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Workshop on

Cutting Edge Marketing


&
Selling Techniques

By
ASK MANAGEMENT CONSULTANCY SERVICES PVT. LTD.
VADODARA

GENERAL

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
General
Difference
between
Selling and
Marketing

Selling revolves around the needs and


interests of the seller.
Marketing revolves around the needs
and interests of the buyer.
Selling believes in pushing the existing
products of the organization.
Marketing views business as producing
and supplying products and services
to meet the needs of the customers.

CUTTING EDGE MARKETING


& SELLING TECHNIQUES

General
Difference
between
Selling and
Marketing

This difference in orientation towards


business is the real separating factor
between selling and marketing.
Selling views the customer as the last link
in the business. Marketing sees the
business from the point of view of the
customer.
In firms practicing selling, production is
the central function, whereas in firms
practicing marketing, marketing is the
central function.

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
General
Customer
Satisfaction
and Quality

A buyers degree of satisfaction with a


product is the consequence of the
benefits perceived after use and the
benefits expected prior to the purchase.
If customer believes that product has
met expectations, satisfaction results. If
not, dissatisfaction results.

Repeated satisfactory experiences


enhance a customers overall level of
satisfaction.

Customer satisfaction results in two


major benefits to the firm greater
loyalty and positive word-of-mouth
communication.

CUTTING EDGE MARKETING


& SELLING TECHNIQUES

Current Quality
of
Marketing efforts
of seller

Word of Mouth

Cumulative Past
Satisfaction

Good / Services

Expected Benefits

Perceived
Benefits Received

Confirmation / Disconfirmation
of Expectations

Satisfaction / Dissatisfaction
from Transaction

Satisfaction and Quality

CUTTING EDGE MARKETING


& SELLING TECHNIQUES

Satisfaction

Positive
Customer
Word of Mouth

Increased
Customer Loyalty

More Repeat

More New

Purchases

Customer

Consequences of Satisfaction

CUTTING EDGE MARKETING


& SELLING TECHNIQUES

General
Quality,
Satisfaction
and
Performance

Higher profitability (as measured by a


firms return on investment) is a
consequence of higher quality.
High quality creates and maintains a high
degree of customer satisfaction.
As a result (as shown below), quality
allows a firm to increase its relative sales
position in the market, which is positively
related to return on investment.
Additionally, as a firms market position
grows, it often becomes more competitive
on average costs because of economies of
scale. Since costs are negatively related
to profitability, the lower costs also lead to
higher profitability.

CUTTING EDGE MARKETING


& SELLING TECHNIQUES

Relative Product Quality

Relative

Relative

Market

Cost

Position

Position

Return on Investment

SELLING SKILLS

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Selling Skills
The Selling
Environment

Sales people operate in a complex


environment.
Most sales people, however, respond to
this environment through planning,
executing and controlling their sales
efforts.
In performing these functions they face three
primary tasks:
1. Identifying buying center members and
what and who influences their behaviour.
2. Making the sales presentation.
3. Developing and maintaining customer
rapport.

10

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Selling Skills

A. Setting the stage

The Selling
Environment

1. Mood, professionalism
2. Credibility
3. Communication level(s)
B. Determining buyer(s) needs
1. Organizational needs
2. Individual needs
3. Departmental needs
C.

Presentation
1. Stage 1 - Develop interest
2. Stage 2 - Demonstration
3. Stage 3 - Handle objections,
close, or conclude

D.

Exit
Selling
11

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Selling Skills
The Selling
Environment

A.

Buyer group identification

B.

Influence pattern identification

C.

Organizational factor identification

D.

Environmental factor identification

Organizational Buying Environment

12

CUTTING EDGE MARKETING


& SELLING TECHNIQUES

The Selling Process


Examples

1.

Searching for and identifying


Organizations and individuals who
might be potential customers.

Screening potential prospects


against evaluative and qualifying
criteria.

2.

Marketing the approach.

Getting the interview and opening


the sale.

3.

Qualifying prospect

Determination the needs of the


prospect.

4.

Making the sales presentation.

