Develop Customer Relationship Is Personal Selling Marketing Essay

Published Date: 23 Mar 2015

With different types of custome rs, the business should apply the appropriate methods and tools of marketing. This ensure for the effectiveness of business activities and otherwise do not waste the resourses for applying the unsuitable tools to the targeted customers. Personal Selling is one of the 5 elements of the marketing communication mix which involve direct contact with customers aimed towards building customer-unique value and long-term relationship, it is also called customer-driven. It shows that it is the most effective tool in B2B market.

The market of machines and equipment for coal and minerals exploring sector has the typical characteristics of B2B market. It has specific requirements on technology, different volume and different procedures of procurement that the tools such as: advertising, promotion, publicity is insufficient.

The most efficient method to acquire, retain and develop customer relationship is Personal Selling in which the sales activities is based on the close relationship of salesperson and purchasers.

Problems:

Itasco-HN is the seller of heavy industrial equipmnet and spare-parts who retain the long time relationship with the buyers in the coal and mineral exploring sector. It has gained remarkable growing steps through time but also it took some mistakes in doing business but now still has been receiving some complaints on services from customers, such as: late guarantee services, not enough range of sparepart....

Second problem is the conflict in selling territories between salesperson, this is understandable due to the selling techniques applied here based on the relationships built during operation.

Finally, the feedback of customers that we are in the lack of engineers in terms of number and experience also, this due to we are just reseller only but deal with many kinds of machine so that we can not employ enough engineers or technician for all sectors we involved.

This situations come from not only the outside factors but also inside subjective reasons, here, the mainly from the management decisions and the selling performance of the salesforce.

This research aims to find out what are regularly arising mistakes, what is going wrong with the salesforce performance and then the corresponding adjustment and solutions recommending applied to improve the situation.

Objectives:

The objective of the research is to understand the buying behavior: characteristics and mechanism of buying decision, from which we can appoint the right salesperson to each task, the right point of time to access to and the most effective technique of selling applied in order to make our customer most sastisfied with the equipment and services supplied by ITASCO-HN.

To have overall look to the sales activity of the company and then to identify the causes of failure in selling, the problems that make the sales ineffective in order to find out the corresponding solutions for better performance and desired objective.

To find out How the sales force are distributed with available resources and that resources are sufficient with the required tasks appointed.

From that research to have an assestment of the customers, who is the potential, who is key-account…. and which strategy should be applied in short-term and medium or longterm for each.

For supporting Personal Selling the Company should apply, at the same time, any other marketing tools, should invest in any supporting means or improve any processes of performance in order to get the ultimate aim, that is the satisfaction of customers.

The scope and limitation of the research:

- Place: researchs are carried in ITASCO-HN and its customers in Vinacomin for supplying all exploring machines, equipment and spare-parts mainly for this industrial sector.

- Sector: This research also has the limit in the sector that the result can only applied in the specific field. Among the B2B market, this research carried in our business (the reseller) and in a market including manufacturing businesses within Vinacomin only, other types are ignored such as: government organizations, institutions.

- Research method: as the limitation of the qualitative method, from the research we can only know the motivation of buying decision but we do not know the effecting level of the factors to the decision of buying or not.

- Sample: the sample of respondent is small so that the result may not be representative.

- This research concentrates on the marketing tool play as the core of the sales activities of the company (ITASCO-HN), that is Personal selling,

CHAPTER 1: LITERATURE REVIEW

1.1 Characteristics of B2B marketing

1.1.1 Marketing definition

»¿ Marketing is defined as a social and managerial process by which individuals and groups »¿obtain what they need and want through creating and exchanging products and value with others.1 (1)(Principles of marketing, 4th Edition, Philip Kotler, Veronica Wong, Gary Amstrong)

Exchange processes involve work. Sellers must search for buyers, identify their needs, design good products and services, promote them, and store and deliver them. Activities such as product development, research, communication, distribution, pricing and service are core marketing activities.

1.1.2 Business to Business market (B2B).

Business market consists of all the organizations that buy goods and services to use in the production of other products and services that are sold, rented or supplied to others. It also includes retailing and wholesaling firms that acquire goods for purpose of reselling or renting them to others at a profit.

But this definition is still narrow as the viewpoint of Jim Blythe and Alan Zimmerman (Business to Business marketing management - a global perspective). The full Business market includes customers who are institutions like hospitals and charities and all levels of government. The business market not only includes physical products but services as well. In fact, as we can see, large institutions, governments and businesses buy virtually every product and service. (3)

Business buyers generally buy to increase their profits, institutional buyers have the same concerns but they may be focused on providing an adequate surplus. There are only two basic ways to increase profits: boost sales or lower costs. These objectives may be achieved by increasing efficiency or purchasing lower-cost products/services. Sometimes business buyers also buy to avoid penalties from government regulators. Therefore, we can conclude that the most effective marketing programs directed at business buyers are always based on one of the following basic appeals:

1. Increasing sales.

2. Reducing costs.

3. Meeting government regulations.

1.1.3 Characteristics of B2B market

The market where businesses sell to other businesses is extremely large, the reason is many parts are manufactured and transacted by many steps before the completed consumer product are sold to the final consumer.

Raw materials

(oil, iron & alu. ores, rubber...)

Material processing

(chemicals, steel, alum. Refiner...)

Parts and sub-assembly

(plastic mold, parts, electric Co.,...)

Final assembly

(Plastic parts, heating element, motor, fan, wire, control...)

