UNIT 2 SALES PROCESS

Structure

2.1 Introduction

Objectives

2.2 Marketing Strategy

2.2.1 Segmentation and Target Marketing

2.2.2 Determining Potential buyer and buyer group

2.3 Sales Approach

2.3.1 Typical Purchasing Process

2.3.2 Essential activities of Sales Process

2.3.2.1 Interest creation activities

2.3.2.2 Pre-purchase activities

2.3.2.3 Purchase activities

2.3.2.4 Post-purchase activities

2.4 Summary

2.5 Keywords

2.6 References

2.7 Suggested Readings

2.1 Introduction

The previous unit dealt with the introduction to “Sales management”. It highlighted the
functions of marketing and sales, described various sales approaches and presented
functions of the sales manager.

We will begin the unit by understanding various steps in marketing strategy and then
deal with the sales personnel skills set and the various steps in the sales process. In
this unit we will discuss about the sales process activities. We shall discuss some
essential activities which need to be performed by the sales personnel in the sales
process. The sales personnel help in creating customer value and competitive
advantage to the product/service.

Irrespective of the nature of sale and the type of customer, the sales personnel should
follow certain basic activities for successful closing of a sale. We will discuss the
essential activities of the sales personnel in general and later on find out in depth how
the sales process changes for different types of sales like Direct and Indirect sales.

Objectives

After studying this unit you will be able to describe the following:-

1) Define segmentation, potential buyer and buyer group for the product/ Service

2) Understand the typical purchasing process of the customer

3) Identify essential activities involved in a sales process

4) Explain the critical role played by the sales person in handling the sales process

2.2 Marketing Strategy

Marketing strategy can be thought of as all the activities performed to use the
company’s limited resources on the objective of the firm to increase the sales and attain
competitive advantage.
The first step includes identifying the product/ service. The product/ service is
developed as per the company goals and the market needs. After identifying the
product/ service, the next step is analyzing the market. This is where we begin to
identify the customer for the product/service.

2.2.1 Segmentation and Target Marketing

Market segmentation is defined as “the process of dividing the heterogeneous market

into homogeneous sub-units”. If we take the population of a country say India, it would
be around 113 crores. For a consumer product let’s say the tooth paste, the market is
huge. However, the entire population would not be looking for the same type of features
in the toothpaste. So we need to convert this heterogeneous group into homogeneous
sub groups. Let us say, we can divide the entire population into two categories, with one
category preferring ayurvedic/herbal toothpaste and the other category preferring non-
ayurvedic toothpaste. This categorization will give an idea of the market segment which
prefers your toothpaste. The need for segmentation is that the marketer is clear about
where to compete and place the product/ service.

There are different bases for segmentation, namely:-

a) Customer-based Segmentation
b) Product-based segmentation
c) Competition based segmentation

Generally there are two important factors before selecting the target segment. They
are:-

a) Attractiveness of a market segment

b) The strategic fit between the segment and the firm’s objectives, resources, and
capabilities.

Market Research will play an important role in finding the answers to the above two
factors.

You can learn more about this in the module Marketing Management.
Now once the segmentation is done for the product/service we can choose the strategy
process from the following methods:-

a) Standardization: - In this strategy, the firm maintains the same product, same
price and same communication medium to all the segments.
e.g.:- Cool drinks will be priced same to either the rich people or the poor people.

b) Differentiation: - In this strategy the firm differentiates the product to cater the
needs of different segment. The pricing would be different in this case.
E.g.:- The Indian Railways differentiates its service into several categories like
AC 2-tier, 3-tire, Sleeper and general coaches depending upon the various
segment needs.

c) Focus: - This is the combination of the above two strategies. In this the basic
product remains the same with additional features for various segments to be
added at an extra cost.
E.g.:- A given model of laptop will be priced same for all segments, but if the
segment needs an up-gradation of features it would be done at an added cost.

So using the above mentioned strategies we market the product/ service.

2.2.2 Determining Potential Buyer and Buyer group

Determining potential buyer is more a marketing task than the function of a sales
process. The potential buyers for a product/service can be arrived by market
segmentation.

The buyer group may be different for the product category and a brand. For example, if
we take the cell phone. Every person in the segment is a potential buyer of the cell
phone. But the buyers are different for high end mobiles and low end mobiles within the
segment. Another example can be thought of as a photo copier. Every office is a
potential buyer of a photocopier but when it comes to brand the offices might go for a
cheaper brand product or a costly brand product.
This is where the sales team comes into picture in determining who the potential buyers
for the brand are and the products associated with it.

