In the gaps model of service quality, the gap between what the firm's advertising promises and what its service actually delivers is the gap between:

Service delivery and external communications

Consumer expectation and management perception

Management perception and service-quality specification

Service-quality specification and service delivery

Grönroos's 'internal marketing' in service firms refers to:

Training and motivating employees to serve customers well — enabling the promise made to customers

Selling the firm's services to its own employees at a discount

Marketing between departments of a conglomerate

Advertising within the home country only

Peppers and Rogers' IDIC framework for customer relationship management stands for:

Identify, differentiate, interact, customise

Inform, deliver, invoice, collect

Investigate, design, implement, control

Innovate, diversify, integrate, consolidate

McNair's 'wheel of retailing' hypothesis states that:

New retail formats enter as low-price, low-margin operations, gradually trade up, and are displaced by the next low-price entrant

Retailers alternate between wide and narrow assortments

Every retail format passes through innovation, growth, maturity and decline

Store location is the only determinant of retail success

Under India's FDI policy for retail, foreign direct investment is permitted in e-commerce only in the:

Marketplace model, not the inventory-based model

Inventory-based model, not the marketplace model

Direct marketing is distinguished from other promotion tools chiefly by its:

Use of consumer-direct channels to obtain a measurable response or transaction without intermediaries

Reliance on mass media to build brand awareness

Face-to-face negotiation with industrial buyers

Sales Force and Personal Selling, Service Marketing, Customer Relationship Marketing, Retail Marketing, Emerging Trends and International Marketing

The second half of Unit 7 collects the applied marketing topics: how a sales force is designed and managed and how personal selling proceeds, what makes services different and how service firms compete, relationship marketing and CRM, retail formats and the recent trends in Indian retail, the emerging forms of marketing the syllabus lists — e-marketing, direct, digital and green — and international marketing's entry-mode and marketing-mix decisions. The paper asks these as classifications and sequences, and this chapter gives them as such.

1. Designing and managing the sales force; personal selling

Sales force design sets objectives (prospecting, targeting, communicating, selling, servicing, information gathering, allocating), strategy (which customers, how — individual, team or conference selling, seminar selling; direct or contractual sales force), structure, size and compensation. Structures are territorial (one representative, one exclusive territory — clear responsibility, low travel cost), product (specialists by product line — for technical, unrelated lines), market or customer (by industry or account — key-account management) and complex (combinations for large firms). Size is set by the workload approach (Talley): group customers into classes by size, set the desired call frequency for each, multiply to get the total annual workload in calls, divide by the average calls a representative can make in a year. Compensation has a fixed amount (salary — security, easy to administer, fits non-selling tasks), a variable amount (commission or bonus — incentive, ties cost to sales), expense allowances and benefits; combination plans are the commonest. Management then recruits and selects (traits — empathy and ego drive, Mayer and Greenberg), trains (product, company, customer, competitor knowledge and selling skills), supervises (call norms, time management — call reports, sales-time analysis), motivates (quotas, sales meetings, contests, recognition — Churchill, Ford and Walker's model links effort, performance, reward and satisfaction) and evaluates (sales reports, sales-to-quota, calls per day, average order size, cost per call, new accounts, customer satisfaction).

Prospecting and qualifying — finding leads (referrals, directories, cold calling, trade shows, digital) and screening them by need, ability to pay and authority.
Pre-approach — learning about the prospect's needs, buying process and people; setting call objectives and approach strategy.
Approach — the opening: appearance, opening lines, rapport, the first few minutes.
Presentation and demonstration — telling the product story with FABV (features, advantages, benefits, value); formats — canned, formulated, need-satisfaction; SPIN selling (Rackham — situation, problem, implication, need-payoff questions).
Handling objections — psychological (resistance to interference, preference for habit, apathy) and logical (price, delivery, product) objections met by clarifying, questioning, denying validity or turning the objection into a reason to buy.
Closing — recognising buying signals and asking for the order: trial close, assumptive close, alternative close, summary close, urgency close, concession close.
Follow-up and maintenance — delivery, installation, service, reassurance to reduce post-purchase dissonance, and relationship building for repeat business.