Demonstrating companys ability


to satisfy customer needs may
include demonstrating the
product.

5.

Answering objections

Anticipating unresolved problem


areas.

6.

Closing the sale.

Asking for the order, includes


avoiding overselling after the
prospect has agreed to purchase

7.

Following up

Maintaining a continuing
favourable relationship with the
buyer.

13

CUTTING EDGE MARKETING


& SELLING TECHNIQUES

Outstanding Salesperson characteristics

Average
Percent
1.
Thoroughness and follow-through

65.0
Mentioned

2.

Knowledge of his / her product line

58.9

3.

Market knowledge and willingness to keep the buyer


posted

40.6

4.

Imagination in applying his / her products to the buyer's


needs

23.1

5.

Knowledge of the buyers product line

18.3

6.

Diplomacy in dealing with operating departments

16.3

7.

Preparation for well-planned sales calls

12.4

8.

Regularity of sales calls

8.7

9.

Technical education

7.4

14

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Selling Skills
Presentation
Skills

Presentation skills is a vital ingredient in any


form of personal selling transaction.
- Personal selling is an ancient art.
- Effective salespersons have more than
instinct.
- They are trained in a method of analysis
and customer management.
- Selling today is a profession that involves
inculcating and applying a whole set of
principles.
There are three aspects of personal
selling:
Salesmanship
Negotiation
Relationship management
15

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Selling Skills

The purpose of the sales force is to sell and


selling is an art.
Selling

For aggressive sales, train salespersons


have to be order getters.
The key motive in formulation of the above
approach
should
be
conversion
of
salespersons from being laid-back, sluggish
order takers to active order getters.
There are two approaches :
A sales-oriented approach and
A customer-oriented approach.
A sales-oriented approach employs highpressure selling techniques.
The customer-oriented approach trains
salespeople in customer problem solving.

16

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Selling Skills

Prospecting and qualifying


The act of
selling is a
seven step
process:

Identification of prospects is the first step in


the selling process.
The company will try to supply leads but the
salesperson must imbibe skills required to
develop their own leads.
Leads can be developed in the following
ways:
Collect the names of prospects from
current customers.
Also from other referral sources such as
suppliers, dealers, non-competing sales
representatives, trade associations.

17

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Selling skills

The act of
selling is a
seven step
process

Engaging in speaking and writing


activities that will draw attention.
Examining data sources (newspapers,
directories) in search of names.
Using the telephone and mail to track
down leads.
Dropping in unannounced on various
offices.

18

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Selling Skills
Pre-approach

The salesperson needs to learn as much as


possible about the prospect company such
as What it needs?
Person /persons involved in the purchase
decision.

Approach

For a good start of relationship sales


person ought to learn himself well.
This involves the salespersons appearance,
the opening lines and the follow-up remarks.
Asking key questions and active listening
to understand the buyer needs better.

19

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Selling Skills
Presentation
and
Demonstration

The salesperson to present the product


aspects to the buyer following the AIDAS
formula of
-

gaining Attention,
holding Interest,
arousing Desire,
obtaining Action and
building Satisfaction

Three different styles of sales presentation.


Canned Approach: Memorized sales talk
covering the main points.
Formulated Approach: Early identification
of buyers needs and buying style to
formulate an approach.

20

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Selling Skills
Presentation
and
Demonstration

Need Satisfaction Approach: Search for


the customers real needs by prompting
the customer to do most of the talking.
This approach calls for good listening and
problem-solving skills.
Salesperson takes on the role
knowledgeable business consultant.

21

of

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Selling Skills
Handling
objections

The salesperson
needs training in the
broader skills of negotiation, of which
handling objections is a part.
Customers tend to pose objections during the
presentation or when asked for the order.
Their resistance can be psychological or
logical.
To handle objections, the salesperson to
- maintain a positive approach.
- ask for clarification on the objection.
- politely deny the validity of the objection
or
- turn the objection into a reason for buying.

22

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Selling Skills
Closing

It is the ultimate step in the order-taking


process.
Salespersons need to know how to recognize
closing signals from the buyer, including
physical actions, statements or comments,
and questions.
The salesperson might offer the buyer
specific inducements to close, such as a
special price, an extra quantity at no charge,
or a token gift.