Distribution

Wholesale

Retail

Consumer

B2B

B2B

B2B

B2B

B2B

B2B

B2CAs the counting of Jim Blythe, in order to manufacture a simple product as electric hairdryer, there are about 18 transactions can be defined as business to business(B2B) category and only one final transaction belong to Business to Consumer (B2C). To make this hairdryer requires raw materials from oil, steel, aluminum and rubber producers, materials processors who process raw ores into usable products, manufacturers of parts and sub-assemblies who put together materials of various kinds and deliver serveral components to another firm who would be a final assembler. The final assembler the delivers the product to the distributor. This firm then sells the product to a wholesaler, who in turn sells to a retailer and only then the product is sold to the final consumer. Each party in this chain also buy many related goods and services. This example shows why there is more business buying than consumer buying - many sets of business purchases were made for only one set of consumer purchases. (3) (Jim Blyth and Alan Zimmerman)

Figure 1.1: Transactions belong to B2B and B2C

Some typical characteristics of B2B market:

a, Market structure and Demand:

+ The buyers in this market are fewer in number but larger in term of volume and value in comparison with B2C market.

+ The market is geographically concentrated. For this characteristic, the customers who buy our equipment and materials locate mainly in Quang Ninh province, Northeast of Vietnam. The areas of coal mines are 04 centres including : Mao Khe - Uong Bi, Hon Gai, Cam Pha and Mong Duong- Khe Cham, therefore, the offices and physical infrastructure of mine also locate here.

+ Demand:

Business demand is derived demand. It derives from the demand of the other business or consumer demand.

The demand of coal from electricity, cement, chemical producer... increase will make the demand of coal exploring equipment increase due to the Coal-mine-companies want to invest to expand output and we expect to sell more equipment and materials to these businesses. In the recession of economy, the demand of electricity and cement drop and the sales of said exploring equipment will be, obviously, affected negatively.

Business demand is inelastic - The demand in consideration of the change in price. the change in price do not affect the demand in the short run. A decrease in price also do not make the demand of any equipment increases. The demand is often planned and fixed for short term. The decrease in price only makes the buying at a lower cost and the whole production more effective but do not change the demand.

Business markets have fluctuating demand. The demand for many business goods and services changes more than the demand for consumer goods and services. A small percentage increase in consumer demand can cause large increases in business demand. Sometimes a rise of only 10 per cent in consumer demand can cause as much as a 200 per cent rise in business demand during the next period.

b, Nature of buying unit:

That is professional buying. Often, business buying is done by trained purchasing agents, who spend their working lives learning how to buy well. The more complex the purchase, the more likely that several people will participate in the decision-making process. Buying committees made up of technical experts and top management are common in the buying of primary goods. Moreover, some business may uses the support from consulting that make the marketing and negotiation even more difficult.

Therefore, business marketers must have well-trained salespeople to deal with well-trained buyers.

c, Buying decision: Types and process.

+ Type of decision: the decision of business buyers are more complex than that of consumer buyers. »¿Business buyers usually face more complex buying decisions than do consumer buyers.

Purchases often involve large sums of money, complex technical and economic considerations, and interactions among many people at many levels of the buyer's organisation. Because the purchases are more complex, business buyers may take longer to make their decisions. For instance, when a mine decide to buy a main water pump station, it often takes about one year for the fulfilment of the bid package because the only manufacturing period may last for 06 months. It also could involve hundreds of technical issues, many legal procedures, an amount of millions of US dollar and dozens of people ranging from top management to on-site users.

+ Process of decision: »¿

The business buying process tends to be more formalised than the consumer buying process. Big technical purchases of business usually call for detailed product specifications, written purchase orders, careful supplier searches and formal approval. Especially, the buying process in the state-owned companies or government's organisations require a strict procedures that must be complied with regulations.

In the business buying process, buyer and seller are often much more dependent on each other. Consumer marketers are usually at a distance from their customers. In contrast, business marketers may roll up their sleeves and work closely with their customers during all stages of the buying process - from helping customers define problems, to finding solutions, to supporting after-sales operations.

Some other characteristics:

Out of some mentioned characteristics, business market also have some case such as: directly buying, leasing, reciprocity.

1.2 How the customer buy in B2B market:

To master the buying behaviour of business will be the decisive factor of success for salespeople. In order to understand how business customer buy we will find the answers for the 04 questions hereunder:

What buying decisions do business buyers make?

Who participates in the buying process?

What are the strongest influences on buyers?

How do business buyers make their buying decisions?

1.2.1 What buying decisions do business buyer make?

+ There are 03 situations of buying: straight rebuy, modified rebuy and new task. Also called buyer's techniques. (1) (Philip Kotler)

- Situation 1: Straight rebuy: the situation when the buyer reorders without any change in required specifications, prices, quantity and other conditions of the previours contract. In this case, purchasing department simply select from the offerings by the regulary suppliers. In many cases the buyer establishes an electronic data interchange (EDI) link with a supplier or establishes automatic buying procedures through Internet and orders are handled without any human interface. In general, these types of buying are applied in the cases that the product is of minor importance, or represents a low commitment in terms of finance or risk. Regulary sellers try to keep their fame and good relationship by good quality of goods and services. The strange sellers, step by step, try to persuade the buyer that their quality of goods and services are better than that of other and their price is more competitve. They first try to get small order and then to enlarge their share as much as possible over time.

