CHAPTER 2.PERSONAL SELLING PREPARATION AND PROCESS  The Psychology in Selling.

y y Deals with the major sales related knowledge and skills required by sales people. Includes psychology in selling, buying decision process, buying situation, effective communication skills, sales knowledge, and sales related marketing policies.

Stimulus Response or the Buyer Behavior Model Stimulus (Sales presentation)  Buyer s decision making process Response (buy or no buy)

Buying Decision Process y In consumer market, individual and household consumers make buying decisions based on five mental stages of buying process. Five-Stage Model of the Consumer Buying Process Problem Information Evaluation Purchase Post-purchase need search of decision behavior recognition collection Alternatives Problem (or need) Recognition y The consumer buying process starts when the prospective consumer recognizes a problem or need. The need can be cause by internal or external stimuli. Whatever may be cause of the need, the salesperson must identify the buyers need to know what information the product benefits should be given so as to satisfy the buyers need. Information Search (or Collection) y Involves visiting retail stores, asking family members and friends, and talking to salespeople about the products price, benefits, sizes or models, warranty service and so on. Evaluation of Alternatives y The consumer is trying to satisfy a need, or solve a problem. y The consumer is looking for certain advantages or benefits from the product or services that satisfies the need or solve his/her problem. y The consumer knows that each alternative product or brand has a set of characteristics, (or attributes) that try to satisfy his/her need. y The importance and relevance of attributes vary from product to product.

Purchase Decision y The consumer forms preferences among the brands and also an intention to buy the most preferred brand, in the evaluation stage. The consumers purchase intentions can be changed by two factors, the attitudes of other and the unanticipated situation factors. For high involvement products, the purchase decisions include: a. Which brand to purchase b. Timing for purchase c. How much quantity d. From which retailer or dealer to buy e. How much make the payment Post-purchase Behavior y Depend upon the satisfaction or dissatisfaction of the consumer with the product or service. Buying Decision process of Business Buyers Decision Making Process includes three additional stages (steps): y Determination of characteristics and quantity of needed product or services. y Development of specifications of product or services, needed. y Detaining and analyzing supplier proposals.

 Buying Situation or Types of Purchases

For Household and Individual Consumers y The buying situations for household and industrial consumers are: a. Routine decision-making b. Limited decision-making c. Extensive decision-making Routine decision-making  The products that are purchased repeatedly come under the category of routine decision-making. These are low-involvement products and are typically low cost and low-risk purchases. Limited decision-making  When consumers are not aware of each brands benefits, they seek more information, before making a purchase decision. Extensive decision-making  When consumers want to buy products like a home, a car, or insurance, they are highly involved in buying decision. The purchase may require more investment in time and money than limited decision-making.

Buying Situation for Business Buyers y The types of purchases or buying situation for business or industrial buyers are: a. New purchase b. Change in supplier c. Repeat purchase New purchase (or new task)  The buyers have limited knowledge and lack of previous experience. They obtain a variety of information about the products, suppliers, prices, and so on. In this new task situation the risk are more, and decision may take longer time as more people are involved in decision making. Change ion supplier (or modified rebuy)  Takes place when the company is not satisfied with the performance of existing suppliers, or a need arises for cost reduction or quality improvement. Repeat purchases (or straight rebuy)  The buying organization requires certain products and services continuously. The buying organization reorders or places repeat orders with the suppliers are supplying with acceptable levels of quality and delivery.  Effective Communication  Communication is transmission of verbal and non-verbal information and understanding between a sales person and a buyer.  Two-way communication is required to make a smile.  It has been recognized that non-verbal communication is an important part of total communication process, and essential for sales success. Salespeople who want to be effective communication to persuade people to buy their products and services show the following characteristics. y Get feedback to uncover buyers need by asking relevant question. y Empathise with the buyers feelings ideas and situation. y Build a relationship based on mutual trust with customer. y Use the selling philosophy of keep it simple, salesperson (KISS). y Listen carefully to the prospects words, feelings, and thoughts and talk less. y Enthusiasm towards the sales job and customers business. y Use proof statement from objective sources to add credibility to sales message.