The marketing group or the brand management should identify the potential buyers.
They ought to give certain marketing inputs in the form of promotions and PR. It helps in
creating the awareness of the supplier and the brand to the potential buyer before the
sales person contacts. All these activities are a part of marketing policies and
approaches of the firm. The firm also has to provide the support material to the sales
people in terms of brochures, literature etc

This is where the sales team begins its activities. When the sales team takes their
responsibilities the first task is to find the customer, a process which we generally refer
as “Suspect to Prospect through MAN approach”. MAN stands for Money, authority and
Need respectively.

Every potential buyer may not be an actual buyer of the product. The potential buyer
cannot purchase the product if he doesn’t have the money, authority and or the need. It
is written in this order because it is easier to identify whether the person is having the
money followed by whether he has the authority to buy and finally he has the need to
buy.

Sales team needs to know how to arrive at knowing whether the potential buyer has the
money, authority and need. One cannot just ask the potential buyer whether he/she has
the money. So, some parameters such as education, occupation, family status etc.
needs to be analyzed at arriving the money aspect in converting the potential buyer to
actual buyer.

Marketing would do this job at a macro level and sales would do this job at the micro
level. Marketing identifies the target segment or potential buyers of the product/ service
but at the level of individual potential buyers it the task of sales person to identify the
needs and wants of the individual potential buyer.
SAQ 1
1) If you are the sales manager in your city for the computer product like laptop,
which method would you follow in identifying the segments for your product?
2) Explain the importance of MAN approach in identifying the actual buyer for
selling a high priced product like a luxury car.

2.3 Sales Approach

Once the sales team identifies the prospect, it’s time to decide on the sales approach.
The first step in sales process would be the pre-approach. Pre-approach would include
the attire, presentation material, fixing an appointment and deciding what to do in the
appointment like opening remarks etc. So pre-approach is more like the data collection,
knowing more about your prospect, the team involved in buying the product, the
customer history and so on.

The sales team will always be able to sell better if they talk customer needs and not the
features of the product/ service. This is referred by the term “FABing” which means
convert features to attitude and attitude to benefits.

If you are selling the photocopier it would be advisable to talk about the customer
needs. You may start your discussion saying “Last year the expense on photocopy is ‘X’
amount, if you install the machine you would end up saving with ‘Y’ amount per annum”.

Now let us understand the typical purchasing process.

2.3.1 Typical Purchasing process

Every purchase has a process which can be understood by the following diagram.

Recognition  Evaluation  Purchase  Implementation 

of needs  of options  decision  and evaluation 

Most of the customers do not buy a product unless there is a need for it. The problem is
the customer does not know what he/she needs. So in the first step of purchasing
process one has to identify what the problem or need is.
In the second step “Evaluation of options” the customer would look for various
competitive products or solutions for his problem. There might be a different criteria
used by different customers. Some of them might be:-

a) Price: - Many customers use price as the differentiation criteria. Customers

might go for a cheaper product rather than a costly one. This is seen more in
developing countries rather than in developed countries. In this the sales person
may be actively negotiating or a better price or give some discounts. Discounts
play a major role in the successful closing of sale. But the sales person should
have a clear idea of what could be the maximum discount allowed by the
company for the product/service.
Some customers go on with the higher price products or some may buy the
medium priced products. The choice would depend on the customer mindset.

b) Quality: - Here the customer would be preferring a best quality product and
doesn’t mind in paying a little more. Quality might be different for different
customers. For the customer, Quality may be associated with long life of the
product, more features, best designs, better after sales service, and so on. Most
of the customers associate quality with brand. It is the role of the sales person to
know what the customer meant by a quality product and carry on with the sales
process.

In the third step the purchasing decision will be taken by customer. The role of a sales
person is to make the purchasing process hassle free and convenient.

And the final step “Implementation and Evaluation” deals with the installation of the
product and evaluating the value. If the customer evaluation is positive it would lead to
another sale in future.

These are the four steps in typical purchasing process for every sale. The level of
activities involved in each step differs for different types of sales like direct and indirect
sales. For instance more activities might involve in the first step “recognition of needs”
for an industrial sale while compared to door-to-door sale. It is very important to know
the kinds of activities involved in each of the step for all the types of sales.

2.3.2 Essential Activities of Sales Process

Generally the sales process can be categorized into four main activities. To convert the
suspect to a prospect, each and every activity is important and needs to be performed
successfully. These activities aim at serving the customer properly and the process can
be referred to the sales process cycle.

