Sales Knowledge: Customers, Products, Technologies Chapter 5 McGraw-Hill/Irwin Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved.

5-3 Chapter 5

5-4 Main Topics  The Tree of Business Life: Knowledge  Sources of Sales Knowledge  Knowledge Builds Relationships  Know Your Customers  Know Your Company  Know Your Product 5 Chapter

5-5 Main Topics  Know Your Resellers  Advertising Aids Salespeople  Sales Promotion Generates Sales  What’s It Worth? Pricing Your Product  Know Your Competition, Industry, and Economy  Personal Computers and Selling 5 Chapter

5-6 Main Topics  Knowledge of Technology Enhances Sales and Customer Service  Sales: Internet and the World Wide Web  Global Technology Provides Service  Technology Etiquette Chapter 5

5-7 The Tree of Business Life: Knowledge The Golden Rule 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. I T C Ethical Service Builds T r u e Relationships T TT TTTT TTTT

5-8 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

5-9 Sources of Sales Knowledge  Experience – the critical source  Selling is a skill developed through experience

5-10 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

5-11 Know Your Customers  Find out all you can.

5-12 Know Your Company  General company information:  Company growth and accomplishment  Policies and procedures  Production facilities  Service facilities – promise of prompt repair services can help make a sale

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

5-14 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

Know Your Resellers Understand the channel of distribution

The Channel of Distribution

Know Your Resellers  Know as much about each channel member as possible  Likes & dislikes of each channel member’s customers  Product lines assortment each one carries  When each member sees salespeople  Their distribution, promotion, and pricing policies  What and how much of a product each has purchased in the past

5-18 Advertising Aids Salespeople

5-19 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

5-20 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 pre-sell customers between sales calls.

5-21 Types of Advertising  Types of Advertising :  National advertising  Retail advertising  Cooperative, or co-op, advertising  Trade advertising  Industrial advertising  Direct-mail advertising  Internet advertising

Types of Advertising  National 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

Promotion I. Personal Selling II. Non-Personal Selling  Advertising  Sales Promotion  Public Relations

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

5-28 Sales Promotion Generates Sales  Consumer sales promotion  Trade 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

5-30 Sales Promotion Generates Sales, cont.  Point-of-purchase (POP) displays  Shelf positioning  Shelf facings  Premiums  Sales promotion on the Internet

Premiums  Premium  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

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

5-35 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.

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

5-37 Know Your Competition, Industry, and Economy  Understand competitors’ products, policies, and practices.  Keep informed about the industry and the economy

5-38 Personal Computers and Selling, Exhibits 5-6 and 5-7  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

5-39 Knowledge of Technology Enhances Sales and Customer Service  Personal Productivity:  Contact management  Calendar management  Automate sales plans, tactics, and tickets  Geographic information system  Computer-based presentations

5-40 Knowledge of Technology Enhances Sales and Customer Service, cont…  Communications with Customers and Employer (allows for quick delivery of information to customers and employers) :  Word processing   Fax capabilities and support  Customer Order Processing and Service Support (shortens sales and delivery cycle)  Salespeople's mobile offices

5-41 Exhibit 5-9: 3M’s Salesperson Bob Burr Uses Mobile Technology to Serve His Customers GPS Device Cell Phone PDA

5-42 Sales: Internet and the World Wide Web  The Internet  The World Wide Web:  Web page  Links  Surfing the Internet

5-43 Exhibit 5-10: Web Sites Can Provide Valuable Information to Salespeople

5-44 Global Technology Provides Service  Increased worldwide interaction

5-45 Technology Etiquette  Netiquette – etiquette on the internet   Cell Phones  Voice Mail  Faxes  Speakerphones and Conference Calls

5-46 Summary of Major Selling Issues  Company knowledge includes information on a firm’s:  History  Development practices  Procedures  Products  Distribution  Promotion  Pricing

5-47 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.

5-48  Success in sales requires knowledge of the many technologies used to sell and service customers. Summary of Major Selling Issues, cont…

5-49 Appendix A: Sales Arithmetic and Pricing Chapter 5

5-50 Sales Arithmetic and Pricing  Salespeople should be able to confidently discuss price, discounts, and credit policies with customers.

5-51 Types of Prices  List price – standard price  Net price – after discounts  Zone price – based on geographical location  FOB shipping point – buyer pays shipping  FOB destination – seller pays shipping  Ownership  Price discrimination

5-52 Discounts Lower the Price  Quantity:  Non-cumulative  Cumulative  Cash  Trade – percentage off list retail price  Consumer

5-53 Exhibit 5A-2: Types and Examples of Discounts

5-54 Exhibit 5A-1: Various Promotional Allowances Available to Resellers

5-55 Resellers: Markup and Profit  Markup  Gross profit  Money available to cover costs marketing product, operating the business, and profit  Net profit  Money remaining after costs of marketing and operating the business are paid  Channel of distribution markup  Markup arithmetic  Return on investment

5-56 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

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

5-58 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.  Selling price = 50%  Cost = 100%  We use selling price in calculating the percent of markup.

5-59 What Is the Percent Markup? It costs a company $6 to manufacture a product that it sold for $10 to a wholesaler who in turn sold it to a retailer for $12. A customer of the retailer bought it for $24. What is the markup on selling price for each member of this product’s channel of distribution?

5-60 Exhibit 5A-3: Example of Markup on Selling Price in Channel of Distribution

5-61 Exhibit 5A-4: Example of Using Unit Cost

5-62 Exhibit 5A-5: Profit Forecaster for Granola Bars Shown to Buyer Skip video

5-63 Organizations: Value and ROI  Value analysis  Product cost compared to true value  Unit costs  Return on investment (ROI) is listened to

5-64 Organizations: Value and ROI  How do your product’s features, advantages, and benefits compare to the product currently being used?  Can your product do the same job as your buyer’s present product at a lower price?  Does the buyer’s current equipment perform better than required? (Equipment too good for present use?)  Will a higher-priced, better-performing product be more economical in the long run?

End of Chapter 5 Chapter 5 McGraw-Hill/Irwin Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved.