CHAPTER 17
Personal Selling and Sales Promotion
TEACHING RESOURCES QUICK REFERENCE GUIDE
Resource
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Purpose and Perspective
IRM, p. 1
Lecture Outline
IRM, p. 2
Discussion Starters
IRM, p. 16
Class Exercises
IRM, p. 18
Chapter Quiz
IRM, p. 20
Semester Project
IRM, p. 21
Answers to Issues for Discussion and Review
IRM, p. 22
Answers to Developing Your Marketing Plan
IRM, p. 29
Comments on Video Case 17
IRM, p. 31
PowerPoint Slides
Instructor’s website
Note: Additional resources may be found on the accompanying student and instructor websites at
www.cengagebrain.com.
PURPOSE AND PERSPECTIVE
This chapter covers two promotion mix elements—personal selling and sales promotion. To help students
build a better understanding of the purposes and roles of salespeople, the chapter initially discusses the
basic steps in the personal selling process, the types of sales force personnel used in organizations, and a
few new types of personal selling. It also devotes considerable detail to a discussion on sales management
decisions and activities, including topics such as establishing sales force objectives; determining the size
of the sales force; and the processes of recruiting, selecting, training, compensating, motivating, routing,
scheduling, and controlling salespeople. Next, it discusses the different techniques of sales promotion and
their application in the market. Within these, it also covers the methods used in consumer sales promotion
and trade sales promotion.
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LECTURE OUTLINE
I. The Nature of Personal Selling
A. Personal selling is paid personal communication that attempts to inform customers and persuade
them to purchase products in an exchange situation.
1. It gives marketers the greatest freedom to adjust a message to satisfy customers’ information
needs.
2. Personal Selling is the most precise of all promotional methods, enabling marketers to focus
on the most promising sales prospects.
3. It is also the most effective way to form relationships with customers.
4. Personal selling is often necessary to assure prospective customers about the quality of an
expensive or high-risk product and answer any questions.
5. Personal selling is generally the most expensive element in the promotion mix.
B. Millions of people earn their living through personal selling.
1. Sales careers can offer high incomes, a great deal of freedom, a high level of training, and a
high degree of job satisfaction.
2. Although the public may harbor negative perceptions of personal selling, unfavorable
stereotypes of salespeople are changing thanks to the efforts of major corporations,
professional sales associations, and academic institutions.
3. Developing ongoing customer relationships requires sales personnel with high levels of
professionalism as well as technical and interpersonal skills.
C. Personal selling goals vary from one firm to another.
1. However, they usually involve finding prospects, determining their needs, persuading
prospects to buy, following up on the sale, and keeping customers satisfied.
2. Identifying potential buyers is critical.
3. Because most potential buyers seek information before making purchase decisions,
salespeople can ascertain prospects’ informational needs and then provide relevant
information.
a. To do so, sales personnel must be well trained regarding both their products and the
selling process in general.
D. Salespeople must be aware of their competitors.
1. They must monitor the development of new products and keep abreast of competitors’ sales
efforts in their sales territories, how often and when the competition calls on their accounts,
and what the competition is saying about their product in relation to its own.
2. Salespeople must emphasize the benefits their products provide, especially when
competitors’ products do not offer those specific benefits.
a. Salespersons often function as knowledge experts for the firm and provide key
information for marketing decisions.
E. Personal selling is changing today based on new technology, how customers gain information about
products, and the way customers make purchase decisions.
1. Customer information sharing through social media, mobile and Web applications, and
electronic sales presentations are impacting the nature of personal selling.
2. Some firms are adopting social media technology to reach business customers.
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3. Social customer relationship management (CRM) provides opportunities to manage data in
discovering and engaging customers.
4. For instance, the cloud-computing models, provided by Salesforce.com to enable firms to
manage relationships with their customers, can assist in personal selling sales management.
F. For long-run survival, most marketers depend on repeat sales and thus need to keep their customers
satisfied.
1. Satisfied customers provide favorable word-of-mouth and other communications, thereby
attracting new customers.
a. Although the whole organization is responsible for achieving customer satisfaction,
much of the burden falls on salespeople, because they are almost always closer to
customers than anyone else in the company and often provide buyers with
information and service after the sale.
2. Such contact gives salespeople an opportunity to generate additional sales and offers them a
good vantage point for evaluating the strengths and weaknesses of the company’s product and
other marketing-mix ingredients.