Every sale has some essential activities to be performed by the sales team. Let’s
understand those activities with the help of following chart.

Interest Creation
Activities

Post Purchase Pre-Purchase

Activities Activities

Purchase
Activities
Source: Sales Management, by Andris A. Zoltner , Prabhakant Sinha, Greggor A.
Zoltners, page no: 41

From the above diagram you can identify that sales process activities can be
categorized into four main activities. To convert the suspect to a prospect, each and
every activity is important and needs to be performed successfully. These activities aim
at serving the customer properly and the process can be referred to the sales process
cycle.
2.3.2.1 Interest Creation Activities

The first activity includes interest creation. Once the potential customer is identified,
he/she needs to be educated about the product/service. It is the job of the sales person
to be prepared with necessary literature, brochures and or presentations. If the product
is a technical instrument, the aim of the sales person should be in explaining the
benefits of the product and not the technical features. In this activity creating awareness
about the brand or product should be the main aim rather than pushing for the sales.
The sales person needs to understand the customer in this phase and identify his/her
problem and provide necessary documents which the customer may request. Various
promotional techniques can be used for interest creation. Some of the ways how
companies create interest in the product/service would be:-

Î For a technological product like anti-virus, companies give full access of the
software features and capabilities for a limited time like 1 month. During this time
the customer can evaluate the product and then buy it.

Î For consumer goods like soaps or shampoos, trial packs are given for free along
with other products.

Î For the automobiles, sales people give free test drive for the customer, so he/she
can purchase only if they are satisfied.

Î Motivation quotes also create interest, like “Why should boys have all the fun” for
Hero Honda’s “Pleasure” which simply says that girls too require freedom as men
and driving the scooter as a symbol of freedom and liberty.

2.3.2.2 Pre-purchase Activities

Having created interest in the brand/ product in the first activity, it’s time for moving on
to the next activity by the sales person. In this process we assume that the customer is
actively considering various product offerings and comparing them. This activity aims at
describing the product or service features to the extent possible. Much emphasis is laid
on demonstrating the capabilities of the company and or the product. Here the sales
person takes active role in assessing the customer needs and help them in problem
solving.

2.3.2.3 Purchase Activities

Having presented solution to the customer problems, it’s time for the sales person to
push on the sale for closing. Here a lot of activities happen both from the sales person
and the customer end. Sales person role lies in negotiating, bidding, finalizing terms and
conditions. The customer evaluates various proposals, negotiates and finalizes the
payment. It is not necessarily required that the same person or company who initiated
the pre-purchase activities would be involving in purchase activities. Some of the
processes may be outsourced to other agents.

Interest Creation Pre-purchase Purchase Post-purchase

Business partner does

IBM direct Business Partner delivery and installation

IBM
sales person (reseller) IBM may provide technical
support

Source: The complete guide to accelerating sales force performance, by Andris A.

Zoltner , Prabhakant Sinha, Greggor A. Zoltners, page no: 31

This table explains how the different stages in sales process are handled by the
company sales force and the selling partner. To sell an IBM product, an IBM sales
representative involves in interest creation and pre-purchase activities like explaining
the features, capabilities and advantages of the product and how the product would be
an advantage for the customer or in solving the customer problems. In the later stages
like purchase activity, the IBM sales person would handle over the lead to a reseller
business partner to complete the purchase and post-purchase activities and the
technical support may be provided by IBM team when required.

Companies may also decide to handle all the activities from interest creation to post-
purchase. It depends on the company to handle all or to share the sales activities with
others. Most of the companies who adopt the outsourced model have several
advantages and disadvantages.

Advantages of Outsourced selling (Partner, reseller & distributor)

ÆCustomer relationships: The reseller or partner might be having good

communication and negotiating skills, so the chances of closing a sale are high.

ÆFinancial Costs: Partner can reduce the financial risk as they can decrease the can
selling risk and would charge as a percentage of the sales made.

ÆProduct variety: Distributor can act as a one stop solution for the customer
requirements. If your company is good in manufacturing microphones/headsets only,
then you can take the help of the distributor who would be dealing with the computer
products. The chance of your product sale goes high when the customer comes for the
computer/laptop and buys your key board as an accessory.

Æ Variable capacities: In times of increased demand, company can’t increase the

sales force to sell the products and later on fire them if there is no much work when
demand decreases. So in peak times the distributors can help in selling your
products/service to the customers.

