Selling Today: Creating Customer Value, Seventh Canadian Edition Solution Manual

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RESOURCE MANUALH.L. (Herb) MacKenzieBrock UniversitySELLING TODAY: PARTNERING TOCREATE VALUESeventh Canadian EditionGerald L. ManningDes Moines Area Community CollegeMichael AhearneUniversity of HoustonBarry L. ReeceVirginia Polytechnic Institute and State UniversityH.F. (Herb) MacKenzieGoodman School of BusinessBrock University

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iiTable of ContentsIntroduction..................................................................................................1Chapter 1....................................................................................................15Chapter 2....................................................................................................22Chapter 3....................................................................................................28Chapter 4....................................................................................................39Chapter 5....................................................................................................46Chapter 6....................................................................................................54Chapter 7....................................................................................................62Chapter 8....................................................................................................68Chapter 9....................................................................................................77Chapter 10..................................................................................................84Chapter 11..................................................................................................91Chapter 12..................................................................................................97Chapter 13................................................................................................105Chapter 14................................................................................................112Chapter 15................................................................................................119Chapter 16................................................................................................126Chapter 17................................................................................................132Appendix 1...............................................................................................139End-of-Part Role-Play Exercises .............................................................163Written Term Projects for Selling—Guidelines and Outlines .................165Sales Videos That Accompany the Text..................................................171

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15Chapter 1RELATIONSHIP SELLING OPPORTUNITIES IN THEINFORMATION ECONOMYEXTENDED PRESENTATION OUTLINEA major goalof this chapter is to describe how personal selling skills contribute to workperformed by knowledge workers. Today’s workforce is made up of millions of knowledgeworkers who succeed only when they add value to information. Salespeople, and many otherknowledge workers, add value to information when they collect it, organize it, clarify it, andpresent it in a convincing manner.As part of the Reality Selling Video Series, this chapter features Alex Homer from the TomJames Company, selling luxury clothing.I.Personal Selling – A Definition and a PhilosophyA.Definition:Personal sellingoccurs when a company representative interacts directlywith a customer to present information about a product or service.1.Personal selling is a process of:a.Building customer relationships.b.Discovering customer needs.c.Matching the appropriate products with these needs.d.Communicating benefits through informing, reminding, and/or persuading.2.Aproductis broadly defined as information, services, ideas, and issues.B.Developing a personal selling philosophy includes three prescriptions:1.Adopt the marketing concept.2.Value personal selling.3.Become a problem solver/partner.II.Emergence of Relationship Selling in the Information AgeA.Major advances in information technology and electronic commerce.B.Strategic resource is information.1.Information is often too plentiful.2.Salespeople help filter information.C.Business is defined by customer relationships.1.The new economy is the customer economy.2.Relationships build a conduit of trust for information exchange.D.Sales success depends on adding value.1.Value-added sellingis defined as a series of creative improvements in the salesprocess that enhance the customer experience.

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162.The value added by salespeople today is increasingly derived from intangibles.III.Considerations for a Future in Personal SellingA.Wide range of employment opportunities.1.The 500 largest sales forces in North America employ more than 21 millionsalespeople.2.Opportunities exist that match your interests, talents, and ambitions.B.Activities performed by salespeople.1.Outside salespeople spend 26% of their time in face-to-face sales and 74% insales prep, travel, waiting, and administrative tasks.2.Salespeople have tremendous freedom to manage their time and activities.3.The proliferation of sales titles in today’s business world has two causes:a.The shift from selling to consulting and partnering.b.The increased skill sets and education needed to fill selling positions.C.Above-average income.1.Table 1.1 describes base salary and total cash compensation for different salespositions.a.Research indicates that salespeople involved in transactional sales earned thelowest compensation. Sales personnel involved in value-added sales earnedthe highest compensation.D.Above-average psychic income.a.Psychic income(psychological rewards) gained from a selling career mayinclude recognition and security.b.In selling, recognition will come more frequently and with greater intensitythan in most other occupations.c.Accomplishments of sales personnel seldom go unrecognized.E.Opportunity for advancement.a.High visibility affords opportunities for advancement.b.Sales experience is invaluable in many middle and high managementpositions.F.Opportunities for women.1.Sales offers women high income and flexible work schedules.2.There is a growing awareness that gender is not a barrier to success in selling.IV.Employment Settings in Selling TodayA. Three major settings include:1.Services Channel.2.Business Goods Channel.3.Consumer Goods Channel.B. Services Channel.1.Approximately 80 percent of the Canadian labour force is now employed in theservice sector.