🧠 The workload method in numbers

A firm has 200 large accounts needing 24 calls a year and 800 small accounts needing 6. Workload = 200 × 24 + 800 × 6 = 4,800 + 4,800 = 9,600 calls. A representative makes 800 calls a year. Sales force size = 9,600 ÷ 800 = 12. Personal selling suits complex, high-value, business-to-business and relationship products, and is the costliest promotion tool per contact; it is the dominant element of the promotion mix in business markets where advertising dominates in consumer markets.

2. Service marketing: managing service quality and brands, strategies of service firms; customer relationship marketing

A service is any act or performance one party can offer another that is essentially intangible and does not result in ownership of anything; offerings run from pure tangible goods through goods with accompanying services, hybrids and services with accompanying goods to pure services. Their four characteristics — intangibility, inseparability, variability (heterogeneity) and perishability — dictate the marketing responses: tangibilise the intangible through evidence and image, manage the provider-customer interface through training and multi-site strategies, standardise through good hiring, procedures and monitoring, and match capacity to demand through differential pricing, reservations, complementary services, part-time staff and shared capacity. The services marketing mix adds people, process and physical evidence to the four Ps (Booms and Bitner, 1981), and service marketing is threefold — external (firm to customer: promise), internal (firm to employees: enabling the promise) and interactive (employee to customer: keeping the promise) — Grönroos's triangle. Managing service quality follows the gaps model of Parasuraman, Zeithaml and Berry (1985): five gaps between customer expectation and management perception, management perception and quality specification, specification and delivery, delivery and external communication, and — their sum — expected and perceived service; SERVQUAL measures the last on five determinants — reliability, assurance, tangibles, empathy, responsiveness (RATER) — of which reliability matters most. Service-quality practices: strategic concept, top-management commitment, high standards, self-service technologies, monitoring (comparison shopping, ghost shopping, surveys), satisfying complaints and recovery (the recovery paradox), and satisfying employees along with customers — Heskett's service-profit chain. Managing service brands means differentiating the offering (primary and secondary service features, innovation), delivery (people, environment, process) and image (symbols and branding), and building brand equity where the brand is often the company itself. The strategies of service firms are differentiation, quality leadership, productivity improvement (better-trained staff, quantity for quality, industrialising the service — Levitt, designing more effective services, incentives for customer self-service, technology), and customer-centric strategies such as the flower of service (Lovelock — eight supplementary services: information, consultation, order-taking, hospitality, safekeeping, exceptions, billing, payment), service blueprinting (Shostack), yield management and the service-dominant logic.

Customer relationship marketing and CRM
Aspect	Content	Names and points
Concept	Relationship marketing attracts, maintains and enhances customer relationships (Berry, 1983) — a shift from transaction marketing (single sale, product features, short horizon, little service, limited commitment) to relationship marketing (retention, customer value, long horizon, high service, high commitment, quality as everyone's concern); the Nordic school (Grönroos, Gummesson) and the IMP group	Trust and commitment are the key mediating variables (Morgan and Hunt, 1994); retention economics — it costs several times more to win a customer than to keep one, and a small rise in retention lifts profit disproportionately (Reichheld)
Relationship building and the loyalty ladder	Prospect, customer, client, supporter, advocate, partner (Christopher, Payne and Ballantyne); Kotler's levels of relationship marketing — basic, reactive, accountable, proactive, partnership — chosen by the number of customers and the margin	Few customers and high margin justify partnership marketing; many customers and low margin get basic or reactive
Strategies	Financial bonds (frequency and loyalty programmes, volume pricing), social bonds (personal relationships, community, events), customisation bonds (mass customisation, anticipation), structural bonds (integrated systems, shared processes) — Berry and Parasuraman's four levels; cross-selling and up-selling; win-back; customer tiering (platinum, gold, iron, lead — the customer pyramid of Zeithaml, Rust and Lemon)	Structural bonds are the hardest for competitors to break
Values	Customer lifetime value as the guiding metric; value for the customer (the relationship's benefits over its costs) and value from the customer (revenue, referrals, information, co-creation); customer equity as the sum of CLVs	CLV = present value of (margin × retention probability) over the expected life, less acquisition cost
CRM process and systems	Peppers and Rogers' IDIC — identify customers, differentiate them by value and needs, interact with them, customise the offering; the CRM cycle — acquire, retain, grow; systems — operational (sales-force automation, marketing automation, service automation), analytical (data warehouse, mining, segmentation, churn prediction), collaborative (channels, partners); Payne and Frow's strategic CRM framework; permission marketing (Godin) and one-to-one marketing	CRM is a strategy enabled by technology, not the software alone — most failures are of process and culture; privacy law (India's Digital Personal Data Protection Act 2023) constrains data use