Follow-up

In order to eliminate cognitive dissonance


that might have arisen, a follow-up visit is
required to detect any problems, assure the
buyer of the salespersons interest.

23

CUTTING EDGE MARKETING


& SELLING TECHNIQUES

Presentation Points to Remember


Your presentation has to be
Personalize your presentation.
believed, agreed with, and acted
upon.
One way to gain the prospects
attention is to dramatize the
product value.

Slant your presentation to your


prospects self interest.

Your presentation produces


orders when it is built around
buyer benefits.

Choose impact words with


motivation strength.

The sale is seldom closed


unless your prospect has
confidence in the proposition.

Achieve credibility. Bring on


your evidence and testimonials.

Speak the prospect's language.


Its a sure way to build
confidence.

The ideal presentation uses


both emotion and logic.

In motivating the prospect to


take action and give you the
order, its very important that
you take the initiative.

Be an assistant buyer who stays


in front of decision makers with
a strategy you believe in.

24

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Selling Skills

Relationship
Management

A sellers dealings with customers must be


guided by the larger concept of relationship
management.
The seller who knows how to build and
manage strong relationships with key
customers will have plenty of future sales
from these customers.
Relationship management is a key skill
needed by marketers.

25

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Selling Skills
Relationship
Management

Salespeople must do more than call when


they think customers might be ready to place
orders. Some techniques are

Make a call or visit at other times


Take customers to dinner
Make useful suggestions about their
business

Relationship management will play an


increasing role in the future.
Companies are recognizing more crossselling opportunities with its current
customers.
Companies are recognizing that they earn a
higher return from repeat sales from current
customers than from spending money to
attract new customers.

26

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Selling Skills
Personality
Aspect of
Sales people

Salesmanship is one of the skills used in


personal selling.
It is the art of successfully persuading
customers or prospects to buy products or
services.
Selling involves buyer-seller interactions. The
salesperson and the prospect, interacting with
each other, constitute one example of a
buyer-seller dyad.
A number of personality traits and personal
characteristics come into play and influence
successful interaction with prospects.

27

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Selling Skills
Personality
Aspect of
Sales people

The impact salespeople make on customers


depends a great deal on their ability to
improve upon the following:

Lack of product knowledge


Failure to follow-up
General unreliability
Slavish adherence to canned
presentations.
Blatant use of flattery
Bad manners
Commercial dishonesty

28

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Selling Skills
Personality
Aspect of
Sales people

Salesperson buyer dyadic relationship is


influenced by both salesperson and buyer,
each a focal person influenced by personal
characteristics and role requirements.
Personality characteristics include personality,
values, attitudes, past experiences and the
like.
During any selling effort, the initial goal is to
put the prospect into a receptive state of
mind.

29

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Selling Skills
Personality
Aspect of
Sales people

The first few minutes of the interview are


crucial.
The following characteristics on the part of
the seller are crucial towards successfully
negotiating this phase.
A salesperson must posses considerable
mental alertness.
Be a skilled conversationalist to survive
the start of the interview.

30

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Selling Skills
Personality
Aspect of
Sales people

Favourable first impressions are assured by


among other things,
Proper attire and neatness
Friendliness
A genuine smile

A good conversation opener causes the


prospect to relax and sets the stage for
the total presentation.

Conversation openers that cannot be


readily tied in with the remainder of the
presentation should be avoided, for once
the conversation starts to wander, great
skill is required to return to the main
theme.

31

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Selling Skills
Personality
Aspect of
Sales people

In addition, an effective salesperson needs to


develop norms for the following:
Developing norms for customer calls
Developing norms for prospect calls
Using sales time efficiently
Sales representatives need to know and
identify with the company.
It is imperative on the part of sales
representatives to know the companys
products.
Sales representatives need to understand
field procedures and responsibilities.

Instructional approaches for the above would


role playing, cassette tapes, videotapes,
programmed learning and films on selling
and on company products.