II. Steps of the Personal Selling Process
A. No two salespeople use exactly the same selling methods.
B. The personal selling process consists of seven steps—prospecting, preapproach, approach, making
the presentation, overcoming objections, closing the sale, and following up (Figure 17.1).
C. Prospecting
1. Developing a database of potential customers is called prospecting.
2. Salespeople seek names of prospects from company sales records, trade shows, commercial
databases, newspaper announcements, public records, telephone directories, trade association
directories, and many other sources.
a. Sales personnel also use responses to traditional and online advertisements that
encourage interested persons to send in information request forms.
3. Most salespeople prefer to use referrals—recommendations from current customers—to find
prospects.
a. Research shows that one referral is as valuable as 12 cold calls.
4. After developing the prospect list, a salesperson evaluates whether each prospect is able,
willing, and authorized to buy the product.
D. Preapproach
1. Before contacting acceptable prospects, a salesperson finds and analyzes information about
each prospect’s specific product needs, current use of brands, feelings about available
brands, and personal characteristics.
2. The most successful salespeople are thorough in their preapproach, which involves
identifying key decision makers, reviewing account histories and problems, contacting other
clients for information, assessing credit histories and problems, preparing sales presentations,
identifying product needs, and obtaining relevant literature.
3. A salesperson with a lot of information about a prospect is better equipped to develop a
presentation that precisely communicates with that prospect.
E. Approach
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1. The approach—the manner in which a salesperson contacts a potential customer—is a
critical step in the sales process.
2. Creating a favorable impression and building rapport with prospective clients are important
tasks in the approach because the prospect’s first impressions of the salesperson are usually
lasting ones.
3. During the initial visit, the salesperson strives to develop a relationship rather than just push
a product.
a. The salesperson may have to call on a prospect several times before the product is
considered.
4. The approach must be designed to deliver value to targeted customers.
a. If the sales approach is inappropriate, the salesperson’s efforts are likely to have poor
results.
5. One type of approach is based on referrals.
6. The salesperson who uses the “cold-canvas” approach calls on potential customers without
prior consent.
7. Repeat contact is another common approach—when making the contact, the salesperson
mentions a previous meeting.
8. The exact type of approach depends on the salesperson’s preferences, the product being sold,
the firm’s resources, and the prospect’s characteristics.
F. Making the Presentation
1. During the sales presentation, the salesperson must attract and hold the prospect’s attention,
stimulate interest, and spark a desire for the product.
2. Salespeople who carefully monitor the selling situation and adapt their presentations to meet
the needs of the prospects are associated with effective performance.
3. Salespeople should match their influencing tactics—such as information exchange,
recommendations, threats, promises and ingratiation—to their prospects.
4. Different types of buyers respond to different tactics, but most respond well to information
exchange and recommendations, and virtually no prospects respond to threats.
5. During the presentation, the salesperson must not only talk but also listen.
6. Nonverbal modes of communication are especially beneficial in building trust during the
presentation.
G. Overcoming Objections
1. An effective salesperson usually seeks out a prospect’s objections in order to address them.
2. One of the best ways to overcome objections is to anticipate and counter them before the
prospect raises them.
a. However, this approach can be risky, because the salesperson may mention objections
that the prospect would not have raised.
3. If possible, the salesperson should handle objections as they arise.
H. Closing the Sale
1. Closing is the stage in the personal selling process when the salesperson asks the prospect to
buy the product.
2. During the presentation, the salesperson may use a trial close by asking questions that
assume the prospect will buy.
a. The salesperson might ask the potential customer about financial terms, desired colors
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or sizes, etc. Reactions to such questions usually indicate how close the prospect is to
buying.
b. A trial close allows prospects to indirectly indicate that they will buy the product
without having to say the difficult words, “I’ll take it.”
3. A salesperson should try to close at several points during the presentation because the
prospect could be ready to buy.
4. An attempt to close the sale may result in objections.
a. Thus, closing can uncover hidden objections, which the salesperson can then address.
I. Following Up
1. After successful closing, the salesperson must follow up the sale.
2. In the follow-up stage, the salesperson determines whether the order was delivered on time
and installed properly, if installation was required.
3. He or she should contact the customer to learn if any problems or questions regarding the
product have arisen.