- Situation 2 :Modified rebuy: the buyer bases on the actual requirements of work to buy with some modifications on technical specifications, time of delivery, price or other conditions. Even the supplier may be changed. Sometimes theses changes come about as a result of environmental scanning, in which the buyer has become aware of a better alternative than the one currently employed, or sometimes the changes come about because of marketing activities by the current suppliers' competitors. The drawback of this approach, however, is that it often results in damaging the relationship with existing suppliers that may have been built up over many years.

- Situation 3: New task: the business buyers buy goods or services for the first time and this is quite an open opportunity to every sellers. Past experience is therefore no guide and current suppliers may not be able to help either. Thus the buyer is faced with a complex decision process. The risks for buyers involved in switching suppliers are often too great unless there is a very real and clear advantage in doing so: such an advantage is likely to be difficult to prove in practice. The new-task situation is the marketer's greatest opportunity and challenge. The marketer not only tries to reach as many key buying influences as possible, but also provides help and information.

+ System buying and selling:

In some cases, based on the specific requirements of the project or work the business want to buy a packaged solution to a problem from a single seller. This is called System buying. Instead of buying equipment and services in different stages and in separated package of components, the business call for the bids that the supplier could supply the full set of solutions and all equipment for the project.

For example: the EPC bids (Engineering, Procurement and Construction), in which the supplier must realise works from engineering, supplying equipment and materials, construction and installation, operation and transfering to the buyer.

The sellers have increasingly recognized that buyers like this method and have adopted systems selling as a marketing tool. Systems selling is a two-step process. First, the seller sells a group of interlocking products: for example, the selller sells not only glue, but also applicators and dryers. Second, the seller sells a system of production, inventory control, distribution and other services to meet the buyer's need for smooth-running operation. (1) (Philip Kotler)

Systems selling is a key business marketing strategy for winning and holding accounts. The contracts often goes to the firm that provide the most complete system that meet customer's needs.

1.2.2 Who participates in the business buying process?

There are very few cases where industrial buying decisions are made by only one person. Even in small businesses it is likely that several people would expect to have some influence or input into purchase decisions. Because of this, the decision - making process often becomes formalized, with specific areas of interest being expressed by members of the decision - making unit (DMU) and with roles and resposibilities being shared. This group which cannot be fixed and identified on any company organization chart, also called the BUYING CENTER, varies in size and make-up from one buying situation to another, from one type of products or services to another. Individuals may participate for a brief time only, or be part of the group from conception to conclusion.

According to Webster & Wind (1972), the DMC includes 06 categories of member: Initiators, Gatekeepers, Buyers, Diciders, Users and Influencers. (2)

According to Philip Kotler in Principles of Marketing in B2B, the DMC includes 05 members who play 05 roles in the buying decision making process. These categories are not mutually exclusive. A User might also be an Influencer or a Buyer might also be a Decider. (1)

In fact, the members of the Decision - making Unit are affected both by rational and emotional motivations. Salespeople are well aware that buyers are affected by their liking or dislike for the supplier's representatives and buyers will often be working to their own agendas: for example, buyers might be seeking a promotion, or might feel threaten in terms of job security, or may be conducting a vendetta with a colleague. Any of these influences might affect the buyers' behavior, but all of them would be difficult or impossible for the supplier's salesperson to identify correctly and act upon.

In general, members of a Decision - making Unit tend to be more risk-averse than consumers. This is because the DMU's members have more to lose in the event of a wrong decision: for consumers, the main risk is financial and even that is limited since most retailers will replace or refund goods purchased in error. For industrial buyers, however, a serious purchasing mistake can result in major negative consequences for business as well as loss of face at work, in shattered promotion dreams, or even in dismissal in serious cases. The professional persona of industrial buyers is liable to be compromised by purchasing errors, which in turn means that buyers will feel a loss of self-esteem.

1.2.3 What are the strongest influences on buyers?

Business buyers are subject to many influences when they make their buying decisions. Some marketers assume that the major influences are economic. They think buyers will favour the supplier who offers the lowest price or the best product or the most service. They concentrate on offering strong economic benefits to buyers. However, business buyers actually respond to both economic and personal factors. Far from being cold, calculating and impersonal, business buyers are human and social as well. They react to both reason and emotion.

When suppliers' offers are very similar, business buyers have little basis for strictly rational choice. Because they can meet organisational goals with any supplier, buyers can allow personal factors to play a larger role in their decisions. However, when competing products differ greatly, business buyers are more accountable for their choice and tend to pay more attention to economic factors.

There are 04 main groups of influences on business buyers: environmental, organisational, interpersonal, and individual.

+ Environmental influences:

Figure 1.2 and its explanatory notes, shows why business buyers are likely to be affected by some or all of the following environmental influences. (4) (Loudon and Della Bitta, 1993)

Economic influences: The macroeconomic environment is concerned with the level of demand in the economy and with the current taxation regime within buyer's country. These conditions affect buyers' abilities to buy goods as well as their need to buy raw materials: if demand for their product is low, the demand for raw materials to manufacture them will also be low. The macroeconomic climate affects business buyers' confidence in the same way as it affects consumer confidence. For example, a widespread belief that the national economy is about to go into a decline will almost certainly make buyers reluctant to commit to major investment in stock, equipment and machinery. At the microeconomic level, companies experiencing a boom in business will have a greater ability to pay for goods and a greater level of confidence.

Political influences: Government frequently pass laws affecting the way businesses operate. A change of the government or policy has a direct impact on the economic scenario, and this ultimately translates into a shift in the organizational buying patterns as well.