32

CUTTING EDGE MARKETING


& SELLING TECHNIQUES

Selling Skills
The
Marketing
Planning
Process

Planning is merely a systematic way for


an organization to control its future.
A plan is a statement of what the
organization hopes to achieve, how to
achieve it and when it will be achieved.
Planning encourages systematic thinking
about the future.
Leads to improved coordination
Establishes performance standards for
measuring trends.
Providing a logical base for decision
making.
Improves the ability to cope with change.
Enhances the ability to identify market
opportunities.
Marketing planning is the systematic
process for developing and coordinating
marketing decisions.

33

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Selling Skills
Implementing
and
Controlling
Marketing
Plans

A number of different performance measures


are available for purposes of control:
1. Sales analysis provides valuable data
and serves as an early warning system
for identifying declining or rapidly growing
sales.
2. Sales performance analysis compares
sales volume to predetermined objectives
or quotas and provides a benchmark
against which to evaluate sales.
3. Marketing cost analysis measures
marketing expenses against their
magnitude and gives insight into the
costs of doing business and the patterns
of these costs.

34

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Selling Skills
Implementing
and
Controlling
Marketing
Plans

4. Contribution margin analysis subtracts


direct costs from sales to determine
contribution to overhead and profits.
5. Net profit analysis subtracts both direct
and indirect costs from sales to determine
profitability.
6. Return on investment analysis compares
profits to the assets involved in generating
profits to measure marketing productivity.

35

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Selling Skills
Information
Gathering on
Markets

In this sphere, salespersons must know the


following:
who their customers are
their locations
the particular products in which they are
interested
their buying habits and motives
their financial condition

36

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Selling Skills
Information
Gathering on
Markets

The salesperson needs to know not only who


buys what but, more importantly, why and
how they buy.
If not trained adequately, they take years to
acquire the needed understanding.
Left to their own, some salespeople never
gain important market information.
For instance, a salesperson who is unaware
of prospects potentials as buyers may
neglect completely to canvass them.
Markets are always changing, so inputs in
this area should be continuous the content
changing with market changes.

37

NEGOTIATION SKILLS

38

CUTTING EDGE MARKETING


& SELLING TECHNIQUES

Negotiation
Skills

Most of the selling activities involve a great


deal of negotiating skills.
The two parties need to reach agreement on
the price and the other terms and conditions
affecting any selling transaction.
Selling is concerned with exchange activities
and the manner in which the terms of
exchange are established.
In any negotiated exchange, price and other
terms are set via the bargaining behaviour.
Sellers who find themselves in bargaining
situations need certain skills to become
effective.

39

CUTTING EDGE MARKETING


& SELLING TECHNIQUES

Negotiation
Skills

The most important traits are


- preparation and planning skill,
- knowledge of subject matter under
negotiation,
- ability to think clearly and rapidly under
pressure and uncertainty,
- ability to express thoughts verbally,
- listening skill
- judgment and general intelligence,
- integrity,
- ability to persuade others and patience
In order to enhance bargaining position in
favour of the seller, sales people to focus on
increasing the perceived value of products in
the eyes of customers.

40

CUTTING EDGE MARKETING


& SELLING TECHNIQUES

Negotiation
Skills

This can be done through


- brand image and brand equity by offering
quality products that constitute valueaddition from customers point of view.
- effective promotional and advertising
campaigns and sound salesmanship
based on problem solving attitude.

41

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Negotiation
Skills
Checklist 1
Principles
of
negotiation

1. Negotiation is about bargaining to


reach a mutually agreeable outcome.
2. Never neglect your preparation.
3. Participants must regard each other as
equals.
4. There is a need to abide by the rules.
5. Put your cards on the table.
6. Patience is a key characteristic of the
good negotiator.
7. Empathy is vital.
8. State clear objectives.

42

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Negotiation
Skills
Checklist 1
Principles
of
negotiation

9.

Avoid confrontation.

10. Position disagreement carefully.


11. Deal with concessions progressively
12. Do not let perfection be the enemy of
the good.
13. Use openness but not comprehensively.
14. Stick with your objectives.
15. Keep on your guard
16. Remain professional.
17. Never underestimate people.
18. End positively.

