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CHAPTER I

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Today, social network’s presences have an enormous impact in business industry. Many companies have increased customer engagement and even generated new leads by regularly posting engaging and educational content across their social media platforms and websites. There are lot of companies that rely heavily on social media platforms and website such as Amazon, Ali baba, and Zappos. Therefore, many other businesses attempt to emphasize more on advanced technology and social network platforms; spend more cost on advertisement on social media, set up an online website and create an online forum. However, they become blind towards social network and forgo what is the core business of the marketing itself. Undeniably, social media drives customer’s interest and helps in promotional event. Social media itself is part of channel marketing. Nevertheless, channel marketing is the main structure of business core pillar is which has several platforms besides social media. Channel marketing is primarily a strategy employed by firms that offer many products across a wide sales territory (Channel Marketing, 2012). The benefits of channel marketing are best realized in economies of scale where the burdens of production, distribution and retailing are sometimes significant. The potential to reduce costs, improve efficiency, expand markets and increase customer satisfaction often make business partnerships too productive to pass up. In business, a “channel” is the pathway through which goods flow from producers to consumers. It is important to consider every point on the path in order to create a full picture of how goods are actually made and sold. Channel marketing involves finding new partners to help transfer goods from producers

to consumers. Very few producers actually sell the goods they produce themselves, which are instead sold through an intermediary.it is merely to maximizing the potential of those channels is the main goal of channel marketing. Personal selling is the basic platforms that cope in channel marketing where the producer of goods attempts to make a direct contact with the ultimate user of goods by several methods of selling including door-to-door sales-persons (Shinha, 2018). There are several positive advantages from personal selling i.e. close relationship to the consumers makes the producer constantly aware of changes and other consumer’s needs and goods get to the consumer more quickly. Industry representative, the World Federation of Direct Selling Associations (WFDSA), reports that its 59 regional member associations accounted for more than US$114 Billion in retail sales in 2007, through the activities of more than 62 million independent sales representatives. The United States Direct Selling Association (DSA) reported that in 2000, 55% of adult Americans had at some time purchased goods or services from a direct selling representative and 20% reported that they were currently(6%) or had been in the past(14%) a direct selling representative (Marketing Channels in the Supply Chain, 2018). According to the WFDSA, consumers benefit from personal selling because of the convenience and service benefits it provides, including personal demonstration and explanation of products, home delivery, and generous satisfaction guarantees

Personal selling is counted as flexible and interactive platform (Markgraf, 2017). It involves the two-way flow of communication between a buyer and seller, mostly are in face to face conversation and designed to influence the buyer’s purchase decision. The salesperson can adjust the message to the needs of the

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particular customer, received and take feedback regarding the message and the products. Feedback allows them to improve their approach continuously The main costs for personal selling are the salary and possibly commissions paid to the salesperson. Costs for travel expenses come into play if the product requires visiting the customer at home. The main strength of personal selling is that it has a high success rate because it is persuasive. Personal selling's main weakness is the high cost per sale. An additional disadvantage is that the approach, message and sales skill may differ from one salesperson to another. High costs and inconsistencies mean that personal selling is mainly used for expensive products such as cars or for complex products such as financial services

According to Selling Power magazine that is called all panels of five sale expert, technology, the internet and social media won’t soon be replacing person-to-person buying and selling. Selling has changed, agreed the panel and the technology greatly enhances the selling process. However, it is not definitely replacing the function of salespeople perform. Internet could takes order and disseminate content however it could not discover customer need, build relationship and prospect on its own. Therefore, someone must define the company’s value proposition and unique message and communicate it to the market and that person is the sales representative.

There’s no doubt about how technology transforms the profession of selling. Instead of relying on sales people for basic information and education or simple ordering, customers can now do much on their own pre-purchase through internet platform. Therefore, nowadays salespeople need to move into the discovery and relationship-building phase, uncovering pain points and focusing on the prospect’s business. All the panelists agree strongly that B-to-B marketers will never be able to do without strong sales

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team. Salespeople who is able to discover customer needs, solve customer problems, and build relationships that will be needed and successful, regardless of what else changes

Personal selling is categorized very useful and practical in Indonesia where most of the businesses are still relying on the traditional business. Many of big companies in Indonesia are still counted on the traditional marketing strategy and use personal selling in promotion the product and services. For example, ; fast moving consumer goods companies who has produces renowned such as , , , , , , , , Rinso, Molto, Sunlight, Wall’s, Blue Band, Royco, and Bango, still used the 2-level of channel marketing. It means they use independent distributors to distribute their products. Curently Unilever owns nine factories in the Jababeka Industrial Zone, Cikarang and in Rungkut, Surabaya, and its head office is in Jakarta. The Company’s products, which comprise 39 core and almost 1,000 stocks keeping units (SKU), are marketed through a network of more than 800 independent distributors who reach hundreds of thousands of stores all over Indonesia.

