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

3. 5-3 Chapter 5

4. 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. 5-5 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

6. 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

7. 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

8. 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

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

10. 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

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

12. 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

13. 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

14. 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

15. Know Your Resellers Understand the channel of distribution

16. The Channel of Distribution

17. 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

18. 5-18 Advertising Aids Salespeople

19. 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

20. 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.

21. 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

22. 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

23. 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

24. 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

25. Types of Advertising, cont.  Internet (Web) Advertising

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

27. 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

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

29. 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

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

31. 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

32. Sales Promotion Generates Sales  Premiums  Sweepstakes and contests  Consumer premiums  Dealer premiums

33. Sales Promotion Generates Sales  Sales promotion on the Internet

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

35. 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.

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

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

38. 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

39. 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

40. 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  E-mail  Fax capabilities and support  Customer Order Processing and Service Support (shortens sales and delivery cycle)  Salespeople's mobile offices

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

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

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

44. 5-44 Global Technology Provides Service  Increased worldwide interaction

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

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

47. 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.

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

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

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

51. 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

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

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

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

55. 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

56. 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

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

58. 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.

59. 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?

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

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

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

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

64. 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?

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