4. The follow-up stage is also used to determine customers’ future product needs.
III. Types of Salespeople
A. Most business organizations use several kinds of salespeople.
B. Based on the functions performed, salespeople can be classified into different groups.
C. Sales structure
1. Many companies have an inside sales force. Inside salespeople support personnel or take
orders, follow up on deliveries, and provide technical information.
2. An outside sales force is focused on developing more consultative long-term relationships.
3. Using both inside and outside salespersons to manage accounts is typical. This task is
sometimes called creative selling.
a. It requires that salespeople recognize potential buyers’ needs and give them necessary
information.
b. Increasingly, inside salespersons manage the digital approaches to sales and outside
salespersons are more face-to-face and relationship-oriented.
4. Current-Customer Sales
a. These sales personnel concentrate on current customers, calling on people and
organizations that have purchased products from the firm before.
b. They follow up on previous sales to seek more sales from existing customers; also,
current customers can be sources of leads for new prospects.
5. New-Business Sales
a. These sales personnel are responsible for locating prospects and converting them into
buyers.
b. They are especially important in organizations that sell real estate, insurance,
appliances, automobiles, and business-to-business supplies and services.
D. Support Personnel
1. Support personnel facilitate selling but usually are not involved solely with making sales.
a. They engage primarily in marketing industrial products, locating prospects, educating
customers, building goodwill, and providing service after the sale.
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2. There are many kinds of sales support personnel; the three most common are missionary,
trade, and technical salespeople.
a. Missionary Salespeople
(1) Missionary salespeople, usually employed by manufacturers, assist the
producer’s customers in selling to their own customers.
(2) They call on retailers to inform and persuade them to buy the manufacturer’s
products.
(3) Manufacturers of medical supplies and pharmaceuticals often use missionary
salespeople, called detail reps, to promote their products to physicians,
hospitals, and pharmacists.
b. Trade Salespeople
(1) Trade salespeople are not strictly support personnel, because they take orders
as well.
(2) They direct much of their efforts toward helping customers, especially retail
stores, in promoting the products.
(3) Food producers and processors commonly employ trade salespeople.
c. Technical Salespeople
(1) Technical salespeople direct their efforts toward the organization’s current
customers by giving technical assistance regarding the characteristics and
applications of the product, system designs, and installation procedures.
(2) Technical sales personnel often sell technical industrial products, such as
computers, heavy equipment, and steel.
IV. Team and Relationship Selling
A. Personal selling has become an increasingly complex process due in large part to rapid
technological innovation; the focus of personal selling is shifting from selling a specific product to
building long-term relationships with customers.
B. Team Selling
1. Team selling involves the salesperson joining with people from the firm’s financial,
engineering, and other functional areas.
a. It is appropriate for expensive, complex, high-tech business products because a single
salesperson can no longer be expert in all aspects of the product and the purchase
process.
b. The salesperson takes the lead in the personal selling process, but other members of
the team bring their unique skills, knowledge, and resources to the process to help
customers find solutions to their own business challenges.
2. Team selling is advantageous in situations calling for detailed knowledge of new, complex,
and dynamic technologies like jet aircraft and medical equipment.
a. It can be difficult, however, for highly competitive salespersons to adapt to a team
selling environment.
C. Relationship Selling
1. Relationship selling, also known as consultative selling, involves building mutually
beneficial long-term associations with a customer through regular communications over
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prolonged periods of time.
a. It is especially used in business-to-business marketing.
2. Relationship selling involves finding solutions to customers’ needs by listening to them,
gaining a detailed understanding of their organizations, understanding and caring about their
needs and challenges, and providing support after the sale.
a. This sales tactic, known as soft selling, has often led to higher sales from customers
who do not feel overly pressured to purchase a product they know little about.
3. Relationship selling has significant implications for the seller.
a. Firms spend six times longer on finding new customers than in keeping current
customers.
b. Relationship selling that generates loyal long-term customers is likely to be extremely
profitable for the firm both in repeat sales as well as the money saved in trying to find
new customers.
c. As the personal selling industry becomes increasingly competitive, relationship selling
is one way that companies can differentiate themselves from rivals to create
competitive advantages.
V. Managing the Sales Force
A. The sales force is directly responsible for generating one of an organization’s primary inputs—sales
revenue. A firm’s reputation is often determined by the ethical conduct of its sales force, making a
positive ethical corporate culture imperative.