43

CUTTING EDGE MARKETING


& SELLING TECHNIQUES

Elements of Good Negotiating Strategy


Steps

Elements

Prepare for negotiating

Gather information on buying organization and


competitors.
Know where each party stands.
Arrange for favourable negotiating atmosphere.
Use graphs and charts where possible.

Establish attitudes

Define problem and sub problems.


Discuss negative and positive aspects.
Express degree of commitment.

Conduct negotiations.

Focus on both parties interests.


Ask questions, avoid statements.
Break issues into subparts.
Have alternatives for solving problems.
Be prepared to stand your ground.

44

CUTTING EDGE MARKETING


& SELLING TECHNIQUES

Negotiation
Skills
Fundamentals
of
negotiation:

Essential rules
Keep the whole package in mind.
Do not underestimate the complexity of
negotiating.
It is the interrelationship between all the
elements that makes negotiation work.
You need to keep all the elements in
mind all the time.
Keep searching for variables.
Remain flexible.
Do not wear your plan or initial intentions
like a strait-jacket.
Everything is negotiable and a few more
things besides. Good negotiators are
quick on their feet.
45

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Negotiation
Skills

The Point of Balance

Fundamentals

Negotiation assumes that a point of


balance is found.

of
negotiation

Participants start at opposite ends of an


acceptable deal.
A range of solutions may be possible at, or
near, the centre.
Negotiation is a to and fro process which
moves up and down the line.
A

Debate
Point of Balance

46

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Negotiation
Skills

Trading
Concessions

1. Never give a concession:


reluctantly

Trade it

The number of variables is finite and


you want your share. We must be seen
to be driving a hard bargain.
This is the if .. then .. approach.

47

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Negotiation
Skills
Trading
Concessions

2. Optimize your concessions


Build up the value and significance of
anything you offer to trade by.
Stressing the cost (financial or otherwise)
to you (Well, I could do that but it will
involve me in a lot more work)
Exaggerate credibly. Do not overstate
and, if possible, provide evidence.
Well, I could do that but it will involve me
in at least twice as much work; I have
just been through

48

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Negotiation
Skills
Trading
Concessions

Refer to a major problem where your


making a concession will solve. (Well, I
suppose if I were to agree, it would
remove the need for you to .)
Imply that it is an exceptional concession
(I would never normally do this, but .)
Imply that it is not only exceptional but
beyond the call of duty (I really dont
know what my boss will say but )
Maximize the perceived value of everything
you offer.

49

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Negotiation
Skills
Trading
Concessions

Minimize their concessions:


Reduce the value the other party puts on
anything offered to you:
Do not overdo the thanks; not a profuse
Thank you so much but a brief, even
dismissive, Thanks
(this is as much a matter of tone as of
the phrase used)
Depreciate, that is be little, the value of
the other persons concession (Right,
that is a small step forward, I guess)

50

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Negotiation
Skills
Trading
Concessions

Amortise the concession where


appropriate, that is divide it into smaller
units that will sound less impressive (Well,
at least that saves me X every month
rather than quoting the total figure)
Treat concessions as given but dont put a
value on them; brief acknowledgement
may be all that is necessary (Right, lets
do it that way)

51

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Negotiation
Skills
Fundamentals
of negotiation

Money matters
One of the variables in many negotiations
is financial (price, margins, discounts,
fees, costs, profit).
The good negotiator is financially numerate,
does his / her financial homework and can
work a calculator.
You cannot guarantee success if
negotiation is conducted off the top of the
head. There is an old saying.
The only place where success comes
before work is in the dictionary
Successful negotiators do their homework.

52

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Negotiation
Skills
Interpersonal
Behaviour

Reading
Negotiation is not simply a matter of
techniques, though these are important. It is
also dependent on reading the other people
involved. Key behavioural factors include:
reading between the lines to seek the
real meaning
listening actively
observing body language

and reacting to all the rituals of the


process to help secure the best possible
deal.