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172.Career opportunities in the service channel:a.Hotel, motel, and convention centre services.(1)Salespeople sell room space, food, beverages, and services related tohosting seminars, conferences, and meetings.(2)Competition for convention business is intense.b.Telecommunication services:(1) Deregulation of telephone service has resulted in the fragmentation ofmajor telephone companies and the creation of numerous new communicationcompanies.c.Financial services:(1)There are more than 3000 firms that provide financial services in Canada.d.Media sales:(1)Sales force employed by radio/television stations sell broadcasting time tocurrent and prospective advertisers.(2)Newspapers and magazines generate their main revenue from advertisingrather than from subscriptions.(3)Media sales personnel help develop advertising campaigns.e.Real Estate:(1)Buying a home is usually the largest single expenditure in an averageconsumer’s life.(2)Real estate salespeople play an important role.f.Insurance:(1)One of the most rewarding careers in sales.(2)Policies sold include fire, liability, life, health, automobile, casualty, andhomeowner’s.(3)Two broad types of insurance salespeople.(a)Those employed by major insurance companies.(b)Independent insurance agents who represent various companies.g.Business services:(1)Outsourcing of services is increasing.h.Other fields of service sales: home and business security, travel andrecreation, pest control, and transportation.C. Business Goods Channel.1.Common titles of salespeople:a.Sales engineer or applications engineer – must have detailed and precisetechnical knowledge.1.Requires expertise in identifying, analyzing, and solving customerproblems.2.May introduce new products and answer technical questions.b.Field salespeople – find and meet needs of new customers.c.Missionary salespeople, (detail salesperson) – primary goal is to developgoodwill and stimulate product demand.1.Calls on wholesale, retail, and other customers to help improve theirmarketing.2.Collects information regarding customer acceptance of products.

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183.Must be able to offer advice on credit policies, pricing, displays, and soforth.D. Consumer Goods Channel.1.Retail selling:a.Profile: The Hitch House (Chris Mckee)1.Success due to expert staff.2.Customers are willing to pay higher prices because they value the qualityproducts and assistance provided by salespeople.3.Well- trained salespeople add value to the shopping experience.2.Direct selling:a.Independent contractors who represent manufacturers.b.The world’s three largest direct selling firms: Amway, Avon, and Mary Kay.Combined, they employ 1.1 million salespeople and generate $2.2 billion insales.c.There are 900 000 direct selling salespeople in Canada.V.Selling Skills – One of the “Master Skills for Success” for the Knowledge WorkerA.The following four groups of knowledge workers use selling skills, too:1.Managerial personnel.a.Some of the managers’ most valuable information comes from customers.b.Executive selling helps managers learn more from customers.2.Professionals.a.Doctors, accountants, lawyers, engineers, and other professionals need to useselling skills.b.Technical skills are not enough in the information age.c.Professionals need relationship skills to develop new business.3.Entrepreneurs.a.Entrepreneurs need to sell their new business plan to investors and others.b.Business owners rely on personal selling to build their business.4.Marketing personnel and customer service representatives (CSRs).a.CSRs have traditionally worked with customers in non-selling areas.b.CSRs are now learning and applying selling skills.c.CSRs often discover customer needs.VI.Learning to SellA.Basic question: “Are salespeople made or are they born?”1.The principles of selling can be learned and applied by a variety of people.2.Hundreds of corporations spend millions of dollars to develop salespeople.B.Types of sales training.1.Business training programs used to develop company salespeople.2.Commercial firms that specialize in developing salespeople (see Table 1.2).3.Courses to earn certification, such as CSP, offered by the CPSA.4.University and college business departments.