B. The morale and ultimately the success of a firm’s sales force depend in large part on adequate
compensation, room for advancement, sufficient training, and management support—all key areas
of sales management.
1. Evaluating the input of salespeople is an important part of sales force management because
of its strong bearing on a firm’s success.
C. Establishing Sales Force Objectives
1. Sales objectives tell salespeople what they are expected to accomplish during a specified
time period.
a. They give the sales force direction and purpose and serve as standards for evaluating
and controlling the performance of sales personnel.
2. Sales objectives should be stated in precise, measurable terms, be specific about the time
period and geographic areas involved, and be achievable.
3. Sales objectives are usually established for both the total sales force and individual
salespeople.
a. Objectives for the entire sales force are usually stated in terms of sales volume, market
share, or profit.
b. Sales objectives, or quotas, for individual salespeople are commonly stated in terms of
dollars or unit sales volume.
(1) Other bases used for individual sales objectives include average order size,
average number of calls per time period, and ratio of orders to calls.
D. Determining Sales Force Size
1. The size of the sales force affects the firm’s ability to generate sales and profits, the
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compensation methods used, salespeople’s morale, and overall sales force management.
2. Several analytical methods are used to determine the size of the sales force.
a. One method involves determining how many sales calls per year are necessary for the
organization to effectively serve customers and then dividing this total by the average
number of sales calls a salesperson makes annually.
b. A second method is based on marginal analysis, in which additional salespeople are
added to the sales force until the cost of an additional salesperson equals the additional
sales generated by that person.
E. Recruiting and Selecting Salespeople
1. Recruiting is a process by which the sales manager develops a list of qualified applicants for
sales positions.
a. Effective recruiting efforts are a vital part of implementing the strategic sales force
plan and can help assure successful organizational performance.
2. A set of required qualifications should be established by the sales manager before recruiting
to ensure that the recruiting process results in a pool of qualified applicants.
a. Although marketers have tried for years to identify a set of traits characterizing
effective salespeople, no set of generally accepted characteristics exists yet.
b. Experts agree that good salespeople exhibit optimism, flexibility, self-motivation,
good time management skills, empathy, and the ability to network and maintain long–
term customer relationships.
c. Today, companies are increasingly seeking applicants capable of employing
relationship-building and consultative approaches as well as the ability to work
effectively in team selling efforts.
3. A sales manager usually recruits applicants from several sources: departments within the
firm, other firms, employment agencies, educational institutions, respondents to
advertisements, websites (like Monster.com), and individuals recommended by current
employees.
4. The process for recruiting and selecting a sales force varies from one company to another,
but companies concerned about reducing sales force turnover are likely to have strict
recruiting and selection procedures.
a. Recruitment should be a continuous activity aimed at reaching the best applicants, and
it should systematically and effectively match applicants’ characteristics and needs
with the requirements of specific selling tasks.
b. The selection process should ensure that new sales personnel are available where and
when needed.
F. Training Sales Personnel
1. Many organizations have formal training programs; others depend on informal, on-the-job
training.
2. A sales training program can concentrate on the company, its products, or its selling
methods, often covering all three.
3. Training programs can be aimed at newly hired salespeople, experienced salespeople, or
both.
a. Training for experienced company salespeople usually emphasizes product
information or the use of new technology, although salespeople must also be informed
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about new selling techniques and changes in company plans, policies, and procedures.
b. Sales managers should use ethics training to institutionalize an ethical climate,
improve employee satisfaction, and help prevent misconduct.
4. Sales training may be performed in the field, at educational institutions, in company
facilities, and/or by using web-based technology.
5. In some firms, recently hired salespeople receive the bulk of their training before being
assigned to a specific sales position.
a. Other business organizations put new recruits immediately into the field and provide
formal training only after the new salesperson has gained some experience.
b. Training programs for new personnel can be as short as several days or as long as
three years or more.
6. Sales training for experienced personnel is often scheduled when sales activities are not too
demanding.
a. Because experienced salespeople usually need periodic retraining, sales management
must determine the frequency, sequencing, and duration of these activities.
7. Sales managers, as well as salespeople, often engage in sales training, whether daily on the
job or periodically during sales meetings; training may also be provided by outside
companies specializing in training.
a. The choice of methods and materials for a particular sales training program depends
on type and number of trainees, program content and complexity, length and location,
size of the training budget, number of trainers, and a trainer’s expertise.