 Sales Knowledge and Sales Related Marketing Policies  Salespeople require knowledge about their company, product and services sold,
customers and competitors, and sales-related marketing policies. These are a number of important reasons why salespeople should get knowledge of selling and sales related marketing policies. These are:

(1) Increase in self-confidence of the salesperson due to the knowledge of the product, its application to the customerss needs, and competitors. (2) Prospects and customers expect salespeople to have good product knowledge, to give ideas to improve the customers operations, and to be reliable and efficient. When a prospective customer has confidence in the salespersons expertise, the sales presentation becomes more acceptable to the prospect. The result in (3) better service to the prospect (4) icreased sales Company Knowledge  Information about the company growth and achievements, policies and procedures (such as order processing and return goods), production and service facilities is used in sales presentation. Product Knowledge  They must know how the product is produced, level of quality control, physical characteristics and sizes, particular features, advantages and benefits of the product, product operation and application. Customers and Competitors Knowledge  Knowledge about existing and prospective customers, different customer (or market) segments and their profiles, buying behavior, and buying situation, need assessments to help salespeople to get insight into the prospects and customers. Competitors information on their strengths, weaknesses, strategies, and policies is important and useful negotiations and while dealing with prospects objection. Sales Related Marketing Policies  The guidelines within which the efforts have to be made to achieve sales anf marketing objectives. The main sales-related marketing policies are: y Pricing policies y Distribution policies y Promotion policies y Product policies Pricing policies  Customers want to know the list price, the next price (equal to list price minus discounts) and transportation (or freight) cost included or extra. Quality (or volume), trade, and cash discount are offered to customers as buying incentives. Customers will also like to know the payment terms. It is necessary for the salesperson to know the companys credit policies foe existing and prospective customers to ensure timely collection of payments against the bills raised on them .

Distribution policies  The salesperson must understand the channel of distribution used by his company to move its products and services to the final customer. Most manufactures use more than one channel. Table 2.2 Prospective/Lead Generating Methods Sl. No. Prospecting Method 1. Referrals from existing customer.

Brief Description Requesting existing customers to suggest the names of prospects. This is a convincing source of nearly two thirds of total leads. Company advertising, direct mail, website, trade shows, and teleprospecting activities. Suppliers, intermediaries, bankers, trade association commercial dotcom vendors. Salespersons become members of civic/social organization like Lions Club, Bangalore Club, and Rotary Club to meet new people who may be prospect or may provide leads. Yellow pages published by government and private publishers. Unannounced calls by salespeople on firms that may need the product/service the salesperson sells. Costly and time consuming. Using for widely needed products like office supplies.

2.

Referrals from internal company sources.

3.

Referrals from external sources

4.

Networking by salespersons

5. Industrial directories

6.

Cold canvassing

Qualifying  It is important that the lead, or the probable prospect is qualified (to meet the necessary standards or conditions to receive further attention). The necessary conditions for the probable prospect or the lead to get qualified to the prospect or potential customer are: y The probable prospect has a need for the product/services being sold. y The probable prospect (could be an individual, a family, or an organization) can afford (or has an ability) to buy the product or services. The prospects, after qualifying, are placed in three groups: a. Hot prospects b. Warm prospects c. Cool prospects Hot prospect  These prospects have good requirements of the companys product/services and are financially sound. Such prospects are handed over to the companys salespersons to convert them to the companys customers. Warm prospects  This group of prospects have medium or average requirements of the companys products/services and are financially sound, these prospect are given to the companys telemarketing team for follow-ups. Cool prospects  These prospects have low requirements and their financial capacity may pr may not be good. Such prospect are either over to the companys intermediaries like dealers/distributors, or their names are kept in pending list for future follow-ups. Preapproach  The preapproach step generally includes two task: y Information gathering in greater depth about the prospect y Planning the sales call on the prospect Information gathering  The prospects business, its product and services, purchasing practices, location of plants, names and background of people who make buying decisions. Purchasing orientation and practices, the major problems or issues faced by the prospects and the industry in which it is operating and so on. Planning the sales call  This consists of setting objectives for the sales calls, and planning the sales strategy.

