategic objectives D. all of the above

25. In the role of _____, the consultative salesperson is expected to coordinates all of the information, resources, and activities needed to support customers before, during, and after the sale. A. business ally B. service provider C. business consultant D. team leader

ESSAYS QUESTIONS 1. Explain the difference between the production concept and selling concept 2. Differentiate marketing concept and selling concept. 3. Under what situation do marketers use personal selling as their promotional tools. 4. Under what situation do marketers use advertising as their promotional tools 5. How does selling related to advertising? 6. How does selling related to sales promotion? 7. To what extent is advertising involved in selling a product? 8. Explain briefly the component of marketing mix. 9. Describe the three level of relationship marketing. 10. Describe the evolution of partnership in selling. 11. Describe the evolution of consultative selling.

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