Chapter 17 – Managing Personal Communications: Direct
and Interactive Marketing, word of Mouth, and Personal
Selling
I Chapter
Overview/Objectives/Outline
A. Overview
New technologies combined with subsequent changes in consumer behavior as they leverage
the new technologies have presented organizations with challenges and opportunities. The
challenges include the ability to remain competitive in adopting technology into the interactive
marketing effort. Consumers have raised their expectations of what business should be doing to
interact with their customers. 24/7 with instant access for not only transactions but also
distribution of products in an expeditious manner is becoming the norm. Organizations must
keep up with advancing technology to stay even with the competition. This includes hardware,
software and methodologies. The Internet has aggregated customers. Buzz and Viral marketing
can extend positive as well as negative information about a company and its products and
services. Companies are attempting to quantify what is being said in the social media
environment (e.g. Facebook, Twitter, blogs, both company and non-company sponsored or
managed). Word-of-Mouth can be a powerful marketing strategy as it comes from the
consumer and not the company. Companies need to measure the value of Word-of-Mouth in an
effort to determine how much to spend to promote Word-of-Mouth.
Companies need to evaluate how well they have integrated their consumer interaction
channels. Timely flows of information from one interactive channel to the next are necessary to
members.
But companies must also pay attention to privacy and ethical issues as these become more
pronounced the more companies and consumers interact.
Most companies use sales representatives, and many companies assign them the pivotal role in
the marketing mix. Salespeople are very effective in achieving certain marketing objectives. At
managing its personal-selling resources.
Sales force design calls for decisions on objectives, strategy, structure, size, and compensation.
Sales force objectives include prospecting, communicating, selling and servicing, information
gathering, and allocating. Sales force strategy is a question of what types and mix and selling
approaches are most effective (solo selling, team selling, and so on). Sales force structure is a
developing the right territory size and shape. Sales force size involves estimating the total
workload and how many sales hours—and hence salespeople—would be needed. Sales force
compensation involves deter-mining pay level and components such as salary, commission,
bonus, expenses, and fringe benefits.
call norms and using their time efficiency through computer-aided information, planning and
selling systems, and inside support salespeople. Salespeople also need encouragement through
economic and personal rewards and recognition because they must make tough decisions and
are subject to many frustrations. The key idea is that appropriate sales force motivation will
follow-up and maintenance. Another aspect is negotiation, the art of arriving at transaction
terms that satisfy both parties. The third aspect is relationship management, the art of creating a
closer working relationship and interdependence between the people in two organizations.
The primary variables for the sales force/management effort include the following: (1) Setting
very difficult. Selection procedures should screen candidates for both ability and
retention-related issues; (4) Training Salespeople—Issues in training center on skills such as
order taking, order getting, and seeing customers as people who require problem solutions; (5)
Supervising Salespeople—Supervision addresses problems in directing and coordinating
sales force performance.
B. Learning Objectives
Gain an insight into how organizations can leverage direct marketing and interactive
marketing techniques to gain a competitive advantage.
Identify impact of word of Mouth
Understand the fundamental principles of personal selling.
Work with and understand some of the tools for successful management of a sales force.
C. Chapter Outline
I. Introduction – Marketing communications today increasingly occur as a dialogue as
technology and software have enabled the consumer to dynamically interact with a
and solution vendor)
II. Direct Marketing – use of consumer-direct channels to reach and deliver goods and
services to customers with reduced reliance of a middleman.
A. The benefits of direct marketing
1. Convenient for consumer
2. Provides information to consumer on products and services
3. Supports relationship building efforts with consumers
4. Allows for more individual targeting and personalization versus mass
media
B. Direct mail
1. Can target consumers at different geographic areas or specific to one
code, zip+4, or specific mailing address
3. Can create different marketing campaigns for current customers and
acquisition strategies are used for the latter
4. Each business vertical market has best practices of direct mail
5. Provides opportunities to measure lifetime value and word of mouth
effects
C. Catalog marketing
to order products
presence
3. Catalogs can be customized at individual consumer level
4. Business to business catalog marketing supports personal selling effort
5. Business to business catalog marketing is challenged by frequent
and other USPS sponsored capabilities
D. Telemarketing
businesses
not call list)
3. Inbound telemarketing (receive calls from customers or prospects)
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prospects
5. Telemarketing functions
a) Telesales – take orders, open, or manage customer accounts
customer relationships
c) Teleprospecting – generate and qualify new leads either by phone
or another channel
d) Customer service and technical support
in mail
2. Radio
3. Direct response TV ads
4. TV Infomercials
6. E-marketing
a)
F. Public and ethical Issues in Direct Marketing
1. Hard-sell and computerized telemarketing offend consumers
2. Unscrupulous marketers can take advantage of unwary public
3. Marketing communications and offers can be misleading
4. Growing consumer of too much information being collected on
consumers
III. Interactive Marketing (leverage Internet for interaction)
A. The advantages of interactive marketing
1. Internet provides marketers and consumers with opportunities for greater
interaction and individualization.