3. Retail marketing: trends in India and types of outlets; emerging trends — e-marketing, direct, digital and green marketing

Types of retail outlets
Type	Description	Indian example
Specialty store	Narrow product line with deep assortment — single-line, limited-line, super-specialty	Bata, Tanishq, Croma
Department store	Several product lines, each run as a separate department by buyers or merchandisers	Shoppers Stop, Lifestyle, Westside
Supermarket	Large, low-cost, low-margin, high-volume self-service store for food and household needs	More, Reliance Fresh, Spencer's
Hypermarket and superstore	Very large selling area combining supermarket, discount and warehouse retailing under one roof	Big Bazaar (now defunct), Reliance Smart, DMart
Convenience store	Small, near residences, long hours, limited high-turnover lines at slightly higher prices	The kirana store — India's dominant format — and 24Seven
Discount store and off-price retailer	Standard merchandise at lower prices on lower margins and higher volume; off-price sells surplus, irregulars and overruns — factory outlets, independents, warehouse clubs	DMart, Vishal Mega Mart, Brand Factory
Category killer	Giant specialty store with a very deep assortment in one category at low prices	Decathlon, IKEA
Non-store retailing	Direct selling (one-to-one, party plan, multi-level marketing), direct marketing (catalogue, telemarketing, TV shopping, e-commerce), automatic vending, buying services	Amway, Flipkart, Amazon India, Nykaa
Corporate retailing	Corporate chain stores, voluntary chains, retailer cooperatives, consumer cooperatives, franchise organisations, merchandising conglomerates; shopping centres — malls, community and neighbourhood centres	Reliance Retail, Tata's Trent, Kendriya Bhandar (cooperative)

Retailing includes all activities in selling goods or services directly to final consumers for personal, non-business use. Its theories are the wheel of retailing (McNair — new formats enter as low-price, low-margin operations, trade up, and are displaced by the next low-price entrant), the retail accordion (alternation between wide and narrow assortments), the retail life cycle (innovation, accelerated development, maturity, decline) and the dialectic process. Retail marketing decisions are target market, product assortment and procurement (category management, private labels), services and store atmosphere, price (high mark-up low volume or the reverse; everyday low pricing), communications and location (central business districts, regional shopping centres, community centres, strip malls, a location within a larger store, and stand-alone). Recent trends in India: the growth of organised retail alongside the still-dominant kirana; the rise of e-commerce marketplaces (Flipkart, Amazon) and vertical players, and of quick commerce (Blinkit, Zepto, Swiggy Instamart) with ten-minute grocery delivery; omnichannel and phygital retail; the Open Network for Digital Commerce (ONDC, 2021) as a government-backed interoperable network; the Unified Payments Interface making digital payment the default; private labels and value formats; the FDI policy allowing 100% in single-brand retail (automatic route, with local-sourcing conditions) and 51% in multi-brand retail with government approval, while the e-commerce policy permits 100% FDI only in the marketplace model, not inventory-based retail; the Consumer Protection Act 2019 and its e-commerce rules; social commerce and influencer-led selling; and the consolidation of large groups (Reliance Retail, Tata Digital) buying formats and brands.