Setting call objectives  This includes gathering information about needs from the prospect. Understanding buying orientation and practices, checking merchandise and making a reorder from the existing distribution, or making a sales presentation. Planning the sales strategy  It consists of finding out when (date and time) and whom (purchases executive or administration officer) to approach by phone call, followed by personal visit. It includes a tentative judgment about which of the companys products best meet the customers needs, and also a tentative plan for presenting the specific product features and benefits. Approach  Make an appointment to see the prospect. Presentation and demonstration  It is necessary for a salesperson to understand customer needs first before considering the methods of sales presentation and developing an effective presentation. The sequence of our discussion will be: a. Understanding the buyers need b. Knowing sales presentation methods (or strategies) c. Developing an effective presentation y Understanding the buyers need - The best way to understand the prospects needs is by asking question.  Situational question - These questions are about the prospects current the situation ar any facts the salesperson needs.  Problem identification question - Salespeople ask these questions to identify or uncover the customers problems, difficulties, or needs.  Problem impact questions - Salespeople ask these questions to make a buyer realize the impact or consequences of the problem and the need to solve problem. The most important questions and the salesperson should ask as many as needed.  Solution value question - Salespeople ask these questions to help a buyer assess the value or usefulness of a solution.  Confirmations question - Salespeople ask these questions to get confirmation from prospects to hear about products or services.

a.

b. c. d. 

Knowing sales presentation methods - Salespeople must know the various methods (or strategy) used for making a sales presentation. These are: a. Stimulus response method b. Formula method c. Need- satisfaction method d. Team selling method, and e. Consultative selling method Stimulus response method - It is also called as canned approach, a memorized sales presentation or a prepared sales presentation. This method assumes that if a salesperson makes the right stimuli, he can get a favorable response from the prospect. Formula method - This method is also based on stimuli response thinking and also known as formulated approach or mental states or selling. - The salesperson assumes that the most buyers can be led through mental states or steps in buying process and hence uses a well-know formula. It has four strategies: attention, interest, desire, and action. (AIDA). Attention - the sales representative plans the sales talk by first getting the attention of the prospects by making favorable comments about the prospects or the prospects business. Favorable first impression is also created by proper dress, neatness, a genuine smile, and cheerful expression of genuine admiration or arousal of customers curiosity. Interest the salesperson finds out which aspect(s) or factors(s) of the product or service appeals or attracts the prospects. Desire the objective in this stage is to arouse a strong feeling in the prospect of wanting to have the product or the service. Action-means buying action, or closing the sale. Some salespeople use trial close to test whether the prospect is ready to buy. Need-satisfaction method - This method is most challenging and creative form of selling. It is an interactive sales presentation, which is different from the stimulusresponse and the formula methods discussed earlier. The salesperson typically starts with understanding the buyers (or the prospects) needs by asking situational, problem identification, problem impact, solution value, and confirmation question, as described earlier. This is done in three ways: features, advantages, and benefits as described below:

a. Features- the salesperson describes the features or characteristics of the product, services, or market offering. b. Advantages- the salesperson describes how the feature can help or give advantage to the prospect. c. Benefits- the salesman then describe how much the feature or advantage meets a clear and detailed need expressed by the prospect.  Team selling method - One of the latest developments in personal selling and growing number of organizations are using multi-person sales teams to deal with multi-person buying center (or buying committees) of their customers. Sales team Major accounts Executive Technical support Engineer Logistics executive Information system Executive Finance executive Exchange relationship process Buying Centre Purchase/ materials executive Operations manufacturing executive Logistics/supply chain executive Material manager

y y

Finance executive

Strategic issues  Team selling should not be used for low sales and profit customers, who could be served by the salespersons with transaction selling approach.  The emphasis in team selling is on building a long term relationship between selling and buying firms by focusing on the whole company and its capabilities, rather than just selling a product or a service. Group presentation  Sales team or a salesperson makes the sales presentation to a group of decision-makers from the buying organization. Some of the guidelines for an effective group presentation are allows: y Need- analysis. Before the group presentation, the salesperson should talk with all or most members of buying centre (or purchase committee) to understand their needs or problems and what benefits they are looking for. Also use yhe opportunity to build a rapport or a good relationship.