G. Compensating Salespeople
1. To develop and maintain a highly productive sales force, an organization must formulate and
administer a compensation plan that attracts, motivates, and retains the most effective
individuals.
a. It should be designed to give sales management the desired level of control and to
provide sales personnel with acceptable levels of income, freedom, and incentive.
b. It should be flexible, equitable, easy to administer, and easy to understand.
c. It should facilitate and encourage proper treatment of customers.
2. To create compensation programs, the developers must determine the general level of
compensation required and the most desirable method of calculating it.
a. In analyzing the required compensation plan, a firm’s sales management must
ascertain a salesperson’s value to the company on the basis of the tasks and
responsibilities associated with the sales position.
b. Sales managers may consider several factors when determining adequate
compensation:
(1) Salaries of other types of personnel in the firm
(2) Competitors’ compensation plans
(3) Cost of sales force turnover
(4) Non-salary selling expenses
3. Sales compensation programs usually reimburse salespeople for selling expenses, provide
some fringe benefits, and deliver the required compensation level. To achieve this, a firm
may use one or more of the three basic compensation methods: straight salary, straight
commission, or a combination of the two.
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a. In a straight salary compensation plan, salespeople are paid a specified amount per
time period, regardless of selling effort, and this sum remains the same until they
receive a pay increase or decrease.
b. In a straight commission compensation plan, salespeople’s compensation is
determined solely by sales for a given period.
(1) A commission may be based on a single percentage of sales or on a sliding
scale, which involves several sales levels and percentage rates.
c. In a combination compensation plan, salespeople are paid a fixed salary plus a
commission based on sales volume.
(1) Some combination programs require that a salesperson exceed a certain sales
level before earning a commission; others offer commissions for any level of
sales
H. Motivating Salespeople
1. A sales manager should develop a systematic approach for motivating salespeople to be
productive.
2. Effective sales force motivation is achieved through an organized set of activities performed
continuously by the company’s sales management.
3. Sales personnel join organizations to satisfy personal needs and achieve personal goals.
a. Sales managers must identify those needs and goals and strive to create an
organizational climate that allows each salesperson to fulfill them.
4. Enjoyable working conditions, power and authority, job security, and opportunity to excel
are effective, as are company efforts to make sales jobs more productive and efficient.
a. Sales contests and other incentive programs can also be effective motivators.
5. Properly designed incentive programs pay for themselves many times over, and sales
managers are relying on incentives more than ever.
a. The most common incentive offered by companies is cash, followed by gift cards and
travel.
6. The benefits of awarding merchandise are that the items have visible trophy value.
a. In addition, recipients who are allowed to select the merchandise experience a sense of
control, and merchandise awards can help build momentum for the sales force.
7. The disadvantages of using merchandise are that employees may have lower perceived value
of the merchandise and the company may experience greater administrative problems.
I. Managing Sales Territories
1. The effectiveness of a sales force that must travel to its customers is somewhat influenced by
management’s decisions regarding sales territories.
2. Several factors enter into the design of a sales territory’s size and geographic shape.
a. Sales managers must try to create territories that allow sales potential to be measured.
b. Sales managers usually try to create territories with similar sales potential, or requiring
about the same amount of work.
c. Territories with equal sales potential almost always will be unequal in geographic size.
d. Salespeople with larger territories to work harder and longer to generate a certain sales
volume.
(1) Conversely, if sales territories requiring equal amounts of work are created,
sales potential for those territories will often vary
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e. If sales personnel are partially or fully compensated through commissions, they will
have unequal income potential.
f. Many sales managers try to balance territorial workloads and earning potential by
using differential commission rates.
g. A territory’s size and shape should also help the sales force provide the best possible
customer coverage and minimize selling costs.
3. The geographic size and shape of a sales territory are the most important factors affecting
the routing and scheduling of sales calls, followed by the number and distribution of
customers within the territory, and sales call frequency and duration.
a. Those in charge of routing and scheduling must consider the sequence in which
customers are called, specific roads or transportation schedules to be used, number of
calls to be made in a given period, and time of day the calls will occur.
b. In some firms, salespeople plan their own routes and schedules with little or no
assistance from the sales manager, but in other firms, the sales manager handles the
task.
c. The major goals should be to minimize salespeople’s non-selling time (time spent
traveling and waiting) and to maximize their selling time.
