Effective Selling Report PDF

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Premium Sportswear in the UK PERSONAL SELLING STRATEGIES & TACTICS Jordan Allison – B00219847 International Marketing | Effective Selling |

Contents Executive Summary................................................................................................................................... 2 Introduction.............................................................................................................................................. 2 Sector: Premium Sportswear..................................................................................................................... 3 Personal Selling in Premium Sportswear: Strategies & Tactics...............................................................4 Conclusion & Recommendations............................................................................................................. 6 References.................................................................................................................................................. 7

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Executive Summary 

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Introduction  Personal selling is extremely important to every day marketing, despite social media and technology becoming so prevalent. Different sales strategies are required to meet the needs of differing customers. Beware of ethical and cultural issues. Sector: Premium Sportswear  Adidas and Nike dominate the sector with a combined 25.6% market share in Western Europe.  Brands such as Puma and Umbro are global however do not compete with the two giants of premium quality sports goods Nike and Adidas.  Personal selling is majorly important for any company within this sector, both B2C and B2B sales. It allows interaction between customer – client and customer – product, however can be costly and time consuming Strategies and Tactics  All sales strategies stem from and link to company objectives  Build, Hold, Harvest & Digest are four identified overall objectives and so sales strategies must apply to those that fit the company.  Adidas and Nike opt for strategies matching Build + Hold objectives due to vast market share.  They regularly employ sales tactics in order to Build such as approaching rising footballing nations for business.  Cultural and ethical issues must be addressed, eg. Business in China – bribe culture  Nike & Adidas employ targeting strategies and often customer retention strategies, whereas the many brands with much less market share opt for pricing strategies due to cost focus and cost leadership

Introduction Even in the modern, 21st century marketing world where it seems technology and social media are the biggest influences on the customer, face-to-face selling is still vital to many sales – and in some business sectors those types of sales are indeed vital. The process of face-to-face selling is also more commonly known as ‘personal selling’. Donaldson describes personal sales as “… the personal contact with one or more buyers for the purpose of making a sale” (Donaldson, 2007: 3). In general terms, no two person-to-person sales are the same as all customers have varying circumstances and individual needs whether the customer is just one person, or representing a business: therefore the sales force must have a wealth of strategies and tactics in order to entice a buyer into a sale. While assessing different strategies, the seller must always consider cultural and ethical issues that come with personal selling which will be investigated further.

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Sector: Premium Sportswear One business sector where face-to-face selling is key, is retail sportswear and in particular, premium, high quality sportswear and footwear. This sector is a great example for two reasons: firstly, businesses in this sector attract sales from both individual customers and other businesses, such as football clubs, and high street and online retailers. Secondly, the sector can be characterised as an oligopoly in the UK. Stanley describes oligopolistic markets relatable to this one as when “… very few sellers, large in comparison to the market, may sell identical products…. or they may try to differentiate their products, as in the automobile industry” (Stanley, 1977). The big players in the UK premium sportswear sector are Adidas and Nike – amongst various suppliers in the same market but with much less market share such as Lotto, Puma, and Umbro etc. To put it in perspective, in 2012 Adidas sat on 13.2% of the entire Western European premium sports products market with Nike just behind them with a still-enormous 12.4% (Yahoo! Finance, 2014). Where individual products such as footwear can be priced around £200 each and also when the fit and design is vital to the customer’s satisfaction, it is clear that any sales team operating in premium sportswear requires a high level of personal selling and customer research in order to keep on top of their competitors. One of the benefits of face-to-face selling in this sector is obviously that the customer can interact with both the seller and the item of sportswear. The seller can then quickly adapt their sales pitch to fit what they gauge the customer’s needs appear to be during the personal sales interaction. This is a clear advantage over online selling particularly in this business sector, where the consumer has no way of gaining complex or real detailed information about the products they are buying. Where sales direct from the internet do have the advantage however, is cost. Particularly in premium sportswear, the cost to the business such as Nike of an experienced sales person, is much, much higher than simply advertising the product on their website. As well as pertaining to the individual customer’s needs, global organisations such as Adidas and Nike undergo many business-to-business sales or B2B personal sales. This form of personal selling is often just as profitable to the company as the amount of customer sales. There can, again, be advantages and disadvantages to B2B selling at face-to-face level for firms in this market. As the two giants Adidas and Nike are primarily manufacturers of their products as well as retailers, they must engage in B2B sales with big sportswear retailers such as Sports Direct in order for their products to be distributed. A disadvantage to them would be the time consuming aspect of it, as typically in western culture, a large B2B personal sale would often require days and sometimes months of financial discussions. This can also lead it to becoming a fairly costly sale as the buyer for the retailer, Sports Direct, Greaves Sports etc. may expect to be taken care of and provided for in terms of lunch and dinner in order to help close the sale – perhaps even hotel accommodation if the buyer is from overseas e.g. Decathlon, France. The main benefit that businesses would hope to come from any lengthy B2B sale is that it would build friendly relationships between the two businesses, leading to future deals being done between the manufacturer and sportswear retailer.