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19END-OF-CHAPTER ACTIVITIESIncluded in this section are answers to review questions, application exercises, the role-playexercise, and the video case problem.Answers to Review Questions1-1.In an era of limitless data, informed salespeople can help customers decide whichinformation has value and which information should be ignored. Customers who have lesstime to adjust to new products and circumstances value this assistance.1-2.The three prescriptions for the development of a successful personal selling philosophy:(1) fully accept the marketing concept, (2) develop an appreciation for the expanding role ofpersonal selling in our competitive national and international markets, and (3) assume therole of a problem solver/partner.1-3.Accordingtotheemploymentsetting,theclassificationsincluderetail,wholesale,manufacturer, and service careers. (See the responses to Questions 5, 7, and 8 for additionalinformation regarding these four employment settings.)1-4.There are growing opportunities for both women and minorities. This is due in part toequal employment legislation. However, a more important reason is the knowledge thatwomen and minorities can be highly successful salespeople.1-5.Most certification programs can result in increased sales competence and a moreprofessional approach to selling. Earning a certificate can give a salesperson a great deal ofpersonal pride and greater self-confidence.1-6.There are two reasons why high performance value-added salespeople earn much morethan high performance transactional salespeople. First, salespeople who are able to add valueduring the sales process tend to close more sales. Second, value-added salespeople are ofteninvolved in selling complex products such as commercial security systems, computersystems, insurance, and other expensive items. Salespeople who sell these products oftenearn a generous commission.1-7.These three types of manufacturing salespeople: (1) Field salespeople who sell well-established products. A high degree of technical knowledge is not required. (2) Salesengineers must have a high degree of technical knowledge. They identify, analyze, and solvehighly technical customer problems. (3) Missionary, or detail, salespeople develop goodwilland stimulate demand for products. These salespeople also train employees and offer adviceon advertising, credit, pricing, display, store layout, and storage.

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201-8.Sellingcareersinthe servicefield:(1)radioandtelevision sales, (2)newspaperadvertising sales, (3) hotel, motel, and convention centre sales, (4) insurance sales, (5)financial services, (6) real estate sales, (7) bank service selling, and (8) business services.1-9.Competition in these fields is intense. Personal selling skills are used to build andmaintain a loyal client base.1-10.Corporate-sponsored training, commercial vendor training, certification studies, andcourses provided by colleges and universities.Suggestions/Answers for Application Exercises1-1.The objective of this exercise it to have the students gain a better understanding of thedifferent types of selling that influence product acceptance. They are also likely to discoverthat with convenience products, such as those in a grocery store, even though there is little orno personal selling at the retail level, there may be a large amount of personal selling effort atthe wholesale and manufacturing levels. At the retail level, a retail sales clerk could handlethe order taking of convenience items, but for other items, such as those found at anappliance store, a retail salesperson would be required in most cases.1-2.The objective of this field-based exercise is to get the student talking with someone in theselling field. The suggested questions will tend to make the visit more informative for thestudent. Students can share a large amount of field-based information if they are asked tomake oral reports on their interviews.1-3.This field interview will give students an opportunity to reflect on some of the newchallenges facing business-to-business salespeople.1-4.Students will find a variety of information on the listed career choices—from jobdescriptions to job ads to periodicals relating to the jobs. After students find information ontheir desired career, have them print and submit it.1-5.This question can generate a considerable amount of discussion. Get several students tocommittotheiranswersbeforeyouexplorewhytheychosethespecificpersonalcharacteristics. You might then wish to explore whether the specific selling environmentmight have an effect on the specific personal characteristics they chose; that is, selling aconsumer product versus selling a business product, selling a car versus selling insurance. Anactual study that included most of these personal characteristics asked sales managers ofmanufacturing firms (B2B sales) to rank 10 indicators and found the three most importantwere (1) enthusiastic, (2) obviously ambitious, and (3) well organized. Sociability wasranked tenth in this study, a surprise to many students. Note that this does not meansociabilityisunimportant,itissimplyratedtheleastimportantofthetenpersonalcharacteristics in this study.

