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Personal Selling and Direct Marketing POM4_C19.qxd 6/20/06 1:31 PM Page 807 Everyone lives by selling something. ROBERT LOUIS STEVENSON Personal selling and CHAPTERnineteen direct marketing Chapter objectives After reading this chapter, you should be able to: n Discuss the role of a company’s salespeople in creating value for customers and building customer relationships. n Identify and explain the major sales force management steps. n Discuss the personal selling process, distinguishing between transaction-oriented marketing and relationship marketing. n Define direct marketing and discuss its benefits to customers and companies. n Identify and discuss the major forms of direct marketing. Mini Contents List n Prelude case – MD Foods AMBA: rethinking its sales force strategy and structure n Introduction n Personal selling n Managing the sales force n The personal selling process n Marketing Insights 19.1 – Cross-cultural selling: in search of universal values n Direct marketing n Benefits and growth of direct marketing n Customer databases and direct marketing n Marketing Insights 19.2 – Database growth: a wealth of information, but a poverty of customer attention n Forms of direct marketing n Summary n Concluding concepts 19 – Britcraft Jetprop: whose sale is it anyhow? s SOURCE: Avon Cosmetics Ltd. POM4_C19.qxd 6/20/06 1:31 PM Page 808 Prelude case MD Foods AMBA: rethinking its sales force strategy and structure MD Foods AMBA, owned by over 8,000 Danish farmers, is marketing organisations, starting in Denmark, where retail Denmark’s largest dairy cooperative. Production facilities are concentration is high and MD has a dominant market position. spread across the country. Through MD Foods International (MDI), Essentially, three key account managers were appointed to serve MD operates its production and distribution facilities in England. specific key accounts, divided into FDB, the Danish cooperative; Cooperative arrangements with counterparts such as Arla in DS, a private retail group together with Aldi, part of a German Sweden and Arla’s sales force in Finland enabled MD to establish retail group; and other retailers. The key account managers a strong presence in the Scandinavian markets. In milk tonnage worked as a team with three trade managers (who have in-store terms, MD is now the fourth largest dairy in Europe. MD also marketing and space management expertise) in relation to the has sales subsidiaries in England, France, Germany, Greece, specific key accounts. The Sales Director coordinated the key Italy, Poland, Norway, Sweden and the Middle East. account managers, while the trade managers reported to the Europe’s dairy industry is dominated by national trade marketing manager. In this way, MD could achieve national producers. Generic products are optimisation of the sales force, while also ensuring that know-how A number of typically marketed by product type, such as is shared through coordination of trade marketing. important changes brie, feta, camembert and so forth, which are The organisational change piloted in Denmark was later internationally known. MD faces increasing introduced in Sweden, but reactions from both MD’s subsidiary have occurred in competition not only from national and local and major Swedish retailers were less positive. At headquarters, the European producers but also from international companies MD is contemplating what steps to take next. What should MD’s market with a track record in product development and sales force strategy and organisational structure for sales be? branding. Should the key account management format be applied in other environment in A number of important changes have markets? Should the key account managers be responsible for the past decade. occurred in the European market environment in the sales force assigned to their key account? Existing sales the past decade. These include the withdrawal of forces also vary in size, from 15 to four people. Large sales forces EU subsidies to the export of dairy products to dealing with stores with more autonomous management see to non-EU countries in 1996, the increasing concentration of food tasks such as sales, merchandising, displays, placing signs and retailers in Europe and the increasing centralisation in retailers’ posters and new campaigns. Smaller sales forces serve the highly buying decision making as well as product mix planning. MD centralised retailers and handle merchandising and displays. New accounts for a third of total EU exports of feta cheese. The end developments must also take into account different workloads, of subsidies to exports to markets such as the Middle East has skills and career developments for sales forces and key account had a big impact on MD’s profits, putting heavy pressure on the managers serving different retailers and geographic markets. company to shift milk used for feta production to other products What will satisfy customer and employee requirements? Finally, (such as milk powders and yellow cheeses) for EU customers. can the new structure that is evolved be successfully applied to Apart from deciding which product group(s) to