53

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Negotiation
Skills
Interpersonal
Behaviour
How you
come over

Your manner must be persuasive yet always


acceptable. Two factors help create the
correct manner.
Projection the way you come over to
other and in particular, the confidence,
credibility and clout with which you come
across.
Empathy the ability to see the other
persons point of view and be seen to do
so.

54

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Negotiation
Skills
Interpersonal
Behaviour
How you
come over

Communicator Types
High pressure communicators are overaggressive and insensitive.
They may feel they can win the argument
but, in fact, their projection without
empathy, becomes self-defeating and
switches people off.
Take-it-or-leave-it communicators have little
interest in either the other person or,
curiously, their own ideas. A lack of
commitment to the whole process tends to
let things run onto the sand.

55

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Negotiation
Skills
Interpersonal
Behaviour
How you
come over

Weak communicators are the those for


whom it is said disparagingly, They mean
well and so they do, they are sensitive
to the other person, come over as
essentially nice, but take the side of the
listener so much on occasion that
persuasion vanishes and they achieve no
commitment.
Ideal communicators are seen as having a
creative understanding of the listener,
being well informed and producing both
agreement and commitment to the
satisfaction of both sides.

56

DISTRIBUTIVE NETWORK
RELATIONS

57

CUTTING EDGE MARKETING


& SELLING TECHNIQUES

Distributive
Network
Relations

The Manufacturer and its distributor share a


common objective - sell products at a profit.
Distributive outlets regard the manufacturers
salespeople, not only as representatives for
the product line, but also instruments for
implementing the manufacturers business
philosophy.
Distributors opinions of the company they
represent are influenced by the conduct of its
sales personnel.

58

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Distributive
Network
Relations
Distributive
network
loyalty

1. Loyalty depends upon relationship with


manufacturer and its sales force.
2 . Also on the R.O.I. and other earnings.
3. Distributor loyalty is more for recognized
brands
4. Some dist enjoy promoting high
technology products.
5. Distributive network loyalty is enhanced
when the sales staff remain in continuous
and active contact.
6. Distributors those are serviced well
always have a feel good factor for the
company and its staff.

59

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Distributive
Network
Relations

Enhancing
distributor
performance

1. By sustained market development activity


by the sales staff.
2. By focused promotional campaign and
activities.
3. By running well planned schemes.
4. By demonstrating active selling effort.
5. By dealer training program.
6. By providing assistance in managing their
sales force.
7. By advising and providing market
information, buying trends, latent potential
and assisting him in resolving general
management problems.
8. Missionary sales personnel.
60

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Distributive
Network
Relations

Money is the last thing Distributors / dealers


should discuss.
Never Talk
Price

They probably reason:


If a buyer bases decisions on quality, service
and price, how can I prove good quality and
service when Im not shipping anything? The
only thing left is Price.
. Never talk price before selling your
company and yourself. The purchaser will
generally guide the Distributor/Dealer to the
lower price.
This leads to the first rule of selling: people
buy from whom they want to buy and make
price and all other decision factors fit.

61

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Distributive
Network
Relations
Customer
Expectations
from
Distributors /
Dealers

Quality of service provided by Dealers is


of utmost importance, because buyers
are more concerned with service than
price.
Not the distributors, but a manufacturer's
sales force plays the role of technical
assistance.
Buyers do business with a particular
distributor, for a consistent and
dependable local service.

62

CUTTING EDGE MARKETING


& SELLING TECHNIQUES

Distributors are true middlemen

Distributors / Dealers are often perceived by


manufacturers and industry observers primarily
as customer agents.

More significant
below:

distributor

functions

are

listed

Distributors Serve Buyers and Sellers


Seller benefit

Buyer benefit

1. Carry inventory.

Provide fast delivery.

2. Combine supplier outputs.

Provide product assortment.

3. Share credit risk.

Provide local credit.

4. Share selling task.

Assist in buying decisions.

5. Forecast market needs.

Anticipate needs.

6. Provide market information.

Provide market information.

7. Enhance customer service.

Enhance customer service.