Disadvantages of Outsourced selling (Partner, reseller & distributor)

Æ Conflicts: Conflicts can arise when deciding which customers to be served, which
territories should be assigned and the company may not be able to force the reseller to
follow its sales strategies.

Æ Control: Outsourced selling cannot be controlled as the personal sales team of the
company. Companies may not be able to keep track of the reseller performance in
selling the goods/services. Reseller may be interested in his own profit and may
encourage the customer to buy other products as he/she receives more share/profit
from other products.
2.3.2.4 Post-purchase Activities

The post purchase activity begins after the successful closing of sale. This phase
includes the delivery of the product/ service, installation, providing information about the
features and finally collecting the payment. This phase can also include after sales
service. The primary objective of this phase is to win the customer loyalty so that he/she
would be a regular customer of the brand/product.

As discusses earlier some functions in this stage like providing information, delivery of
product and installation can be done by the company itself or with the help of a reseller.
After sales service plays an important role in creating the customer loyalty. It can be
simply addressing the customer problem on the telephone line or personally visiting the
customer premises and resolving the issue. In B2B deals, post purchase activities can
include installing the product or service and then provide the training for the employers
of the company until they understand the new product/service.

Understanding the post-purchase behaviour by the sales team is an important task if the
company looks for repeated business for a long term relationship with customer. So the
sales team has to understand

Consumer 
Post-purchase
Complaints       
Dissonance Negative Evaluation     
“Did I buy the right one?” “I’m calling the 
“It doesn’t work well” 
store.”

No Purchase 
Purchase         Usage               Product disposal        
“This is the one  “I found another  “Can I trade this in?” 
I want”  for use…” Repurchase 
.

Positive Evaluation      
“It works well” 

Source: Small business management: an entrepreneurial emphasis By Justin Gooderl

Longenecker, Carlos W. Moore, J. William Petty, Leslie E. Palich, page no: 298
This model says activities like post purchase dissonance is a type of cognitive
dissonance which would arise when the purchase decision is made and customer has
any thoughts of other products as an alternative. This can create a negative effect on
the evaluation and satisfaction level with the product/ service. So, sales people should
try to find ways in maintaining this cognitive dissonance among customers.

SAQ 2
1) If you are in need for an anti-virus product, identify the typical purchasing process
you would follow.
2) If you are a sales representative for kitchen chimney products, what sort of
interest creation activities would you employ if the customer is not interested?

2.4 Summary

In the previous unit we have discussed about various marketing and sale approaches
followed by the companies. In this unit we have understood the importance of
segmenting and target marketing in identifying the customers. We have understood how
the customer would purchase the product/service starting with the recognition of needs,
evaluating options, making the purchase decision and finally the implementation and
evaluation of the product after it is delivered by the sales representative. It’s the job of
the sales person to help the customer in handling the purchasing process of the
customer. So we studied the essential activities of the sales person in handling the
customer and making the deal.

We understood how the interest can be created in the product/service in various ways.
After the interest is created it’s time for the sales representative to handle the pre-
purchase activities like giving sufficient information about the product/service and
describing the benefits. The next stage would be purchase activities where the sales
representative would be aiming at closing the deal successfully by negotiating and
finalizing the payment terms. Finally the post purchase activities would include
delivering the product/service, collecting the payment as per the terms and providing the
after sales service. Finally we have discussed that for repeated business with
customers, it has become extremely important to handle the post-purchase behaviour of
the customer as more and more alternative products/services as available for customer
by other companies.

2.5 Keywords

1) Reseller Company or an individual who purchases the

products/ service with an intention of selling
them to other customers on behalf of the
company.

2) Potential Buyer Buyer who is interested in buying your

product/service, but may not necessarily buy it.

2.6 References

1. Andris A. Zoltners, Prabhakant Sinha, Greggor A. Zoltners (2001), “The complete

guide to accelerating sales force performance”, Amacon, New York, USA.

2. Justin Gooderl Longenecker, Carlos W. Moore, J. William Petty, Leslie E. Palich

(2001), “Sales Management: Teamwork, Leadership, and Technology (13th
Ed.)”, South Western, USA.

3. Rajan saxena (2006), “Marketing Management (3th Ed.)”, Tata Mcgraw-Hill, New
Delhi, India.

4. William L. Cron, Thomas E. Decarlo (2006), “Dalrymple’s Sales Management

(9th Ed.)”, John wiley & Sons, New Delhi, India.
2.7 Suggested Readings

1. Ralph W. Jackson, Robert D. Hisrich (1996), “Sales and Sales Management”,

Prentice Hall, New Jersey, USA.