emphasise, MD’s operations across Europe?1 another major problem confronting MD is how to develop a more effective sales and marketing structure to compete cost- Questions effectively in these market situations. In the past, MD has based its sales organisation on 1. Why does MD Foods rely on a sales force to sell its products? geographical and national considerations. Moreover, the focus of 2. What are the key considerations that MD Foods needs to take the sales force was on individual stores rather than retail chains into account in setting its sales force’s objectives, strategy, or key accounts. With the emerging retail concentration and structure and compensation? Identify the trade-offs involved centralisation of buying and planning functions in customers’ in each of these decisions. organisations, MD recognises the need to respond to these 3. What are the key challenges facing MD Foods in developing pressures and to consider the options for managing the sales and implementing an organisational structure that will satisfy function, from analysing sales to managing key accounts. The both customers and employees (sales force, marketing and time was right for dramatic action. key account managers)? Recommend and justify a strategy A key opportunity arose when one customer – a large for MD Foods. international retailer – introduced the idea of key account SOURCE: Based on Mogéns Bjerre, ‘MD Foods AMBA: a new world management to MD. This one customer’s European turnover from of sales and marketing’, in Understanding Marketing: A European MD exceeded the turnover of many of MD’s subsidiaries, making Casebook Celia Philips, Ad Pruyn and Marie-Paule Kestemont (eds), it more important than some of MD’s geographic markets. MD pp. 30–41, reproduced with permission, © John Wiley & Sons Ltd, decided to introduce key account management in its sales and Chichester, UK, 2000. 808 POM4_C19.qxd 6/20/06 1:31 PM Page 809 Introduction The questions in the prelude case reflect some of the critical issues that management must address when determining sales force strategy and structure. Indeed, the decisions called for are relevant not only for MD Foods, as in the prelude case, but also for any firm that uses a sales force to help it market its goods and services. In the previous two chapters, you learned about integrated marketing communication (IMC) and three specific elements of the marketing communications mix – advertising, sales promotion and publicity. This chapter is about the final two IMC elements – personal selling and direct marketing. Both involve direct connections with customers aimed towards building customer-unique value and lasting relationships. Personal selling is the interpersonal arm of marketing communications in which the sales force interacts with customers and prospects to make sales and build relationships. Direct marketing consists of direct connections with carefully targeted consumers to both obtain an immediate response and cultivate lasting customer relationships. Actually, direct marketing can be viewed as more than just a communications tool. In many ways, it constitutes an overall marketing approach – a blend of communications and distribution channels all rolled into one. As you read on, remember that although this chapter examines personal selling and direct marketing as separate tools, they must be carefully integrated with other elements of the marketing communication mix. Personal selling Robert Louis Stevenson once noted that ‘everyone lives by selling something’. We are all familiar with the sales forces used by business organisations to sell products and services to customers around the world. Sales forces are found in non-profit as well as profit organisations. Churches use membership committees to attract new members. Hospitals and museums use fund-raisers to contact donors and raise money. In the first part of this chapter, we examine the role of personal selling in the organisation, sales force management decisions and the personal selling process. The nature of personal selling Selling is one of the oldest professions in the world. The people who do the selling go by many names: salespeople, sales representatives, account executives, sales consultants, sales engineers, field representatives, agents, district managers, marketing representatives and account development reps, to name a few. When someone says ‘salesperson’, what image comes to mind? Perhaps it’s the stereotypical ‘travelling salesman’ – the fast-talking, ever-smiling peddler who travels his territory foisting his wares on reluctant customers. Such stereotypes, however, are sadly out of date. Today, most professional salespeople are well-educated, well-trained men and women who work to build long-term, value-producing relationships with their customers. They succeed not by taking customers in but by helping them out – by assessing customer needs and solving customer problems. 809 POM4_C19.qxd 6/20/06 1:31 PM Page 810 Part 7 Promotion Consider Airbus, the aerospace company that markets commercial aircraft. It takes more than a friendly smile and a firm handshake to sell expensive computer systems.
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