2. Availability of contextual placement, buying ads on sites related to the
marketer’s offerings
3. Increase ability to reach consumers and track behavior
4. Individualized messages optimize investment
5. Increases reach cost effectively
6. Online communities precipitate knowledge for companies and
consumers
B. Disadvantages of interactive marketing
1. Consumers can opt-out of communications
2. Companies can lose control of the message
3. Online “Clicks” may give companies misleading information. For
example, a large number of clicks by a consumer on the web site may be
a result of a poorly designed web site.
C. Designing an attractive web site (Table 17.1 defines elements of effective web
design)
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D. Some of the main categories of Interactive Marketing are:
1. Web sites
a) Key issues is attracting first time and encourage repeat visits
b) Microsites – Limited area on the web managed and paid for by
external advertiser/company, designed to supplement a primary
site
2. Search related ads –
a) Links provided along with consumer search results, fee paid only
when link is clicked on by consumer (cost per click correlated
with click rank and popularity of keyword searched)
b) Search Engine Optimization has become a crucial part of
marketing with greater emphasis creating more effective search
ads
3. Display or banner ads
a) Small rectangular boxes containing text and images, which are
paid placement. So the larger the audience the higher the cost
b) Consumers only spend 5% of their time online searching for
information
c) Interstitials are ads, often video and animation, which pop up
between changes on a web site. Consumers often block these ads
4. E-mail campaigns are cost effective but run risk of spamming consumers
and thus may be filtered by consumers
5. Mobile marketing growing
a) Major opportunity with cell phones for advertisers to reach
consumers on the “third screen”, TV and computer being the
other two screens.
b) Mobile apps – “Bite-sized” software programs that can be loaded
onto smart phones.
c) Monitoring consumer location allows for location-specific
promotions.
IV. Word-of-Mouth (WOM) (key aspect of social networking, e.g. MySpace and
FaceBook)
A. Consumers use WOM to share information on products and services
facilitated.
2. Paid Media results from press coverage of company generated
advertising
3. Earned Media – also called Free Media, is all the PR benefits a firm
receives without having directly paid for anything. Not really free as
devoted to eliciting a media response.
B. Social Media
1. Means for consumers to share information
2. Useful but cannot be sole source of marketing communication
3. Three main platforms for social media:
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with no affiliations or by firms
b) Blogs are regularly updated online journals or diaries. Brings
people together based on common interests. Consumers create
most but some are created by firms. FTC requires disclosure
from bloggers if they have a relationship with marketers.
marketplace.
1. Buzz Marketing generates excitement, creates publicity, and conveys
new relevant brand-related information through unexpected or
outrageous means. Refer to “Marketing Skills: How to Start a Buzz
Fire” for more information on how to generate buzz.
online
D. Opinion Leaders – society contains cliques and members of each clique tend to
interact frequently which facilitate communication but also insulates the clique
from new ideas. Malcom Gladwell identifies three factors working to ignite
public interest in an idea:
E. Measuring the effects of Word-of-Mouth (WOM)
1. Intuit classified blogs into several categories velocity, share-of-voice
(how much talk occurred), voice quality (what was said and to what
positive or negative degrees), and sentiment (how meaningful were the
comments)
marketers focus on easy-to-track online efforts
V. Personal Selling and The Sales Force
A. Types of Sales representatives – six positions
1. Deliverer – major task is delivery of product
2. Order taker- inside or behind counter, outside which goes out and makes
calls
4. Technician – serve as a knowledge resource
5. Demand creator – use creative skills to sell tangible goods
6. Solution Vendor – Consultative selling by providing solutions to solve
the customer problem
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Steps in Effective Selling
1. Personal Selling steps appropriate for transaction situations
2. relationship Marketing steps required to build long-term customer
relationship and ensuing loyalty
C. Company must develop sales force objectives, strategy, structure, size and
D. Sales Force Objectives and Strategy
1. Objectives – tasks to perform include prospecting, targeting,
communicating, selling, servicing, information gathering, and allocating
2. Strategy – approach can be sales rep to buyer, sales rep to buyer group,
sales team to buyer group, and conference selling or seminar selling. A
force
3. Direct sales force – full or part-time sales representative that work
directly for the selling firm
4. Contractual sales force – external partners who work on commission
(e.g. manufacturers’ reps, sales agents, brokers)
with customers in many locations
2. Product – use when selling many products to many types of customers
3. Market – option similar to product structure
4. Example – Motorola uses four types of sales force structure: strategic
market, geographic, distributor sales force focusing on distributors and
each of these types of customers.