Legal influences: laws often lay down specific standards, which affect buyers' decisions. Often, suppliers can obtain competitive advantage by anticipating changes in the law.

Physical influences: the location of purchasing companies relative to their suppliers may be decisive, since many companies prefer to deal with people from the same cultureal background or they wish to support local suppliers.

Technological influences: the level of technological development available among suppliers will affect what buyers can obtain. The technology of buyers and sellers must also be compatible, especially in technical standards.

Cultural influences: culture establishes the values, attitudes, customary behavior, language, religion and art of a given group of people. Beyond the national culture is the corporate culture, sometimes defined as "the way we do things round here".

Ethical influences: in general, buyers are expected to act at all times for the benefit of the organization, not for personal gain. This means that, in most cultures, the buyers are expected not to accept bribes, for example. However, in some cultures bribery is the normal way of doing business, which leaves suppliers with a major ethical problem - refusing to give a bribe is likely to lose the business, but giving a bribe is probably unethical or illegal in the company's home country.

Competition influences : Today's business is all about beating competition and staying ahead. So when an organization's competitors move on to a newer product or service, or if they get to enjoy a competitive edge because of their suppliers, it's very likely for the organization to change its trends too and thus its buying pattern will change accordingly.

+ Organizational influences:

More than the external factors, it's the internal organizational factors that influence organizational buying. The organizational factors derive from the corporate culture, as well as from the strategic decisions made by senior management within the company. Organizational policies, procedures, structure, systems of rewards, authority, status and communication systems will all affect the ways buyers relate to salespeople.

Some examples of strategies and policies in buying organizations has had a considerable impact on buying decisions of the buyers: the emergence of just-in-time (JIT) production systems, purchasing performance evaluation, upgraded purchasing, long-term contracts... all that the business marketers must know as thoroughly as possible to match and catch the development and changes in B2B market.

+ Interpersonal factors:

The DMU usually includes many participants who influence each other. The business marketer often find difficult to determine what kinds of interpersonal factors and group dynamics enter into the buying process. As one writer notes: ' Managers does not wear tag that say "decision maker" or "unimportant person". The powerful are often invisible, at least to suppliers' representatives. Nor does the participants in DMU with the highest rank always have the most influence. Participants may have influence in the buying decision because they control rewards and punishments, are well liked, have special expertise, or have a special relationship with other important participants. Interpersonal factors are often very subtle. Whenever possible, business marketers must try to understand these factors and design strategies that take them into account.

+ Individual influences:

»¿Each participant in the business buying-decision process brings in personal motives, perceptions and preferences. These individual factors are affected by personal characteristics such as age, income, education, professional identification, personality and attitudes towards risk. In addition, buyers have different buying styles. Some may be technical types who make in-depth analyses of competitive proposals before choosing a supplier. Other buyers may be intuitive negotiators who are adept at pitting the sellers against one another for the best deal.

+ Situational Factors

In this final section we'll take a look at some of the situational factors that can influence organizational buyers.

Time Factor: Sometimes, organizations don't have all the time to follow the detailed buying procedure. If the organization needs a replacement for equipment that broke down suddenly, it may decide to place its order with some existing supplier or a supplier that is at close proximity.

Current Financial Situation: If the organization is crunched for cash, it may decide to place its order with one of its existing supplier who offers extended credit. Also, if the organization cannot spare out enough money for a certain purchase, it may opt for a readily available cheaper version that fits into its budget.

Availability: Some buying decisions can wait while others cannot, thus if the supplier cannot make available the exact product by the desired date, the organizational buyers may shift to a new supplier or to a more readily available alternative.

Special Offers: Special offers being given by a supplier may also be one of the situational factors affecting the buying decision.

As a supplier, now that you know what factors influence organizational buyers, you can work up your business to business sales strategies to manipulate organizational buying activities and thus procure more orders for your supply business.

1.2.4 How do business buyers make their buying decisions?

Business buying can be seen as a series of decision, each of which leads to a further problem about which a decision must be made. From the viewpoint of the business marketer, it is possible to diagnose problems by examining the sequence of decisions, provided, the decision is known to the marketer. Marketers can identify the stage at which the firm is currently making decisions and can tailor the approach accordingly.

The most complex buying situation is New-task which involve the largest number of decision makers and buying influences. This is because New Task require the greatest amount of effort in seeking information and formulating appropriate solutions, but will also require the greatest involvement of individuals at all levels of the organization, each with their own agenda. Buyers making modified or straight rebuys may skip some of the stages. (Appendix No. 1: Buygrid Framework)

Recognition of a problem: the first stage of the business buying process in which someone in the company recognises a problem or need that can be met by acquiring a good or a service. Problem recognition can result from internal or external stimuli. Internally, the company may decide to launch a new product that require a new production equipment and materials. Or a machine may break down and need new parts.... Externally, the buyer may see an advertisement or receive a call from a salesperson who offers a better product or a lower price.

Description of characteristic and quantity of needed item: the stage in the business buying process in which the company describe the general characteristics and quantity of a needed item. For standard items, this stage is simply. But for more complex items, the buyer may have to work with others: engineers, users, consultants... to define the items. The team may want to rank the importance of reliability, durability, price and other attributes desired in the item. In this phase, the alert business marketer can help the buyers define their needs and provide information about the value of different product characteristics.

Determination of characteristics and quantity of needed item: the stage in the business buying process in which the company decides on and specifies the best technical product characteristics for the needed item.