63

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Distributive
Network
Relations
Distributors
are true
middlemen

Distributors functions are like two-sided


coins. One side benefits the seller while
the other side benefits the buyer.
Each time a distributor serves a customer
well, the cause of the product
manufacturer is served equally well.
Successful distributors may indeed
appear to be customer oriented because
of their emphasis on service.
Distributors are only as strong as the
product lines they carry.

64

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Distributive
Network
Relations

Choosing
the Right
Distributor

When a manufacturer decides to utilize


independent distribution, this initial decision
prompts several other choices regarding the
potential relationship.
The manufacturer must also decide
What marketing functions will be assigned
to or shared with distributors?
What portion of the product line will be
sold through this channel?
What size and type of distributor should
be chosen?

65

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Distributive
Network
Relations
Choosing
the Right
Distributor

Should exclusive or multiple distributions


be used?
How should the selling function be
divided between distributors and the
company sales
force?
What policies must be spelled out to
ensure an effective, profitable, mutually
satisfying relationship?

66

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Distributive
Network
Relations
Assigning
Marketing
Functions

A distributor is be expected to carry local


inventory sufficient to serve the market.
The manufacturer will divide existing and
potential customers into two broad
categories:
- sold directly via the company sales
force,
- sold entirely by the distributor, except
for occasional technical support
provided by the manufacturer.

Most manufacturers high spot target


markets with their direct sales force.
The remaining accounts are assigned to
the distributor, or perhaps allocated, if
more than one distributor is franchised in
a given geographic market.

67

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Distributive
Network
Relations
Exclusive
or Multiple
Distribution

Manufacturers selling into industrial


market segments will usually let the size
and dispersion of a given geographic
market determine the number of
distributors that they will franchise.

A marketers decision regarding the


number of distributors to use is primarily
based on the size of a market and the
market share held by channel members.
If one distributor is clearly dominant in
market with a relatively low potential, the
choice of exclusive distribution would be
quite logical.
In major market areas multiple
distribution would be a common strategy.

68

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Distributive
Network
Relations
Problems to
avoid

A manufacturer should be wary of two


potential problems:
First, franchising too many distributors in
any market simply makes the product
line undesirable to sell.

The second potential problem involves


the mixture of distributors in multiple
distribution markets.

A marketer cannot always prevent such


problems or even foresee them but
careful analysis during the channel
formation stage is well worth the effort.

69

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Distributive
Network
Relations
Distribution
Policies

The formulation of an effective and workable


distributor franchise agreement represents a
real challenge to a manufacturer.
Some firms will sin excess.
Others sin by defect.
A happy compromise will make clear 1. respective duties of both parties to each
other and to their common market.
2. rights of both parties and how these will
be protected
3. major force-able conflicts and
resolutions.

70

their

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Distributive
Network
Relations
Duties and
Goals

Marketer must detail, quite clearly the


sharing of this responsibility.
Besides clarification of duties, the marketer
must also explain.

Principal target segments


Approximate market share desired
Relative emphasis on price
Degree of product innovation to be

expected
Level of customer service
required.

A large portion of channel conflict can be


traced back to ambiguity and incompatibility
between the goals of the manufacturer and
those of the distributor.

71

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Distributive
Network
Relations
Rights and
Protection

Some marketers give the impression that


they are concerned solely with their own
needs and desires.
Some distributors imply by their actions
that customers are important, but
suppliers are only a necessary evil.
The prudent marketer will exhibit an
understanding of both sides of the proposed
relationship.
By stressing product innovation, marketers
will often engage in self obsolescence. This
means that portions of a distributors
inventory can suddenly become worthless.

72

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Distributive
Network
Relations

A. Distributor

Issues to
Address in
Distributor
Franchise
Agreements

1. Carry sufficient inventory to satisfy


market needs.

I. Duties of
both
parties

3. Extend competitive credit terms to


customers.

2. Help to disseminate new product


information and sample.

4. Use pricing to stimulate market growth


while maintaining reasonable profit
margins.

73

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Distributive
Network
Relations
Issues to
Address in
Distributor
Franchise
Agreements
I. Duties of
both
parties
A. Distributor

5. Utilize co-operative advertising


programs to enhance market share.
6. Pass along any market information
indicating business opportunities and/or
problems.
7. Provide manufacturer with a list of
current customers by product segment.
8. Follow up on all customer leads
provided by manufacturer.