F. Sales Force Size – A workload approach is one way to establish a sales force
size (5 steps)
1. Group customers into size classes according to sales volume
2. Establish call frequencies (# of account calls per year)
reps needed
G. Sales Force Compensation – Quantify four components of sales force
compensation
1. Fixed compensation
a) Salary satisfies need for income stability
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2. Variable Amount
a) Commissions, bonus, profit sharing, serve to stimulate and
reward effort
b) Works best where sales are cyclical or depend on individual
initiative
expense of the relationship
3. Expense Allowances – Enable sales reps to meet expenses of travel and
entertainment
4. Benefits – such as paid vacations provide security and job compensation
5. Combination plans feature benefits of both while limiting their
disadvantages
A. Recruiting and Selecting Sales Representatives
1. What makes a good sales representative? One survey shows 25% of reps
generate 52% of sales
2. Average sales rep turnover for all industries s almost 20%. Turnover
leads to:
a) Lost sales
b) Expense of finding new replacements
3. Recruitment procedures
a) Solicit names from existing reps, agencies
b) Recruit from colleges
c) Length of time and expense varies by organization
d) Universities are collaborating with firms as they develop sales
training programs within their curriculum
4. Applicant-rating procedures
consumer-products
1. Goals – to know and identify with the company, to know the company’s
products, to know the customers’ and competitors’ characteristics
2. Other goals – to know how to make effective sales presentations, and to
understand field procedures and responsibilities
C. Sales Rep Productivity
1. Norms for customer calls
2. Norms for prospect calls
3. Using sales time efficiently
a) Time and duty analysis/improving productivity
b) Inside sales force
D. Motivating Sales Representatives – the higher the salesperson’s motivation, the
greater his or her effort
1. Sales quotas
2. Supplementary motivators (meetings, contests, etc.)
E. Evaluating Sales Representatives
write-ups of activity reports
2. Formal evaluation – current-to-past sales comparisons,
customer-satisfaction evaluation, and qualitative evaluation
3. Key indicators of sales performance
a) Average # of sales calls per rep per day
b) Average sales call time per contact
c) Average revenue per sales call
d) Average cost per sales call
e) Entertainment cost per sales call
customers per period
g) Number of lost customers per period
h) Sales force cost as a percentage of sales
4. Performance may also be related internal factors (effort, ability, strategy)
and external factors (task and luck)
VII. Executive Summary
II. Lectures
A. Direct and Interactive Marketing
marketing as the nature of their business, i.e., remote selling without a storefront,
provided the only means of communicating and transacting with their customers. Direct
mail and the telephone were the main means of communication. The catalogers, who had
deeper financial and technical resources, performed some analysis on their customer
A promotion would be mailed, responses would be tracked, no lifetime value would be
calculated, and marketing models were basically a means of attempting some prediction
of the promotion response.
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behavior change models in addition to their predictive behavior models.
In the mid- to late 90s technology, fueled by the Internet, smart kiosks and other
technology innovations created an environment where customer information could be
captured more quickly and accurately, which enhanced their behavior changing
competitive.
Growing consumer social pressure related to privacy has placed new constraints on
organizations. Along with an organization’s ability to capture and use vast amounts of
consumer information in support of their marketing strategy comes an ethical and legal
that the consumer has alerted one area that they no longer wish to have their information
kept and used to maintain the relationship. However, another division in the same
corporation may not be aware of this request and continue to operate as before. The web
site www.ftc.gov is a good place to find information regarding current and pending
legislation in these areas.
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