Value analysis is a method of evaluating components, raw materials and even manufacturing processes in order to determine ways of cutting costs or improving finished products. Value-in-use is defined as a product's economic value to the user relative to a specific alternative in a particular application (Kijewski and Yoon, 1990). Value-in-use is the price that would equalize the overall costs and benefits of using one product rather than using another. The sellers can use value analysis as a tool to »¿help secure a new account. By showing buyers a better way to make an object, strange sellers can turn straight rebuy situations into new-task situations that give them a chance to obtain new business.

Search for and qualification of sources: the stage in the business buying process in which th buyer tries to find the best vendors. The buyer can make a shortlist of qualified suppliers by reviewing trade directories, searching on Internet or phoning other companies for recommendations. Using internet is really a great opportunity for small suppliers to play in the market with the same advantage as the large suppliers.

»¿The newer the buying task, and the more complex and costly the item, the greater the amount of time the buyer will spend searching for suppliers. The supplier's task is to be listed in major directories and build a good reputation in the marketplace. Salespeople should watch for companies in the process of searching for suppliers and make certain that their firm is considered.

Aquisition and analysis of proposals: in this stage the buyer invites the qualified suppliers to summit proposals. In response, some suppliers will send only a catalogue or a salesperson. However, when the item is complex or expensive, the buyer will usually require detailed written proposals or formal presentations from each potential supplier. Business marketers must be skilled in researching, writing and presenting proposals in response to buyer proposal solicitations. Proposals should be marketing documents, not just technical documents. Presentations should inspire confidence and should make the marketer's company stand out from the competition.

Evaluation of proposals and selection of supplier (s): the stage of the business buying porocess in which buyers reviews proposals and select a supplier or suppliers. During the selection, DMU will draw up a list of desired attributes and their ralative importance. The members of DMU will rate suppliers against these attributes and identify best suppliers. (Appendix No.2 illustrates some of the ways in which buyers can assess potential suppliers.)

Increasingly, companies today are reducing the number of suppliers. These companies expect their preferred suppliers to work closely with them during product development and they value their suppliers' suggestions.

Selection an order routine: in this stage of process, the buyer writes the final order with the selected supplier or suppliers, listing the technical specifications, quantity needed, expected time of delivery, return policies and warranties. In the case of maintenance, repair and operating items, buyer are inceasingly using Blanket orders rather than periodic purchase orders. A blanket order creates a long-term relationship in which the supplier promises to re-supply the buyer as needed at agreed-on prices for a set period. The seller holds stock and the buyer sends an order when the stock needed. Having a blanket order dispenses the buyer from holding large inventories and carrying costs and avoides administrative expense of processing frequent purchase orders.

Blanket contracting leads to more single-source buying and to buying more items from that source. This practice locks the supplier in tighter with the buyer and makes it difficult for other suppliers to break in unless the buyer becomes dissatisfied with prices or service.

Performance feedback and evaluation: the stage of business buying process in which the buyer rates its satisfaction with suppliers, deciding whether to continue, modify or drop them. The buyer may contact user and ask them to rate their satisfaction. The seller's job is to monitor the same factors used by the buyer to make sure that the seller is giving the expected satisfaction. (Appendix No. 3: Evaluation approaches)

All these methods involve some degree of subjectivity, in other words each method requires buyers to make judgments about the suppliers. The fact that the outcomes are expressed in numbers gives each method a spurious credibility: those involved in evaluation exercises of this nature should be aware that the evaluation exercises itself should be evaluated periodically and the criteria used by the various individuals involved needs to be checked.

1.3 The role of Personal selling in B2B marketing.

1.3.1 Definition:

Among the five main elements of integrated marketing communications - IMC (advertising, sales promotion, public relation, direct marketing) , personal selling is used as the most effective method in B2B marketing.

+ Definition of salesperson: an individual acting for a company by performing one or more of the following activities: prospecting, communicating, servicing and information gathering. Salesperson is someone who may stand behind the counter or whose job demands the creative selling of products and services (industrial equipment, insurance and consulting services...) or just builds a goodwill or educates buyers. (3)

+ Definition of Personal selling - is any form of personal presentation by the firm's sales force for purpose of making sales and building customer relationships. (3)

Personal selling involve some specific tools: sales presentations, fairs and trade shows, and incentive programmes.

Personal selling is the most effective tool at certain stages of the buying process, particularly in building up buyers' preferences, convictions and actions. Compared to advertising, personal selling has several unique qualities:

It involves personal interaction between two or more people, so each person can observe the other's needs and characteristics and make quick adjustments.

Personal selling also allows all kinds of relationships to spring up, ranging from a matter-of-fact selling relationship to a deep personal friendship. The effective salesperson keeps the customer's interests at heart in order to build a long-term relationship.

Finally, with personal selling the buyer usually feels a greater need to listen and respond, even if the response is a polite 'no thank you'.

These unique qualities come at a cost, however. A sales force requires a longer-term commitment than does advertising - advertising can be turned on and off, but sales force size is harder to change. Personal selling is also the company's most expensive promotion tool, costing companies several hundred euros on average per sales call.

1.3.2 The role of personal selling:

+ The relative importance of personal selling in B2B market: The importance of different promotional tools varies between consumer and business markets (see Figure 1.3). Consumer-goods companies usually put more of their funds into advertising, followed by sales promotion, personal selling and then public relations. Advertising is relatively more important in consumer markets because there are a larger number of buyers, purchases tend to be routine, and emotions play a more important role in the purchase-decision process.