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21Role-Play ExerciseThis role-play exercise duplicates a typical job interview. Prior to the role-play, students shouldthink about what they have to sell in terms of work experience, education, leadership positionsheld, volunteer work, etc. Most students will change jobs 8 to 10 times throughout their lifetime,so this role-play can prepare them for future real-world interviews.Solution for the Case Problem1-1.Tom James and Alex Homer appeal to the three prescriptions of a personal sellingphilosophy. First, they have adopted the marketing concept in so far as the customer is at thecentre of their value proposition – Tom James offers a service rather than just clothing.Second, Tom James values personal selling because its customers are highly sensitive to thelevel of service provided and customer retention is dependent upon superior personal sellingstrategies. Third, sales representatives of Tom James, such as Alex Homer, are problemsolvers for their clients, who are under extreme time constraints and need to have acustomized service that identifies and fulfills their needs.1-2.For Alex Homer, being employed in a sales position that allows for creativity andautonomy is likely to generate considerable psychic income. In addition, considering 80percent of the business is generated from repeat customers, it is likely that Alex hasdeveloped long-term, rewarding relationships that develop job satisfaction. At the same time,the difficulty to find new business is one of Alex’s major challenges and may be one of themost adverse aspects of his sales job.1-3.Alex uses a persuasive presentation strategy that is made possible by his experience andexistingknowledge.Togathernewinformationabout clientsAlex asks detailed andpurposeful situation questions to identify the needs of customers. This utilization of theselling process allows Alex to advance the sales process and induce buying motives duringthe sales call.1-4.Alex can generate referrals from maintaining the three fundamental prescriptions of thepersonal selling philosophy. Overall, his preparation for the sales call is crucial, and if thecustomers have a favourable experience with Alex, it will result in referrals to friends andfamily members. In addition, it is important that Alex remain honest, trustworthy, andgenuine. It is not good practice to bad-mouth competitors, for instance.1-5.Alex must have a prowess in several different types of selling skills, including activelistening skills, communication skills, and business and client development skills. Of the fourmajor sources of sales training (i.e., corporate-sponsored, commercial vendors, certificationprograms, and colleges and universities), Tom James could hire educated sales associates andcreate a certification program internally that would recognize and promote excellence inselling.

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22Chapter 2EVOLUTION OF SELLING MODELS THATCOMPLEMENT THE MARKETING CONCEPTEXTENDED PRESENTATION OUTLINEPersonal selling is an important force in maintaining the economic vitality of a nation.Manyproductive salespeople are using the strategic consultative-selling approach to determine andfulfill consumers’ product and service needs.As part of the Reality Selling Video Series, this chapter features Marcus Smith from LibertyMutual, selling financial services.I.Marketing Concept Requires New Selling ModelsA.Evolution of the marketing concept.1.Themarketing conceptis a principle that holds that achieving organizationalgoals depends on knowing the needs and wants of target markets and deliveringthe desired products.2.The foundation for the marketing concept is a business philosophy that leaves nodoubt in the mind of every employee that customer satisfaction is of primaryimportance.3.The marketing concept was introduced in the early 1950s (discuss Table 2.1).B.Marketing concept yields marketing mix.1.Themarketing mixis a network of marketing activities that will maximizecustomer service and ensure profitability.2.Elements of the marketing mix:a.Productb.Promotion (includes personal selling)c.Placed.PriceC.Important role of personal selling.1.Personal selling is often the major promotional method used —whether measuredby people employed, by total expenditures, or by expenses as a percentage ofsales.2.Firms make investments in personal selling in response to several major trends:a.Products and services are becoming increasingly sophisticated and complex.b.Competition has greatly increased in most product areas.c.Demand for quality, value, and service by customers has sharply risen.II.Evolution of Consultative Selling