Introduction. First part of the group presentation should include the company name, members of selling firm and their designations, and a brief statement of the purpose or objectives of the presentation. y Convincing. Mention, during presentation, the companys experience, names of renowned customers, third- party celebration of satisfaction, and quality assurance. y Specific-benefits if need-analysis was not done before the presentation, ask each person the benefits they look for in the product or service they intend to buy. Then go through the presentation and show hoe the product or the service offered meets with each persons specific benefits. y Well Prepared At the end of the presentation, the selling team should answer question from the buying team. The selling team should make each team member responsible to his/her area of specialisation such as technical, commercial, and so on.  Consultative selling method (or problem solution presentation) is increasingly used as professional method or problem- solving approach.  For successful consultative selling, the requirements are as follows: y Salespeople should have an in- depth knowledge of the customers company and the customer industry, and carry out of detailed analysis of the problems or needs. y Salespeople should be aware of key members of the customers buying center (or purchase committee) and get their acceptance of the needs / problems. y Salespeople should prepare the proposal for solving the buyers problems and make the sales presentations. y Salespeople should use the selling firms cross- functional expertise to provide solutions to custom ers business and technology related problems. If needed, external sources should be used by the sales team to become an expert on the customers business and to solve the problems. y This is also sometimes referred to as problems- solution method or problem-solving approach. y Salespeople should build long-term partnership with the customer.

 Developing an effective Presentation y For developing an effective presentation, the ff. guidelines would be helpful: y Planning y Use Technology

y Adapt Presentation y Benefit Plan y Dont Overload y Prospects Language y Convincing  Demonstration- one of the important selling tools of a salesperson. y Sales presentation can be improved by demonstration y Demonstrations prove the benefits of the product and reduce the risk of wrong purchase to the buyer.  Some of the Benefits of Using the demonstration as a tool for selling are as follows: y Buyers doubts or objections are cleared and their questions are answered. This improves a buyers purchasing interest y It provides a good support in the selling process. y It helps the salesperson to find out the specific benefits of the prospective customer. The salesperson can then show his/her products or services can meet those benefits better than the competitors.  Planning and Conducting Demonstration: The salesperson should necessary planning by rehearsing the demonstration with colleagues, who act as buyers, to ask questions or raise objections. There should be planned in two parts. y The salesperson should explain briefly the product features, advantages and benefits of the product or actual working of the product works. y The salesperson should show demonstration or actual working of the product. The salesperson should also understand the purpose of demonstration to obtain a sale or to lead for further discussions or negotiations.  Matching Presentation Methods with Situations Table 2.5 Matching sales presentations methods with sales situations Sales Presentation Methods Suitable Sales Situations Stimulus response method, canned Suitable when selling time is short and approach, or memorized sales products are simple or non-technical. presentation The method is used by sales people with less experience, as it gives them more confidence used for door to door or telephone selling. Formula method, formulated approach, or mental states selling. In straight rebuy or repeat purchase situation, when the customer is familiar

with the product or services of salespersons company or when salespersons is aware of the buyers needs, this method is appropriate. Need- Satisfaction method It is creative form of selling, suitable for selling industrial products, or consumer durable products, where the salesperson has to understand the prospect need first. For selling high-cost technical products or services like computer hardware and software. power transformer and furnance, this presentation method is used to present to a grouped of individuals , using team selling approach

Consultative selling or problemsolution method

 Overcoming Objections Two types of objections or resistance happen: y Psychological (or hidden) - include predetermined ideas or beliefs, preference for established brands, dislikes of making decisions, anxiety or resistance to spend money. y Logical or real objection- is tangible such as quicker delivery schedules, high price product quality, or product availability.  Methods for Handling and Overcoming Objections y Ask question y Turn an objection into a benefit y Deny objections tactfully y Third- party certificate, and y Compensation  Trial Close/ Closing Sale y Trial close- Is one of the selling techniques. It checks the attitude, the opinions of the prospects. y Closing the sale means asking for the order. y Closing is the process of helping the buyers to malke a decisions that will benefit him/her.  Buying Signals are follows: y Examines the products y Ask another persons opinion y Asks question

y Become Friendly  Closing Techniques There are many closing techniques some of closing techniques are: y Alternative- choice close- in the the technique the prospect is given a choice between two or more items or models, and not between buying or not buying. y Minor points close- this technique is similar to the alternative choice close. y Assumption close this technique is effective when the salesperson connect the customer trust to such an extent that the sales person prepares the orders and hands it over to customer for his signature. y Summary of Benefits close- this technique is very popular. It is simple and straight forward.  Steps Involved are: y Find out the important benefits of your product or service that appeal to prospects, during presentations y Summaries these benefits by using FAB ( features, advantages, and benefits) statement and SELL sequence ( Show feature, Explain advantage, Lead in to benefit, Let customer talk)  T- Account (or modified T- account) or balance sheet close this technique is used by the salesperson, when he takes a piece of paper and draws a large T on it. y Special Offer close y Probability close- this technique is used when the prospects says, I will think it over, or I will let you know. y Negotiation close- most salesperson close the sale after successful negotiations with buyers.  Closing Techniques and Sales situation y Copy table 2.7  Follow up and Service- salespeople must understand that their job is not over after the order.  Check Customer Order  Plan Follow up visit at the time Delivery The Salesperson should plan a follow up call when the equipment or item is to be delivered  Account Penetration Successful salespeople know that there is still a lot of work to be done after making a sale. By contacting the customer after the sale, the salesperson lays the foundation of a positive businessrelationship. Account