In contrast, industrial-goods companies put most of their»¿ funds into personal selling, followed by sales promotion, advertising and public relations. In general, personal selling is used more heavily with expensive and risky purchases, and in markets with fewer and larger sellers.

Figure 1.3: Relative importance of promotion tools

in consumer versus industrial marketsn.(1)

+ The role of sales force in personal selling:

Personal selling is probably the largest single budget item in most B2B market. Salespeople earn high salaries and need expensive back-up: means of traveling, administration assistance, expensive brochures and sales materials and so forth. Counting the traveling time, preparation time, etc. Salespeople spend only a small portion in their time-budget actually making sales presentation. This leads to the question that why have we not been able to find a cheaper way to get business?

The reason is that salespeople provide a personal touch. A salesperson is able to meet a buyer or indeed anyone else in the buying organization, discuss the organization's problems and find out a suitable creative solution. The buyer understands the company's problems, the salesperson understands the capabilities of the supplier and their products and these two one share knowledge about the industry and the environment in which it operates.

The key point in this is that selling is about establishing a dialogue: it is not about persuading buyers to buy things they don't really want, it is not about fast-talking a buyer into making a rash decision and it is definitely not about telling lies about the supplier's products.

Figure 1.4: Establishing dialogue in personal selling. (3)

As a part of promotion mix, Personal selling is different from the other elements in that it always offers a two-way communication with the prospective customer, whereas each of the other elements is usually a one-way communication. As such, »¿personal selling can be more effective than others in more complex selling situations. This is partly what makes Personal selling such a powerful instrument; the salesperson can clarify points, answer queries and concentrate on those issues which seem to be of greatest to the prospect.

More importantly, the salesperson is able to conduct a "market research" with the prospect and find out which issues are of most relevance, often in a interactive way which allows the salesperson to highlight issues which the prospect was not aware of. And further, »¿they can build long-term personal relationships with key decision makers.

The role of personal selling varies from company to company. Some firms have no salespeople at all - for example, organisations that sell only through mail-order catalogues, E-commerce or through manufacturers' representatives, sales agents or brokers. In most firms, however, the sales force plays a major role. In companies that sell business products, such as our company (ITASCO), Komatsu, CAT, the salespeople may be the only contact. To these customers, the sales force is the company. At the same time, salesperson also act on the viewpoint of the buyer to the company, they arrange the contacts between the company's sales forces and the buying agents. ,

»¿As companies move towards a stronger market orientation, their sales forces are becoming more market focused and customer oriented. Today, organisations expect salespeople to look at sales data, measure market potential, gather market intelligence and develop marketing strategies and plans. They should know how to orchestrate the firm's efforts towards delivering customer value and satisfaction. A market-oriented rather than a sales-oriented sales force will be more effective in the long run. Beyond winning new customers and making sales, it will help the company to create long-term, profitable relationships with customers.

As with other forms of marketing communication, selling works best as part of an integrated marketing campaign. Salespeople find it much easier to call on prospects who have already heard something about the supplier through trade fair, advertising, publicity.

1.4 Sales force management in personal selling:

Good sales force management plays a decisive role in the sucess of selling of a company, especially in industry selling which the orders come mainly from the long-term relationships built by the sales force.

1.4.1 Setting objectives for sales force:

The company bases on the volume of the market,the relative capability of sales force to set up the feasible objectives to the sales force. Some very specific objectives may be pointed out such as: the sales volume for each month, each quarter or the deadline for introducing the new technology to customer, the agenda of personal contacting time to customers and to prospects.... and the sales force must organize their sales teams, time budget, means of traveling, budget... basically conform to the company's selling goal.

1.4.2 Determining Sales force strategy and Designing Structure

The sucess of personal selling depends much on the task of the company to design the appropriate sales force strategy and structure toward each customer or prospect.

+ The sales force strategy:

In order to win the orders from customers, the salesforce strategy must be determined basing on the overall understanding of not only the organization's buying process but also the charateristics of the DMU's participants. From that the company may use the appropriate selling approaches as individual sales presentation or team sales presentation, conference selling or seminar selling (educational selling).

Salespeople make sales presentation in individual or team contact form they still need the assistance and support from other members of functional departments of the company. it may be the introducing phone call from the director, may be the technical information from technician, the support from finacial officer, aftersales staff or other administratvie officers.

»¿Once the company decides on a desirable selling approach, it can use either a direct or a contractual sales force. A direct (or company) sales force consists of full- or part-time employees who work exclusively for the company. This sales force includes inside salespeople, who conduct business from their offices via telephone or visits from prospective buyers, and field salespeople, who travel to call on customers. A contractual sales force consists of manufacturers' reps, sales agents or brokers who are paid a commission based on their sales.

+ Structure of sales force:

From the sales force strategy identified, the company builds up the sales force structures suitable for the characteristics of customers, the products lines of the company, the characteristics of the market.... Several typical sales force structure usually used by supplier as following:

Territory structure: is the salesforce organization that assigns each salesperson to an exclusive geographic territory in which that salesperson sells the company's full lines of products and services.

Product salesforce structure: the salesforce organization under which sales people specialize in selling only a portion of the company's products or lines. This structure is applied in the cases of the company's numerous products lines or the product of too complex technology so that the specialist is really required. This type of salesforce organization may lead to the conflict among the different sales teams in approaching the same prospects or same customers.

Customer sales force structure: the sales force organization under which sales people specialize in selling only to certain customers or industries. This type of sales force structure is particularly effective to apply in selling industrial goods and more and more sellers are using it. This application can make the company more customer-oriented and give the company the opportunity to develop long-term relationship.