Emerging trends in marketing
Trend	Concept	Tools and terms
E-marketing (internet or online marketing)	Marketing through the internet and electronic channels — the firm's website, e-mail, online advertising, e-commerce; part of e-business (Kotler: e-marketing is the e-business side that markets and sells online)	B2C, B2B, C2C, C2B; click-only versus brick-and-click; the 4 Cs of online marketing (Kotler) — context, content, community, customisation, plus communication, connection, commerce; interactivity and disintermediation
Direct marketing	The use of consumer-direct channels to reach and deliver goods and services to customers without marketing middlemen, seeking a measurable response or transaction	Direct mail, catalogue, telemarketing, direct-response TV, kiosks, e-mail, mobile; the customer database and database marketing; RFM analysis (recency, frequency, monetary value); Direct Marketing Association; legal limits — do-not-call registry (TRAI's National Customer Preference Register)
Digital marketing	Marketing through digital technologies and data — the broader successor of e-marketing that includes mobile, social, search and programmatic channels and measures every touch	Search engine optimisation and marketing (organic and paid search), display and programmatic advertising, social-media marketing, content marketing, influencer marketing, affiliate marketing, e-mail and marketing automation, video and short-form, app and mobile marketing; owned, paid and earned media; metrics — impressions, click-through rate, cost per click and per acquisition, conversion rate, return on ad spend, engagement, bounce rate; the customer journey and the 'moments of truth'; AI-driven personalisation and chatbots
Green marketing	Marketing products presumed to be environmentally safe — modifying the product, production process, packaging and advertising to reduce environmental impact (Polonsky; the AMA's definition covers all three of retailing, social and environmental senses)	Green consumers and segments; the green marketing mix; eco-labels (India's Ecomark 1991, BEE star rating, Energy Star); greenwashing and its regulation (the Central Consumer Protection Authority's 2024 guidelines on greenwashing claims); life-cycle assessment; circular economy and extended producer responsibility; sustainability marketing and the triple bottom line

4. International marketing: entry mode decisions and planning the marketing mix for international markets

International marketing is the performance of marketing activities across national boundaries; global marketing treats the world as one market. The decisions run in sequence: whether to go abroad (pull of larger markets, push of a saturated home market, following customers, counter-attacking competitors), which markets to enter (few or many — the waterfall versus sprinkler approach; developed or developing; regional clusters — the EPRG orientation of Perlmutter and the psychic-distance principle), how to enter, what marketing programme to run and how to organise. The five entry modes rise in commitment, risk, control and profit potential: indirect exporting (through home-country export houses, agents, cooperative organisations or export-management companies — least investment), direct exporting (own export department, overseas sales branch, travelling representatives, foreign distributors or agents), licensing (a licensee pays fees or royalties for the use of a process, trademark, patent or know-how — low risk, low control; management contracts, contract manufacturing and franchising are its variants), joint ventures (shared ownership and control with a local partner — needed where law, capital or knowledge requires it) and direct investment (a wholly owned assembly or manufacturing subsidiary, greenfield or by acquisition — full control and the largest exposure to currency, expropriation and market risk). Strategic alliances, turnkey projects and piggybacking are the other named routes; Dunning's eclectic (OLI) paradigm — ownership, location and internalisation advantages — explains when direct investment is chosen, and the Uppsala model describes the incremental progression through the modes.