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Personal Selling in Premium Sportswear: Strategies & Tactics Without any overall marketing targets, the sales force would be selling blindly with no direction to go in, which could potentially damage the firm financially, therefore sales strategies are directly linked to that of the corporate objectives. There are so directly related that it is clear to see which organisational decisions at director level have been taken into consideration at personal sales level. Strakle and Spiro categorise four marketing objectives and identify on the table below how they directly influence the personal sales strategy. Strategic marketing objective Build

Hold

Harvest

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Build sales volume Increase distribution Provide high service levels

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Maintain sales volume Maintain distribution  Maintain service levels

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Divest

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High call rates on existing accounts High focus during call Call on new accounts (prospecting)

Continue present call rates on current accounts  Medium focus during call  Call on new outlets when they appear 

Reduce selling costs Target profitable accounts Reduce service costs and inventories

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Call only on profitable accounts  Consider telemarketing or dropping the rest  No prospecting

Clear inventory quickly

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Quantity discounts to targeted accounts

Source: Strakle, W. and Spiro, R.L. 1986 Journal of Personal Selling and Sales Management, pp 11-18

“Build” shows that when the company are looking to increase sales, the strategies mirror those intentions as they aim to look at approaching new customers and even push existing customers into more sales, whilst paying closer attention to them. As a contrast, as the business wishes to “hold” their current sales levels, the sales strategy changes to one that is happy with their current level of attention to existing customers and only seeks new potential consumers if they appear. In real life you can see this in retail at any level, for example at Christmas time in a jewellers, a member of the sales force will rush over to prospective, neutral browsing consumers whereas at a less intensive time

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of the year they may employ ‘holding’ tactics. The objective described as ‘harvesting’ by Strakle and Spiro would be used when a company needs to change its sales operations as they are currently resulting in losses and are not currently benefitting the marketing department, therefore the suggested sales strategies are shown directly linked to the hypothetical company’s current status. They suggest a cheaper and therefore less effective method of personal sales, to only press the more profitable customers for more sales and not to bother budgeting for new customers. Finally, the grim objective of ‘divesting’ when the company is in dire need of cutting investment into personal sales, the suggested action is to entice existing customers with deals for bulk buying in order to get rid of stock.