Complex sales force structure: »¿When a company sells a wide variety of products to many types of customer over a broad geographical area, it often combines several types of sales force structure. Salespeople can be »¿specialised by customer and territory, by product and territory, by product and customer, or by territory, product and customer. A salesperson might then report to one or more line and staff managers. No single structure is best for all companies and situations. Each organisation should select a structure that best serves the needs of its customers and fits its overall marketing strategy.

Other structures of sales force: outside sales force (field sales force), inside sales force, team selling, and key-account selling. Each can be used in the particular context of market, selling technologies available in supplier, the volume of market...

+ The size of sales force:

Usually, the first base that the company uses to set up the size for sales force is the workload approach. By this approach, the company considers some factors as the size of the buyers, the potential sales volume in short-term and medium-term, the characteristics of the products and services related to the amount of effort required and determine how many salespeople are needed to call on customers and prospects the desired numbers of times.

1.4.3 Recruiting salespeople:

Recruitment play a decisive role in the sucessful performance of the sales force for any seller. A company, therefore, should establish a true strategy and a full standard process that need counting for the particular characteristics of the industry involved, the products and services, the relationships network, the existing sales force for recruiting good salespeople.

+The criteria required: these are different in consumer market (B2C) and B2B market, the industrial equipment even requires some specific characteristics for salesperson.

In Vietnam heavy industrial equipment, the criteria of order priority for good salespeople should be: able to build good long-term relationship, customer-oriented, experient, enthusiastic, independent, technical, self-motivated... This order is quite realistic in sales performance in Vietnam due to some factors as culture, level of technology, habits and customs and market itself.

When recruiting, beside the main criteria stated above the company also considers carefully other personal charateristics of the candidates as the health, marriage status, in order to access whether they can travel for long period, will they join the new working environment quickly? Can they be able to approach and work with top management officers of the buying business?

+ Source of candidates: from other business' sales people, recommendations from exisitng sales people, appointments from internal departments, employment agencies, introductions from professional colleges and universities....

+ Recruiting processes and procedures:

Generally, recruiting process may be devided in 06 steps:

Step 1: the board of director discusses with the sales Dept. to draw up a specific set of desirable traits and decide recruiting.

Step 2: the Human resource and Administrative Dept. gathers the demand from sales Department and builds a set of criteria of candidate

Step 3: Human resource and Administrative Department refine the CV of applicants, only CV of carefully prepared and briefly qualified are selected.

Step 4: a written test is organized then to rate the candidates. Good result candidates are informed to meet the business's interviewers.

Step 5: an interview is hold for cadidates as the final test.

Step 6: working contracts and probational period are set up for new sales people to begin.

The steps may vary from one company to another depending on the requirement of the positions, the numbers of candidates to apply, the quality of candidates...

1.4.4 Training:

Actually, the training in a company is the next step in the recruiting process before making the produtivity of the sales force. Training can be long or short depending on the complexity of products and market, recruits are experienced or not.

Typically, training falls into two sections: classroom and field training:

Classroom training: the recruits are introduced about the company and about the products, about the competitors, about the industry and and customers. They may be taught some grounding in sales techniques (these are usually outsourcing courses). Selling experiences are also introduced by the top management and experienced salespeople.

Field training: which is an ongoing training program carried out in front of real customers in the field. People tend to learn best by performing the task, so most sales training programs involve substantial field training, either by sending out trainees with experienced salespeople or engineers, or by sending them out on their own early in their careers ("let's them swim"). The latter method is applied if there are plenty of customers. But for most industrial selling where customers and orders are fewer but larger, a mistake happens may cause serious results. In these circumstances it would be better to give trainees a long period to work in a sales team alongside more experienced salespeople.

1.4.5 Compensation for salespeople:

A good compensation policy of a company will make the sales force perform effectively. This can reduce the turn-over rate, thus reduce many types of costs for recruiting, training, costs of loss sales, and furthermore new sales people is less productive than the experienced one.

»¿Compensation is made up of several elements as follows:

Fixed amount: usually a salary, gives the salesperson some stable income.

Variable amount: which might be commissions or bonuses based on sales perfomance, rewards the salesperson for greater effort.

Expenses: which salespeople paid for selling activities stipulated and accepted by the company and be repaid.

Fringe benefits: such as paid vacations, sickness or accident benefits, pensions and life insurance, provide job security and satisfaction.

The company usually uses these elements to set up the following 4 types of payment: straight salary, straight commision, salary plus bonus and salary plus commision. The appropriate type of payment can be used as a tool to motivate salespeople and also direct their activities. The sellers in industrial market tend to design the formular of payment that reward salespeople for building long-term relationship and growing long-run value of each customer.

1.4.6 Supervising sales force:

The companies must supervise the activities of the sales force to ensure that the selling activities are not in wrong direction. The supervision needed applies not only for new salespeople but the whole sales force in order to direct and motivate them for more effective performance.

+ Directing sales force:

The company may help salespeople to target customer in their territories and require them using their time budget very specifically.

Sales manager also direct salespeople how to spend their time efficiently, requiring them to schedule their visits weeky, monthly, annually to customers and prospects and to prepare reports accordingly. Even salespeople need to be instructed timing their traveling, participating sport games with customers, eating, waiting, timepoint to meet and whom to meet...