Penetration means working and contacting people throughout the account and discussing about the selling firms products and services. Relationship Market Todays salespeople work to build and maintain longterm, mutually beneficial partnerships with their key customers. Effective followup and customer service will help build loyal customers. Negotiation Salesperson should have certain skills and qualities to be effective in negotiations. Salesperson talk to one person or a group of people, there is a possibility of negotiation. When to Negotiate Negotiation is a proper procedure to be followed for making the sale when the following conditions or circumstances are present: y The buyer puts certain conditions for buying to the seller. For instance, If you will reduce the price of your product by 8 percent, I will buy. y When the arrangement between the buyer and the seller will have to take place on several factors, such as price, delivery, quality, and payment terms. y When the product or service to be exchanged is customized to the requirement of the buyer and may take long-time to execute the order y When there is a zone of agreement between the two parties and the final price is to be decided throughout bargaining Preparing for negotiation with customers Successful salespeople prepare well for negotiations with customers by following the steps described below: y Planning Gathering information about the competitors prices, quality, service, share of business and so on. y Building Relationship Much before the final negotiation, salespeople should use the available time to build an environment of trust, understanding, and relationship with the customer. A good relationship between the two parties eases the tension during the negotiation process. y Purpose Styles of Negotiation There are four different styles of negotiation. These are: (a) I win, you lose, (b) Both of us win, (c) you win, I lose, and (d) Both of us lose. Out of the four styles of negotiation, the style that is typically used for the customers, suppliers, employees, and relatives is both of us win of win - win. This is achieved by the following guidelines: y Much before the final negotiation, build and environment of trust and confidence. y During the negotiation, be polite and humble, which would help the customer to communicate in easy manner. y In the initial stage of communication, the focus should be on identifying and agreeing to the problems rather than the solutions.

Both sides should then work together, pooling their resources,, ideas, and sharing information to solve the problems stated earlier y Both sides should make concessions at regular frequency y Defensive posture, legalistic, or contractual approach should be avoided.  Salesperson should recognize, based on the following tips, if the prospect or buyer uses I win, you lose style: y The buyer starts with tough demand or ridiculous offer y The buyer raises voices or make emotional outbursts y The buyer does not reciprocate or is stingy to the concession made by the seller y The buyer ignores the time deadline y  Once the salesperson recognizes that the customer or prospect is using this style against him, he should defend his position in the following manner: y He should take equally strong position by presenting a clear but unemotional opposition to the prospects demand y He must explain why he holds his position and seek the reason from the customer for holding the position y He should stress the consequences of a failure to resolve the issue. The purpose here is to move the other party from win lose style to win win style.  Transaction and Relationship Selling Parameters Objective Transaction Selling Get the order of sales Relationship Selling Become sole or preferred supplier Building trust and superior customer service

Focus

Sales presentation, overcoming objections, and closing Many customers with lower profit potential Short days

Customer Type and numbers Length of Relationship Sales Team

Few high-profit potential customers Long (Months / Years)

One or two junior level sales people Low to medium, involving the few functions

Team selling with three to five junior and senior level people High, involving many functions

Selling Efforts

Pricing Strategy

Competitive or lowest prices to Mutually acceptable prices for get sales profits and mutual benefits

 Transaction Selling (or Exchanges) These are mostly one-time-only exchanges with an objective of getting sales or orders from customer whose profit potentials are low. The selling efforts are minimum, with low or competitive prices and/ or availability as main criteria for getting sales.  Relationship Selling The objective of relationship selling is to become the sole, or preferred supplier. This objective is achieved by building strong social, economic, service, and technical ties over a long period of time. The foundation of this relationship is trust and commitment.