74

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Distributive
Network
Relations
Issues to
Address in
Distributor
Franchise
Agreements
I. Duties of
both
parties

B. Manufacturer
1. Provide products with a quality and
innovation level necessary to meet
market penetration plans.
2. Share the plans with distributor to coordinate joint efforts and to avoid
conflicts.
3. Provide distributor buy prices (costs)
that allow competitive market pricing,
plus reasonable profits.
4. Devise promotional programs to
stimulate market interest.

75

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Distributive
Network
Relations
Issues to
Address in
Distributor
Franchise
Agreements
I. Duties of
both
parties
B.
Manufacturer

5. Supply distributor personnel with


adequate training, guidance, and written
information.
6. Handle all stocking orders on a timely
basis.
7. Refer to distributors those customer
orders that fall within protected quantity
levels.
8. Keep the distributor informed regarding
those customers being handled directly.

76

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Distributive
Network
Relations
Issues to
Address in
Distributor
Franchise
Agreements
II. Rights /
protection
of both
parties

A. Distributor:
1. Right to return obsolete inventory to
manufacturer provided inventory mix
and level was previously approved.
2. Protection against arbitrary decision by
manufacturer to make any distributor
customer a house account.
3. Protection against arbitrary addition of
distributors provided market
penetration goals have been met.
4. Inventory cost protection if manufacturer
reduces market price.

77

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Distributive
Network
Relations
Issues to
Address in
Distributor
Franchise
Agreements

B.

Manufacturer

1. Any proprietary information given to


distributor for guidance or coordination
purposes will be safeguarded.

II. Rights /
protection

2. Distributor will not use price in such a


way as to be a disruptive market
influence.

of both
parties

3. Protection against distributor arbitrarily


adding competing product lines.
4. Distributor will not use co-operative
advertising funds to promote products
outside the manufacturers product line.

78

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Distributive
Network
Relations
Role and
Importance
of
Distribution
Channels

Channels provide distributional efficiency


to manufacturers.
Bring together the makers and the users in
an efficient and economic manner.
Mass distribution needs large resources in
terms of money, materials and men. No
manufacturer can easily command such
resources.
In absence of intermediaries it is difficult to
contact so many scattered customers.
Marketing intermediaries minimize the
number of contacts the firm has to make
to sell its products conferring vital
advantage of distributional efficiency.

79

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Distributive
Network
Relations

Distribution channels provide the vital input


of salesmanship.
Channels
Provide
Salesmanship

They assist in establishing new products


in the market.
Dealer recommended selling is common
in many consumer products.
Dealers promote the products through
their word-of-mouth communication.
They also provide the pre-sale and aftersale service to consumers.
They provide market intelligence and
feedback to their principals.

80

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Distributive
Network
Relations
Functions
Performed
by
Distribution
Channels

They facilitate the sales process by being


physically close to customers.
They bridge the makers and users
efficiently and economically.
Break the bulk and cater to the small-size
requirements of buyers.
Assemble and offer suitable assortments
of products as required by buyers.
Help sub-distributors
a. selling to sub-distributor
b. re-transports
c.
handling
d. accounting

81

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Distributive
Network
Relations

Help stock holding


a. financing the stocks
b. risk bearing
c. storage of products
d. making available warehouse space
e. aiding the sales by transforming the
static stocks into operational
stocks.

Provide salesmanship

Provide pre-sale and after-sale service

Assist in sales promotion

Assist in merchandising

Aid the introduction of new products in


the market

Functions
Performed
by
Distribution
Channels

82

CUTTING EDGE MARKETING


& SELLING TECHNIQUES
Distributive
Network
Relations
Functions
Performed
by
Distribution
Channels

Assist in developing sales forecasts for


the territory concerned.
Provide feedback and market intelligence.

Maintain records / registers

Maintain liaison

Extend credit to retailers as well as actual


users.

Transfer technology to the users and act


as change agents.

83