Figure 1.5. How salespeople spend their time

»¿ SOURCE: Reprinted with permission from Dartnell Corporation, 30th

Sales Force Compensation Survey, copyright © 1998 by Dartnell Corporation, 360 Hiatt Drive, Palm Beach Gardens, FL 33418.

Today, more and more the internet is popularized, the usage of internet in selling activities is more efficiently and making the selling costs reduced and changing the relative proportions of the above chart. For example, Salespeople can exchange informaion by email intead of phone calls or faxes, easier searching techincal information, customers' information, competitors' informaiton....

+ Motivating sales force:

Beside directing salespeople, the company also needs a set of norms and stipulations aiming at motivating them. Motivation tends to come from sources other than payment. The classic view of motivation was proposed by Abraham Maslow (1954). Maslow's Hierarchy of Needs model stated that people will fulfill the needs at the lower end of a pyramid (survival and security) before they move on to addressing needs at the uper end (love/belonging, esteem and self-actualization). Thus, once a salesperson has assured his physical needs, these are not motivators anymore; the individual will then moving to belonging or esteem needs. This case are right as the Vietnamese proverb "Mot tram tien cong khong bang mot dong tien thuong", means that one hundred as a salary/wage can not be compared to one as a bonus.

For this reasons The Board and Sales managers usually have to consider the appropriate motivational tools for the right type of salesperson.

Company's working climate: that make salespeople feel that their opportunities are fair among members, their value are highly appreciated, their good selling results are the opportunity for higher income and promotion.

Company's incentives and encouragement:

One of the usual incentives is the Sales meetings which is often organized for all salespeople and high level positions in the company an opportunity to meet in order to make their spirit higher, to make their "business culture" characteristics again popularized in all members.

Other meeting can be hold as seminars, workshops or some events such as: teambuilding, sport games. Here, salespeople have chance to exchange ideas, talking and making the relationship more familiar, time to honour the best salespeople... Other incentives can be sales contest, trips awards, merchandise awards...

Encouraging salespeople by offering a prize or gift to their family members.

All the above motivational devices aim at making the salesforce feel to be in high spirits, full of energy and ready for the new challenges. They also set up ties between salesperson to the company, making salesperson be responsible for tasks and duties assigned by the company.

1.4.7 Evaluating salespeople:

+ Why evaluating: in order to have the basis to give out some kinds of direction and motivation, the company must evaluate the salespeople' sales performance.

+ Sources of information: Sales reports are mostly used by any seller including weekly sales reports, monthly, quarterly and annually as well. Information also comes from reports of salesperson's visits to customers and prospects, from the expenses reports used for selling activities. Other sources can collect from customers' complaints, customers' surveys, talks with DMU's users and buyers, talks with other salespeople.

+ Evaluating steps:

Step 1: determine criteria for evaluating: criteria may include: sales volume(value or quantity) in territory or by accounts, percentage of completion compared with plans or quotas, gross margin compared with plan, profit compared with plan...

Step 2: set-up performance standards

Step 3: comparing performance standards.

Step 4: feedback to salespeople.

In the final step, management board talks with salespeople to point out their progresses or drawbacks and then may give directing proposals or motivational device. The aim of giving feedback is to help salespeople to improve their performance in the future.

1.5 Process in personal selling:

Personal selling is an ancient art that has spawned a large literature and many principles.

Effective salespeople operate on more than just instinct - they are highly trained in methods of territory analysis and customer management. Effective companies take a customer-oriented approach to personal selling. They train salespeople to identify customer needs and to find solutions. This approach assumes that customer needs provide sales opportunities, that customers appreciate good suggestions and that customers will be loyal to salespeople who have their long-term interests at heart. By contrast, those companies that use a sales-oriented approach rely on high-pressure selling techniques. They assume that the customers will not buy except under pressure, that they are influenced by a slick presentation and that they will not be sorry after signing the order.

The personal selling process includes many steps, in this dissertation I would like to take the view of Zimmerman in analyzing the detail of the process in which salespeople get new customer and obtain orders from them. ( See Figure 1.6 ) - The selling sequence is drawn as a circle to indicate that it is an ongoing process.

Figure 1.6: The selling cycle

+ Lead generation:

The activities are sometimes called Prospecting, although in fact they differ considerably. Lead generation is concerned with finding people who are prepared to meet the salesperson and hear what he has to say, (while Prospects are potential buyers who have a need for the product and able to pay for it). Lead generation is a process of establishing first contact; some leads can be supplied by the company but salespeople need skills to find their own. Leads are generated via cold-calling (making visits or phone calls without an appointment), ads, exhibition, mails, personal recommendation.

+ Prospecting:

When the lead has a need for the product and also has the means to pay for it. In some cases these issues cannot be clearly determined before the meeting with potential customer, but a good salesperson will try to investigate a prospect as thoroughly as possible before wasting time to make a sales call.

+ Preparing: preparing both physically and mentally: clothes, right presentation materials, attitude, knowledge.

+ Appointing: making appointment with the decision-makers in buying organization.

+ Presenting: the process of conducting a direct conversation with the prospect's need, from explain the solutions to prospect's need and closing the sale (the order is placed or may be not).

+ After-sales activities: including follow-up calls on customers frequently to learn lessons, to correct any shortcomings... the unexperienced salesperson often have the fear that customer will have a complaint but it is far better to find out that it is really the problem if salesperson did not. Further, after-sales visits also offer opportunities for other sales or asking recommendations. Other after-sales activities include ensuring that the paperwork is correctly completed, delivery on time and representing the customer's view back to the company and other appropriate market information.