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23A.Consultative sellingemerged in the late 1960s and early 1970s (see Table 2.1) and isan extension of the marketing concept.B.Transactional sellingis the sales process that serves the buyer primarily interested inprice and convenience.C.Major features of consultative selling:1.The customer is seen as a person to be served, not a prospect to be sold.2.The salesperson doesn’t use a high-pressure sales presentation; two-waycommunication identifies (diagnoses) customer’s needs.3.Consultative selling emphasizes need identification, problem solving, andnegotiation rather than manipulation.4.Consultative selling emphasizes service at every phase of the personal sellingprocess.D.Consultative selling practices are not easily mastered.III.Evolution of Strategic SellingA.Strategic selling began receiving considerable attention during the 1980s (see Table2.1).B.During the 1980s we witnessed the beginning of several trends that resulted in a morecomplex selling environment.C.Strategic planningis the managerial process that matches the firm’s resources to itsmarket opportunities. It takes into consideration the various functional areas ofbusiness that must be coordinated such as financial assets, workforce, productioncapabilities, and marketing.D.The strategic market plan is often the guide for a strategic selling plan.1.Tacticsare techniques, practices, or methods you use when you are face-to-facewith a customer.2.Astrategyis a prerequisite to tactical success. If you develop the correctstrategies, you are more likely to make your sales presentation to the right person,at the right time, and in a manner most likely to achieve positive results.3.Strategic planning sets the stage for a form of consultative selling that is morestructured, more focused, and more efficient.E.Strategic/Consultative-Selling Model.1.The model is divided into four broad strategic areas:a.Relationship strategy: A well thought-out plan for establishing, building, andmaintaining quality relationships.b.Product strategy: A plan that helps salespeople make correct decisionsregarding the selection and positioning of products to meet identifiedcustomer needs.c.Customer strategy: A carefully conceived plan that will result in maximumresponsiveness to the customer’s needs. It involves the collection and analysisof specific information on each customer.d.Presentation strategy: A well-developed plan that includes preparation of thesales presentation objectives, understanding the buying process, and renewingone’s commitment to provide outstanding customer service.

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242.Interrelationship of basic strategies—the relationship, product, and customerstrategies all influence development of the presentation strategy.IV.Evolution of PartneringA.The partnering concept emerged in the early 1990s (see Table 2.1).B.Partneringis a strategically developed, long-term relationship that solves thecustomer’s problems.C.Today’s customer wants a quality product and a quality relationship. Partneringrequires that salespeople continuously search for ways to add value to their sellingrelationships.D.Partnering is the key to building repeat business and referrals.Note: The partnering concept is covered in more detail in Chapter 3.E.Strategic Alliances – The Highest Form of Partnering.1.The goal of strategic alliances is to achieve a marketplace advantage byteaming up with another company.2.Partnering is enhanced with high ethical standards.3.Partnering is enhanced withcustomer relationship management (CRM).V.Value Creation – The New Selling Imperativea.Theinformation economywill reward salespeople who can create value at every stepof the sales process.b.Traditional selling has too often emphasized communicating value that lies in theproduct rather than creating value for the customer.c.Creating and Delivering Customer Value Model:a.Understanding Customer’s Value Needs.b.Creating the Value Proposition.c.Communicating the Value Proposition.d.Delivering the Value Proposition.END-OF-CHAPTER ACTIVITIESIncluded in this section are answers to selected end-of-chapter exercises. Answers are providedfor all review questions, application exercises and case problems. In addition, a brief descriptionof each role-play is provided.

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25CHAPTER 2Answers to Review Questions2-1.In adapting to the marketing concept, emphasis is now placed on satisfying the customerthrough “partnering.” Instead of “pushing” goods, salespeople now form relationships andseek to identify specific customer needs.2-2.The marketing concept sparked development in marketers’ fundamental understanding ofpersonal selling. This change of mindset altered companies’ focus from an orientation that isfocused on selling to one that is focused on the customer. Models of selling that haveemerged in response to the marketing concept include consultative selling, strategic selling,and partnering. These models have progressed to our current focus on partnering and areoutlined in Table 2.1.2-3.Personal selling is the point at which the marketing concept is implemented. A personalselling philosophy that is centred on partnering allows a company to generate customerinformation that is necessary to be customer focused. Further, as personal selling is aboundary-spanning task, it has considerable impact on customers’ perceptions of a product orservice.2-4.Consultative selling emphasizes need identification that is achieved through effectivecommunication between the salesperson and customer. The salesperson assumes the role ofconsultant and offers well-considered recommendations. Negotiation replaces manipulationas the salesperson sets the stage for a long-term partnership.2-5.Thefourstepsincludeneeddiscovery,selectionofproduct,need-satisfactionpresentation, and servicing the sale.2-6.The four broad strategic areas that make up the selling process are (1) developing arelationship strategy—success in selling depends heavily on the salesperson’s ability todevelop, manage, and enhance interpersonal relations with the customer, (2) developing aproduct strategy—products and services represent problem-solving tools, (3) developing acustomer strategy—sales and marketing efforts are organized around the needs and desires ofthe customer, and (4) developing a presentation strategy—although the sales call may last nomore than 25 minutes, the presentation is definitely a critical part of the selling process.2-7.In the 1990s, many companies began to see the merits of maintaining long-termrelationships. With more look-alike products, customers are seeking quality products andquality relationships.2-8.Value-added selling can be defined as a series of creative improvements in the salesprocess that enhance the customer experience. Salespeople can add value by carefullyidentifying the customer’s needs and then prescribing the best possible product solution.Value-added selling has surfaced in response to increased levels of competition and the