J. Controlling and Evaluating Sales Force Performance
1. To control and evaluate sales force performance properly, sales management needs
information, which can be obtained from salespersons’ call reports, customer feedback,
contracts, and invoices.
2. The dimensions used to measure a salesperson’s performance are determined largely by sales
objectives the sales manager sets.
a. Indicators of performance used by sales managers for evaluation include average
number of calls per day, average sales per customer, actual sales relative to sales
potential, number of new-customer orders, average cost per call, and average gross
profit per customer.
b. To evaluate a salesperson, a sales manager may compare one or more of these
dimensions with predetermined performance standards.
3. After evaluating salespeople, sales managers take required corrective action to improve sales
force performance.
VI. The Nature of Sales Promotion
A. Sales promotion is an activity or material, or both, that acts as a direct inducement, offering added
value or incentive for the product, to resellers, salespeople, or consumers.
1. It encompasses all promotional activities and materials other than personal selling,
advertising, and public relations.
B. Marketers often use sales promotion to facilitate personal selling, advertising, or both; they also use
advertising and personal selling to support sales promotion activities.
C. Sales promotion can increase sales by providing extra purchasing incentives.
D. When deciding which sales promotion methods to use, marketers must consider several factors,
especially product characteristics (price, size, weight, costs, durability, uses, features, and hazards)
and target market characteristics (age, gender, income, location, density, usage rate, and shopping
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patterns).
E. The use of sales promotion has increased dramatically, primarily at the expense of advertising. This
shift has occurred for several reasons:
1. Heightened concerns about value have made customers more responsive to promotional
offers, especially price discounts and point–of-purchase displays.
2. Due to their size and access to checkout scanner data, retailers have gained considerable
power in the supply chain and are demanding greater promotional efforts from manufacturers
to boost retail profits.
3. Declines in brand loyalty have produced an environment in which sales promotions aimed at
persuading customers to switch brands are more effective.
4. The stronger emphasis placed on improving short-term performance results calls for greater
use of sales promotion methods that yield quick, but perhaps short-lived, sales increases.
VII. Consumer Sales Promotion Methods
A. Consumer sales promotion methods encourage or stimulate consumers to patronize a specific
retail store or try particular products.
B. Coupons and Cents-Off Offers
1. Coupons reduce a product’s price and aim to prompt customers to try new or established
products, increase sales volume quickly, attract repeat purchasers, or introduce new package
sizes or features.
a. They are the most widely used consumer sales promotion technique.
(1) To take advantage of the new consumer interest in coupons, digital
marketing—including mobile, social, and other platforms—are being used for
couponing.
b. When deciding on the distribution method for coupons, marketers should consider
strategies and objectives, redemption rates, availability, circulation, and exclusivity.
c. Coupons offer several advantages:
(1) Print advertisements with coupons are often more effective at generating brand
awareness than print ads without coupons.
(2) Coupons reward current product users, win back former users, and encourage
purchases in larger quantities.
(3) Because they are returned, coupons also help a manufacturer determine
whether it reached the intended target market.
(4) Electronic coupons have even greater advantages, including lower cost per
redemption, greater targeting ability, improved data-gathering capabilities, and
greater experimentation capabilities to determine optimal face values and
expiration cycles.
d. Coupons also have a few drawbacks:
(1) The primary drawback is fraud and misredemption, which can be expensive
for manufacturers.
(2) Because so many manufacturers offer coupons, many consumers do not buy
without some incentive, whether a coupon, a rebate, or a refund.
(3) Brand loyalty among heavy coupon users has diminished, and many
consumers redeem coupons only for products they normally buy.
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appliances, cosmetics, and cleaning supplies.
F. Free Samples and Premiums
1. Free samples are given out to stimulate trial of a product, increase sales volume in the early
stages of the product’s life cycle, and obtain desirable distribution.
a. Sampling is the most expensive sales promotion method due to the high promotion and
distribution costs involved. However, it can also be one of the most effective.
2. Premiums are items offered free or at a minimal cost as a bonus for purchasing a product.
a. Creativity is essential when using premiums; to stand out and to achieve a significant
number of redemptions, a premium must match the target audience and the brand’s
image.
b. Premiums are placed on or inside packages and can be distributed to retailers through
the mail.
