5 Chapter Sales Knowledge: Customers, Products, Technologies McGraw-Hill/Irwin ABC’s of Selling, 10/e Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

Main Topics The Tree of Business Life: Knowledge Sources of Sales Knowledge Knowledge Builds Relationships Know Your Customers Know Your Company Know Your Product Know Your Resellers Advertising Aids Salespeople Sales Promotion Generates Sales What’s It Worth? Pricing Your Product Know Your Competition, Industry, and Economy 5-2

Main Topics, cont... Personal Computers and Selling Knowledge of Technology Enhances Sales and Customer Service Sales: Internet and the World Wide Web Global Technology Provides Service Technology Etiquette 5-3

The Tree of Business Life: Knowledge Guided by The Golden Rule: Be an expert on everything associated with your product(s) Use wisdom when applying knowledge Remember, customers rely on you to truthfully provide knowledge and wisdom Realize that people do not care how much you know until they know how much you care T T Ethical Service T T T T T T T T Builds T r u e Relationships T C I 5-4

Sources of Sales Knowledge Sales training Experience 5-5

Sources of Sales Knowledge Sales Training – effort put forth by employer to provide the opportunity for the salesperson to receive job-related attitudes, concepts, rules, and skills that result in improved performance Education, Reading, and Word-of-mouth

Sources of Sales Knowledge Experience – the critical source Selling is a skill developed through experience

Knowledge Builds Relationships Knowledge increases a salesperson’s confidence, and, Knowledge increases a buyer’s confidence in the salesperson. Thorough knowledge about your product is needed to gain the buyer’s confidence. More knowledge, more confidence mean more relationships, and… More relationships mean more sales

Know Your … 5-9

Know Your Customers Find out all you can 5-10

Know Your Company General company information: Company growth and accomplishment Policies and procedures

Know Your Company’s Policies & Procedures The salesperson should let the buyer know: How his order will be processed How long it will take for her to receive her order The policy on returned goods How to open a new account What to do if he receives the wrong shipment

Know Your Company General company information, cont.: Production facilities Service facilities – promise of prompt repair services can help make a sale

Know Your Product Product knowledge may include: Performance data Physical size and characteristics How the product operates Specific features, advantages, and benefits of the product How well the product is selling in the marketplace 5-14

Understand the channel of distribution Know Your Resellers Understand the channel of distribution

The Channel of Distribution

Know Your Resellers Understand the channel of distribution Know as much about each channel member as possible Likes and dislikes of each channel member’s customers Product lines and the assortment each one carries When each member sees salespeople Distribution, promotion, and pricing policies What quantity of which product each channel member has purchased in the past 5-17

Advertising Aids Salespeople

Why Spend Money on Advertising? Main ingredient of a firm’s promotional effort Companies advertise because they hope to: Increase overall sales and sales of a specific product Give salespeople additional selling information for sales presentations Develop leads for salespeople through mail-ins and ad response Increase cooperation from channel members through co-op advertising and promotional campaigns Educate the customer about the company’s product 5-19

Why Spend Money on Advertising?, cont… Inform prospects that a product is on the market and where to buy it Reduce cognitive dissonance over the purchase Create sales or presell customers between sales calls 5-20

Types of Advertising Types of Advertising Differ: National advertising Retail advertising Cooperative, or co-op, advertising Trade advertising Industrial advertising Direct-mail advertising Internet advertising

Types of Advertising National Advertising Retail Advertising Reaches all users of the product across the country Ford, GM, GE, IBM, Coca-Cola Retail Advertising Used by retailers to reach customers within a geographic area Cost for national-brand advertising paid by retailer or shared

Types of Advertising, cont. Cooperative Advertising Conducted by retailer, paid by manufacturer or shared Trade Advertising Undertaken by manufacturer directed toward the wholesaler or retailer Trade publications

Types of Advertising, cont. Industrial Advertising Aimed at individuals and organizations who purchase products for use in manufacturing other products Direct-mail Advertising Ads, samples, and coupons mailed directly to the consumer or industrial user to expose him to or remind him of the product May solicit response

Types of Advertising, cont. Internet (Web) Advertising

Sales Promotion Promotional tool that simulates consumer purchasing and dealer interest by means of short-term activities Supplements personal selling, advertising, and public relations Examples: free samples, prizes, contests, and cents-off coupons

Sales Promotion Generates Sales Consumer sales promotion Business sales promotion

Sales Promotion Techniques B2B Trade Shows Portfolios Deals Catalogs Conventions B2C Coupons Cents-off Promotions Sampling Premiums Sweepstakes Contests Bonuses Catalogs Demonstrations Special Events Lotteries In-store Displays See Learning Goal 5: Explain the importance of various forms of sales promotion, including sampling. See text pages: 443-444