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26growing complexity of many products and services. The value added by salespeople today isincreasingly derived from intangibles such as the quality of the advice offered.2-9.The goal of strategic selling alliances is to achieve a marketplace advantage by teamingup with another company whose products or services fit well with your own. Both companieshope to achieve a mutual competitive advantage.2-10.Because salespeople are a vital link between a company and its customers, buyers willusually form impressions about the company based on the salesperson.Suggestions/Answers for Application Exercises2-1.The outline should include the following topics: Economic benefits—development ofglobal markets; stimulate our local economy, which reduces unemployment. Consumerbenefits—assistance with the purchase of complex products; service after the sale.2-2.She will have to (1) research the kind of customer her product appeals to as well as thecustomer’s motivation for purchasing the product; (2) improve the product by engineeringproduct features that will appeal to the customer; (3) package and brand it so it will beconvenient and memorable to the customer; (4) price the product so it will be within theeconomic means of the customer and yet allow the company to make a reasonable profit; (5)select dealers and physically transport and store the product so it will be available in the rightplace at the right time; and (6) promote the sale of the product by communicating to theconsumer through the mediums of personal selling, advertising, and other forms of salespromotion.2-3.In teaching and selling, Brenda must be able to present scientific ideas accurately andpersuasively. She must be able to motivate others as well as enjoy working with people. Thedifferences consist of working without a prearranged schedule; she will need to organize herown time in sales work. Compensation plans, especially extra financial incentive, are usuallyfound in selling; they are not usually found in teaching.2-4.Students will find information regarding sales training offered by the company. Havethem print and submit this information.Likely similarities that students will mention arepartnering, win-win exchanges, problem solving, understanding the customer’s business,value-added selling, adaptive selling, and others.2-5.This exercise will certainly have those who support and those who do not support thatwomen make better salespeople. There are a number of research papers that discuss gender insales, and how purchasing people view male versus female salespeople. Most studiesconclude that men and women are equally suited to sales positions, although some studies dosuggest that women have some particularly important attributes: the ability to empathize,greater service-orientation, willingness to listen, etc. Be prepared for a good discussion.Role-Play Exercise

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27Provide students with a brief introduction to the wide variety of pens and pencils available. Anice gold pen, for example, might sell for $100 or more.Solution for the Case Problem2-1.Yes, it appears that Smith has adopted the three prescriptions of a personal sellingphilosophy. He demonstrates adoption of the marketing concept because he is constantlyseeking to offer his customers the best value. He appears to value personal selling because heparticipates in a high degree of ongoing training. He also approaches selling as a problemsolver because he bundles insurance policies that are in the customer’s best interest andworks with all individuals who directly or indirectly influence the sale.2-2.Smith has adopted the win-win philosophy; projects a professional image; and maintainshigh ethical standards. See page 38 for a description of why a relationship strategy isespecially important in personal selling.2-3.Smith can create value for his customers by helping them understand complicatedinsurance terms, comparing terms across policies (and even competitors), bundling policiesto save the customer money, providing information about new policy types, and quantifyingthe benefit of having a particular insurance policy or the risk of not having a particularinsurance policy.2-4.It is imperative that Liberty Mutual employees in the marketing research and advertisingdepartments understand personal selling because of the cross-functional demands placed onthe marketing discipline. That is why Smith regularly communicates with employees in otherdepartments – to understand the highly competitive insurance industry and to share marketknowledge with them. Marketing support people in the departments mentioned in thequestion would all benefit from acquiring personal selling skills due to their interaction withstakeholders of the organization that are external to Liberty Mutual.

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