Planning the marketing mix for international markets
Element	Standardise or adapt	Strategies and terms
The central debate	Levitt's 'The Globalization of Markets' (1983) argued for standardised global products and brands on scale economies and converging tastes; the adaptation view stresses cultural, legal, economic and usage differences; the resolution is 'glocalisation' — think global, act local — standardising the core and adapting the periphery	Standardisation cuts cost and builds a global brand; adaptation fits the market and costs more; most firms mix the two
Product and communication	Keegan's five strategies: straight extension (same product, same message — Coca-Cola), product adaptation (change the product, same message — McDonald's menu in India), communication adaptation (same product, new message), dual adaptation (change both) and product invention (backward invention — reintroducing earlier forms; forward invention — a new product for the market's needs)	Country-of-origin effects, global brands versus local brands, brand-name translation problems, packaging and labelling law, standards and certification
Price	Uniform price everywhere, market-based price in each country, or cost-based price in each country; price escalation from freight, tariffs, margins and currency; transfer pricing between subsidiaries; dumping (selling below home price or cost — met by anti-dumping duties under WTO rules); grey markets and parallel imports; counterfeit goods	Incoterms fix who bears freight and insurance; currency choice and hedging; penetration pricing in emerging markets — the 'bottom of the pyramid' (Prahalad) and reverse innovation
Place (distribution)	The whole-channel view — seller's headquarters organisation, channels between nations (entry mode, intermediaries, transport), channels within nations (local wholesalers and retailers, which differ hugely: Japan's multi-layered system, India's kirana network); adapt to local channel structure	Global retailing and e-commerce cross-border selling change the calculus; logistics and Incoterms
Promotion	Global campaign themes with local execution; media availability and regulation differ (advertising to children, comparative claims, alcohol and tobacco); language, colour and symbol meanings; personal selling norms; sales promotion legality varies	Hofstede's dimensions and Hall's high- and low-context cultures decide message style; global agencies versus local agencies
Organisation	Export department, international division (geographic, product or functional), and the global organisation (Bartlett and Ghoshal's multinational, global, international and transnational forms)	The transnational combines global efficiency, local responsiveness and worldwide learning

⚠️ Entry modes ranked, and Keegan's five named

From least to most commitment, risk and control: indirect exporting, direct exporting, licensing (with franchising and contract manufacturing), joint venture, direct investment. Licensing has the paradox of low risk but the danger of creating a competitor when the licence ends. Keegan's product-communication grid: straight extension, product adaptation, communication adaptation, dual adaptation, product invention — a question that says 'same product, different advertising' wants communication adaptation, and 'a new, simpler product designed for a low-income market' wants forward invention.

Key takeaways

Sales force structures are territorial, product, market and complex; size by the workload method is total annual calls needed divided by calls per representative; the selling process runs prospecting, pre-approach, approach, presentation, objections, closing, follow-up.
Services are intangible, inseparable, variable and perishable; the mix adds people, process and physical evidence; the gaps model has five gaps and SERVQUAL five RATER dimensions with reliability first; service marketing is external, internal and interactive.
Relationship marketing is Berry's 1983 term; the loyalty ladder climbs prospect to partner; bonds are financial, social, customisation and structural; CRM's IDIC is identify, differentiate, interact, customise, and its systems are operational, analytical and collaborative.
Retail formats run specialty, department, supermarket, hypermarket, convenience, discount, category killer and non-store; the wheel of retailing is McNair's; India's trends are organised retail beside kirana, e-commerce and quick commerce, ONDC, and FDI at 100% single-brand and 51% multi-brand with marketplace-only e-commerce.
Direct marketing seeks a measurable response without middlemen; digital marketing spans search, social, content, influencer and programmatic with CTR, CPA and ROAS as metrics; green marketing is opposed by greenwashing; entry modes rank indirect export, direct export, licensing, joint venture, direct investment, and Keegan's five product-communication strategies decide adaptation.

Practice questions (10)

Attempt each one before opening the answer. Every explanation names the tempting wrong option as well as the right one, because that is where marks are lost.