Sales Promotion Generates Sales, cont. Point-of-purchase (POP) displays Shelf positioning Shelf facings Premiums

Premiums Premium Purposes of Premiums Article of merchandise offered as an incentive to the user to take some action Purposes of Premiums Promote customer sampling of new product Introduce new product Encourage point of purchase display Boost sales of slow products

Sales Promotion Generates Sales Premiums Sweepstakes and contests Consumer premiums Dealer premiums

Sales Promotion Generates Sales Sales promotion on the Internet

Exhibit 5-2: Advertising and Sales Promotion Information the Salesperson Provides the Buyer

Exhibit 5-2: Advertising and Sales Promotion Information the Salesperson Provides the Buyer 5-34

What’s It Worth? Pricing Your Product Price refers to the value or worth of a product that attracts the buyer to exchange money or something of value for the product 5-35

Exhibit 5-4: Examples of Prices and Discounts Salespeople Discuss in Their Sales Presentations 5-36

Know Your Competition, Industry, and Economy Understand competitors’ products, policies, and practices 5-37

Personal Computers and Selling The top 10 PC applications include: Customer/prospect profile Lead tracking Call reports Sales forecasts Sales data analysis Sales presentation Time/territory management Order entry Travel and expense reports Checking inventory/shipping status 5-38

Exhibit 5-6: Top 10 PC Applications 5-39

Knowledge of Technology Enhances Sales and Customer Service, Three Areas of Sales Force Automation Personal Productivity Communications with Customers and Employer Customer Order Processing and Service Support 5-40

Knowledge of Technology Enhances Sales and Customer Service Personal Productivity Contact management Calendar management Automated sales plans, tactics, and ticklers Geographic information systems Computer-based presentations 5-41

Knowledge of Technology Enhances Sales and Customer Service, cont… Communications with Customers and Employer Word processing E-mail Fax capabilities and support Customer Order Processing and Service Support Salespeople's mobile offices GPS and PDA 5-42

Exhibit 5-8: Salespeople Rely on Mobile Technology to Serve Their Customers GPS Device Cell Phone PDA 5-43

Sales: Internet and the World Wide Web The Internet The World Wide Web Web page Links Surfing the Internet 5-44

Exhibit 5-9: Web Sites Can Provide Valuable Information to Salespeople 5-45

Global Technology Provides Service Increased worldwide interaction 5-46

Technology Etiquette Netiquette – etiquette on the internet Cell Phones Voice Mail Faxes Speakerphones and Conference Calls 5-47

Summary of Major Selling Issues Company knowledge includes information on a firm’s: History Development practices Procedures Products Distribution Promotion Pricing 5-48

Summary of Major Selling Issues, cont… To reduce conflicts and aid channel members in selling products, manufacturers offer assistance in: Advertising Sales promotion aids Pricing allowances National, retail, trade, industrial, and direct-mail advertising create demand for products and are powerful selling tools in sales presentations 5-49

Summary of Major Selling Issues, cont… Salespeople should be able to confidently discuss price, discounts, and credit policies with customers Success in sales requires knowledge of the many technologies used to sell and service customers 5-50

Sales Arithmetic and Pricing Chapter 5 Appendix Sales Arithmetic and Pricing 5-51

Types of Prices List price – standard price charged to customers Net price – after allowance for all discounts Zone price – based on geographical location FOB shipping point – buyer pays transportation charges – title transfers FOB destination – seller pays all shipping costs 5-52

Discounts Lower the Price Quantity discounts Noncumulative – one-time Cumulative Cash – ex. 2/10 Net 30 Trade – Wholesaler / Retailer Consumer 5-53

Exhibit A: Various Promotional Allowances Available to Resellers 5-54

Exhibit B: Types and Examples of Discounts 5-55

Resellers: Markup and Profit Gross profit Net profit Channel-of-distribution markup Markup arithmetic Return on investment 5-56

What Is the Percent Markup? $1.00 = cost to retailer $1.00 = dollar markup $2.00 = selling price 5-57

What Is the Percent Markup?, cont… It depends on whether you use Selling Price, or Cost Dollar markup is divided by either selling price or cost to retailer 5-58

What Is the Percent Markup?, cont… $1.00 = cost to retailer $1.00 = dollar markup $2.00 = selling price Selling price = 50% Cost = 100% We use selling price in calculating the percent of markup 5-59

What Is Markup? Markup is the dollar amount added to the product cost to determine its selling price Markup is often expressed as a percentage 5-60

Exhibit C: Example of Markup on Selling Price in Channel of Distribution 5-61

Exhibit D: Example of Using Unit Cost 5-62

Exhibit E: Profit Forecaster for Granola Bars Shown to Buyer 5-63

Organizations: Value and ROI Value analysis Product cost compared to true value Unit costs ROI is listened to 5-64