G. Consumer Contests, Consumer Games, and Sweepstakes
1. In consumer contests, individuals compete for prizes based on their analytical or creative
skills.
a. This method can be used to generate retail traffic and frequency of exposure to
promotional messages.
b. Contestants are usually more involved in consumer contests than in games or
sweepstakes, even though total participation may be lower.
c. Contests may also be used in conjunction with other sales promotional methods, such
as coupons.
2. In consumer games, individuals compete for prizes based primarily on chance.
a. Collecting multiple pieces (like bottle caps or a sticker on a carton of French fries) may
be necessary to win or increase chances of winning the game, and this stimulates
repeated business.
b. Although games may temporarily stimulate sales, it is unproven whether games impact
a company’s long term sales.
3. The entrants in a consumer sweepstakes submit their names for inclusion in a drawing for
prizes.
a. Sweepstakes are employed more often than consumer contests and tend to attract a
greater number of participants.
(1) However, contestants are usually more involved in consumer contests and
games than in sweepstakes, even though total participation may be lower.
b. Contests, games, and sweepstakes are used to stimulate lagging sales and may be used
in conjunction with other sales promotion methods.
VIII. Trade Sales Promotion Methods
A. Trade sales promotion methods attempt to persuade wholesalers and retailers to carry a
producer’s products and market them more aggressively.
B. Marketers use trade sales methods for many reasons, including:
1. Countering the effect of lower-priced store brands
2. Passing along a discount to a price-sensitive market segment
3. Boosting brand exposure among target consumers
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4. Providing additional incentives to move excess inventory or counteract competitors
C. Trade Allowances
1. A buying allowance is a temporary price reduction offered to resellers for purchasing
specified quantities of a product.
a. Such offers are used to provide an incentive for resellers to handle new products,
achieve temporary price reductions, or stimulate purchase of items in larger-than–
normal quantities.
b. One drawback of buying allowances is that customers may buy “forward,” or buy
large amounts that keep them supplied for many months, and also competitors may
match or beat the offers, lowering profits of all sellers.
2. A buy-back allowance is a sum of money that a producer gives to a reseller for each unit the
reseller buys after an initial promotional deal is over.
a. This method is a secondary incentive in which the total amount of money resellers
receive is proportional to their purchases during the initial promotional effort.
3. A scan-back allowance is a manufacturer’s reward to retailers based on the number of pieces
moved through the retailers’ scanners during a specific time period.
a. To participate in scan-back programs, retailers are expected to pass along savings to
consumers through special pricing.
4. A merchandise allowance is a manufacturer’s agreement to pay resellers certain amounts of
money for providing promotional efforts like advertising or point of-purchase displays.
a. This is best suited to high-volume, high-profit, easily handled products.
b. Manufacturers should verify a retailers’ performance before paying them.
D. Cooperative Advertising and Dealer Listings
1. Cooperative advertising is an arrangement in which a manufacturer agrees to pay a certain
amount of a retailer’s media costs for advertising the manufacturer’s products. The amount
usually allowed is based on the quantities purchased.
2. Dealer listings are advertisements promoting a product and identifying participating retailers
that sell the product.
E. Free Merchandise and Gifts
1. Free merchandise is offered to resellers that purchase a stated quantity of products.
a. Free merchandise sometimes is used as payment for allowances provided through
other sales promotion methods.
2. A dealer loader is a gift given to a retailer that purchases a specified quantity of
merchandise.
a. Dealer loaders are often used to obtain special display efforts from retailers by
offering essential display parts as premiums.
F. Premium Money
1. Premium money (push money) is additional compensation to salespeople offered by the
manufacturer as an incentive to push a line of goods.
2. This is a good method when personal selling is an important part of the marketing effort.
G. Sales Contests
1. A sales contest is designed to motivate distributors, retailers, and sales personnel by
recognizing outstanding achievements.
2. To be effective, this method must be equitable for everyone involved.
16
Chapter 17: Personal Selling and Sales Promotion
DISCUSSION STARTERS
Discussion Starter 1: Sales Force Automation
ASK: How do you think technology has revolutionized personal selling?
Technology has radically altered how sales people do their jobs. The amount of data a salesperson has
Discussion Starter 2: Personal Selling Skills and Successful Job Interviewing
ASK: How can an understanding of personal selling skills and tools assist you during job interviews?
If you know personal selling skills, you are better able to understand how to read the interviewer and how
Discussion Starter 3: Modern Day Marketing for Vitamin Water