A firm has 200 large accounts needing 24 sales calls a year and 800 small accounts needing 6. If a representative can make 800 calls a year, the workload method gives a sales force of:
1. 12 representatives
2. 6 representatives
3. 24 representatives
4. 10 representatives
Show answer
Answer: A — 12 representatives
Total workload = 200 × 24 + 800 × 6 = 9,600 calls; 9,600 ÷ 800 = 12. The workload (build-up) approach sizes the force from required call frequency by account class.
In the personal selling process, the step that immediately follows the presentation and demonstration is:
1. Overcoming objections
2. Prospecting
3. Closing
4. Pre-approach
Show answer
Answer: A — Overcoming objections
The sequence is prospecting and qualifying, pre-approach, approach, presentation and demonstration, overcoming objections, closing, follow-up and maintenance. Objections arise in response to the presentation and must be handled before the close.
In the gaps model of service quality, the gap between what the firm's advertising promises and what its service actually delivers is the gap between:
1. Service delivery and external communications
2. Consumer expectation and management perception
3. Management perception and service-quality specification
4. Service-quality specification and service delivery
Show answer
Answer: A — Service delivery and external communications
Gap 4 in Parasuraman, Zeithaml and Berry's model: over-promising in communications inflates expectations and lowers perceived quality. Gaps 1 to 3 are the knowledge, standards and performance gaps; gap 5, the customer gap, is their result.
Grönroos's 'internal marketing' in service firms refers to:
1. Training and motivating employees to serve customers well — enabling the promise made to customers
2. Selling the firm's services to its own employees at a discount
3. Marketing between departments of a conglomerate
4. Advertising within the home country only
Show answer
Answer: A — Training and motivating employees to serve customers well — enabling the promise made to customers
The services marketing triangle: external marketing makes the promise, internal marketing enables it by preparing employees, and interactive marketing keeps it at the moment of service. Berry called employees the first market of a service firm.
Peppers and Rogers' IDIC framework for customer relationship management stands for:
1. Identify, differentiate, interact, customise
2. Inform, deliver, invoice, collect
3. Investigate, design, implement, control
4. Innovate, diversify, integrate, consolidate
Show answer
Answer: A — Identify, differentiate, interact, customise
One-to-one marketing identifies individual customers, differentiates them by value and needs, interacts to learn more, and customises the offer — the process behind operational and analytical CRM systems.
McNair's 'wheel of retailing' hypothesis states that:
1. New retail formats enter as low-price, low-margin operations, gradually trade up, and are displaced by the next low-price entrant
2. Retailers alternate between wide and narrow assortments
3. Every retail format passes through innovation, growth, maturity and decline
4. Store location is the only determinant of retail success
Show answer
Answer: A — New retail formats enter as low-price, low-margin operations, gradually trade up, and are displaced by the next low-price entrant
The wheel explains why department stores were undercut by discount stores and they in turn by warehouse clubs and online sellers. The assortment alternation is the retail accordion, and the stage sequence is the retail life cycle.
Under India's FDI policy for retail, foreign direct investment is permitted in e-commerce only in the:
1. Marketplace model, not the inventory-based model
2. Inventory-based model, not the marketplace model
3. Both models up to 51%
4. Neither model
Show answer
Answer: A — Marketplace model, not the inventory-based model
A marketplace is a technology platform connecting buyers and sellers, where 100% FDI is allowed; an inventory-based e-commerce entity owns the goods it sells, which is multi-brand retail and closed to FDI. Single-brand physical retail allows 100%, multi-brand 51% with government approval.
Direct marketing is distinguished from other promotion tools chiefly by its:
1. Use of consumer-direct channels to obtain a measurable response or transaction without intermediaries
2. Reliance on mass media to build brand awareness
3. Use of unpaid news coverage
4. Face-to-face negotiation with industrial buyers
Show answer
Answer: A — Use of consumer-direct channels to obtain a measurable response or transaction without intermediaries
Direct mail, catalogues, telemarketing, direct-response TV and e-mail built on a customer database seek an immediate, measurable response. Mass-media awareness is advertising, unpaid coverage is publicity, and face-to-face negotiation is personal selling.
Among the modes of entering a foreign market, the one with the lowest investment, risk and control is:
1. Indirect exporting
2. Joint venture
3. Direct investment
4. Licensing
Show answer
Answer: A — Indirect exporting
The modes rise in commitment, risk, control and profit potential from indirect exporting through direct exporting, licensing and joint ventures to direct investment. Indirect exporting through home-country export houses needs no overseas presence or investment at all.
In Keegan's international product and communication strategies, selling the same product abroad with a different advertising message is:
1. Communication adaptation
2. Straight extension
3. Product adaptation
4. Dual adaptation
Show answer
Answer: A — Communication adaptation
Straight extension changes neither product nor message, product adaptation changes the product only, communication adaptation the message only, dual adaptation both, and product invention creates a new product for the market.