Not far from capital city of North Sumatra; Medan, there are a district called Karo District. With 350,479 populations (census 2010) and population density is estimated at 180 people/Km2, it is a big potential market. In this district, communities still depend on conventional business and lifestyle than advanced technology. According to Karo District official website, Karo district is estimated has 0.718 value in 2014 in Human Development Index in which categorized as high category. A higher HDI score means a higher life span, higher education level and higher GDP.

In this Karo district, there is a company that is engaged in distributor field under Unilever’s management called Yotarimas. Yotarimas is one of Unilever’s independent distributors that cover

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all the area around Karo District. Since it is a distributor company, Yotarimas heavily relies on sales. Sales are the biggest factors that affect the profit of the company. In this case, Yotarimas is not directly related to end- users but to retailers. Therefore, retailer is the third party; basically the entities of particular shop that helps distributors to deliver the product to end-users. Thus in this case, Yotarimas is eagerly to keep the retailer to have consistent inclined sales. The higher the sales are the more profit Yotarimas can receive. However, in order to keep up the sales, Yotarimas needs hinge on the salesperson’s work performance especially for the salesman. The salesmen’s work performance indicator is diligence of the salesman, the skill of salesman and how they mastered all the products. The main goal of having good work performance mainly benefits for increasing the sales number

Therefore this grand theories of this paper is from Gould- Williams (2003) in which he suggests that when salespersons act diligently and have outstanding performance, the organizational performance will be superior. This paper is entitled to the impact of salesperson’ work performance towards to sales at Yotarimas.

1.2 PROBLEM LIMITATION

This paper is focused on Yotarimas as one of the distributor lines of Unilever Indonesia. More over, Yotarimas distributor area is covering the area in Karo District, in which is divided into six main areas; Kabanjahe area, Berastagi, TigaBinaga, Merek, TigaPanah and TigaJumpa. Besides, this research center to all related to the salesperson’s work performances that have impact to the sales of the company. On top of that, this data research only carried out in week 32 until 35 in 2017 in which lays in month of August.

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1.3 PROBLEM FORMULATION

Based on the research conducted by the writer, there is several important sections, which are:

1) How to foster salesperson’s work performance in relation to the sales of Yotarimas? 2) How the salesperson’s work performance of Yotarimas gives an impact on the sales?

1.4 OBJECTIVE OF RESEARCH

The objective of the research that the writer can get as

follows:

1) To identify the method that conducted in Yotarimas that in relation to the sales 2) To identify how the salesperson’s work performance increases the sales of Yotarimas

1.5 BENEFIT OF RESEARCH

1.5.1 THEORETICAL BENEFIT

Theoretical benefit that is expected from this paper is there is an impact from salesperson’s work performance towards sales especially in distributor industry. This paper is expected to strengthen the practical theory that people have believed about how salespersons’ work performance boosts customer or other third party to make a purchase. As Markgraff has mentioned, personal selling is flexible and interactive platform in which alleviates the selling and buying process greatly.

1.5.2 PRACTICAL BENEFIT

This paper is expected to help Yotarimas itself pertaining to the salespersons’ work performance that helps in inclining the sales of the business. Moreover, this paper is also intended to know whether the method that Yotarimas has been using to impact on

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sales. Furthermore, this paper is used to help in seeking the answers that lies in power of personal selling that is performed by salesman rather than expressly involves on Social Media platform.

1.6 SYSTEM OF WRITING

To complete this paper as a whole, it is divided into five chapters, from chapter one until chapter five.

Chapter one: This chapter covers all the background of how this topic is interesting enough to be issued and the important objectives that need to be achieved. It includes background of study, problem limitation, problem formulation, research objectives, benefit of the research and system of writing.

Chapter two: This chapter is ought to cover the theoretical background of salesperson work performance and sales, previous research about relation of work performance and sales, hypothesis, research model and framework of thinking of this paper.

Chapter three: In this chapter discusses about the research method need to be used to examine and analyze the data collected. It is important chapter as it is to determine the accuracy of the conclusion at the end. It covers research design, population and sample, data collection method, operational variable definition and variable measurement, and data analysis method.

Chapter four: The data analysis and discussion is located at the fourth chapter, in which contain general view of research object, data analysis, descriptive statistic, result of data quality testing, result of hypothesis testing and discussion.

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Chapter five: Lastly, chapter five includes all the conclusion drawn

from the data analysis and discussion. It comprises conclusion, implication, and recommendation.

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