As the premium sports goods sector in Britain has already been identified as oligopolistic with Adidas and Nike the two leaders, it is a fair assessment to predict that their respective marketing directors will always set their objectives between ‘building’ and ‘holding’ sales – however as they retail in upwards of 30 countries worldwide, they can be seen to operate simultaneously with multiple strategies in the different countries, depending on the economy and the wealth and demands of the target market there. Currently, as the FIFA World Cup 2014 looms however, and of course the summer/autumn time is widely considered marathon season in Western Europe in particular, both these organisations have every reason to aim to build and generate more sales in the UK and worldwide. In recent months, Nike and Adidas have recently employed numerous sales tactics, involved in a vast amount of B2B personal sales in order to sell their brand to several nation’s football associations who are competing in the coming World Cup. Prospecting new up and coming footballing nations is a priority for the marketing departments as this sales tactic could lead them to build and generate sales from an entire nation, delivering to them a product with arguably both a unique selling point and an emotional selling point: the nation’s football jersey. Aside from B2B deals to manufacture kits, there would be personal selling deals to individual footballers who carry a brand within themselves, e.g. Cristiano Ronaldo, Lionel Messi (who are currently contracted to wear Nike and Adidas sportswear respectively) (Daily Mail, 2014). Cultural barriers and ethics can cause the sales force at companies like Adidas to proceed with extreme caution when performing face-to-face business. When they closed the deal to become the shirt manufacturer for the People’s Republic of China’s national football team, they faced a number of obstacles. Although the deal was massive for Adidas as China is the most populous country in the world, it is widely recognised that it is difficult to do major business in China without the request at some point for a form of bribery (Reuters, 2013). “Ordinary people in China face bribery when dealing with government officials, but even in the workplace” (Backman & Butler, 2007). This recognition attributes bribery as part of China’s culture, and that is something any company who wishes to enter the country’s market must respect. However ethically, as a worldwide loved company, Adidas must tread carefully to not let any globally understood wrong-doings such as bribery be misinterpreted by their customers as bad practise of ethics and morals as an organisation, as this could certainly lead to loss of loyal customers. Once firms in the premium sportswear sector have established their objectives, the selection of sales strategies is crucial. Jobber and Lancaster narrow strategies down to three categories which give insight into which would be used by the sales force at leading companies in this market. Companies such as Umbro and Puma are strugglers for market share alongside Nike, and they therefore employ pricing strategies due to their cost focus (Lancaster & Jobber, 2012). They have a much lower cost for

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their product and use this to their advantage in selling. They can then target customers geographically based on the overall average wealth of people in the target location. This targets areas and customers that Adidas and Nike cannot get sales from due to their premium pricing. Adidas and Nike on the other hand, look to targeting strategies concentrating on the customer’s purchasing habits and attitudes towards their respective brands (Lancaster & Jobber, 2012). Many customers exhibit loyalty towards either Adidas or Nike and therefore those marketing sales forces will push for them to continue their buying through direct promotion and advertising, especially during seasonal boosts such as the FIFA World Cup – linking to customer retention strategies.

Conclusion & Recommendations The sheer enormity of both Nike and Adidas’ brand awareness and share in the premium sportswear market allows them to compete healthily around the world, forcing them to seek new ways to be better than their opponents thus leading to a better value product for the customer. It is important to remember that for the majority of these international companies, they can employ various different strategies linked to the same overall objective, in several different countries concurrently. It is evident that no matter what state any of the companies in this sector find themselves in, there are sales strategies that clearly match a company’s needs in order to prosper. Adidas and Nike have an incredibly large share of the premium sportswear market not just in the UK or Europe but worldwide as well. For them to begin to increase this share in the UK and Western Europe, it would be recommended that they attempted to consider looking into more B2B sales from the retailers in areas that Puma and Umbro have market share power over. There, they must use promotional pricing such as temporary price reductions on sale items or lesser quality products.

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References 

Backman, M & Butler, C (2007) BIG In Asia: 30 Strategies for Business Success. Palgrave MacMillan p154

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Donaldson, B. (2007) Sales Management: Principles, Process and Practice

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Jobber, D & Lancaster, G. (2012) Selling and Sales Management. 9th Edition

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Stanley, R.E. (1977) Promotion: Advertising, Publicity, Personal Selling. Sales Promotion pp. 4, 266-289

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Strakle, W & Spiro, R.L. (1986) Journal of Personal Selling and Sales Management. Aug, pp 11-18

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Dailymail.co.uk – Daily Mail (n.d.). Retrieved 17th March 2014, from the Daily Mail http://www.dailymail.co.uk/sport/football/article-2577272/Football-Rich-List-RealMadrids-Cristiano-Ronaldo-beats-Barcelonas-Lionel-Messi-wealthiest-title.html

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uk.Reuters.com – Reuters (7/11/13). Retrieved 18th March 2014, from Reuters http://www.trust.org/item/20130903142206-sj9z1/-

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uk.Finance.Yahoo.com – Yahoo! Finance (n.d). Retrieved 16th March 2014, from Yahoo! Finance http://uk.finance.yahoo.com/news/nike-adidas-square-off-brazil-174638124.html

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