Sales Knowledge: Customers, Products, Technologies McGraw-Hill/Irwin Copyright © 2007 by The McGraw-Hill Companies, Inc All Chapter 5-3 Chapter Main Topics 5-4 The Tree of Business Life: Knowledge Sources of Sales Knowledge Knowledge Builds Relationships Know Your Customers Know Your Company Know Your Product Chapter Main Topics 5-5 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 Chapter Main Topics Knowledge of Technology Enhances Sales and Customer Service Sales: Internet and the World Wide Web Global Technology Provides Service Technology Etiquette 5-6 Chapter The Tree of Business Life: Knowledge vic Et h ic al r Se T T T T T TT T T T T Builds True e Relationships T I C Guided by The Golden Rule: 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 not care how much you know until they know how much you care 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 Sales Arithmetic and Pricing Salespeople should be able to confidently discuss price, discounts, and credit policies with customers 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 Discounts Lower the Price Quantity: Non-cumulative Cumulative Cash Trade – percentage off list retail price Consumer Exhibit 5A-2: Types and Examples of Discounts 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 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 What Is the Percent Markup? $1.00 = cost to retailer $1.00 = dollar markup $2.00 = selling price 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 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 $24 What is the markup on selling price for each member of this product’s channel of distribution? Exhibit 5A-3: Example of Markup on Selling Price in Channel of Distribution Exhibit 5A-4: Example of Using Unit Cost Exhibit 5A-5: Profit Forecaster for Granola Bars Shown to Buyer Total stores Deal dates Regular cost per dozen Less allowance ($.53) Deal cost per dozen Feature price Cases purchased Total investment Total gross sales Total gross profit Return on investment (ROI) a cases per store b 500 x 15.24 = $7,620 c 500 x 12 = 6,000; 6000x $1.39 = $8,340 Skip video 3-Day Special 2-Week Special Normal 100 June – June 30 $21.60 - 6.36 $15.24 1.39 500a $7,620b $8,340c $720d 9.0%e 100 100 $21.60 - 6.36 $15.24 1.39 1,000 $15,240 $22,680 $7,440 49% $21.60 d $8,340 - $7,620 = $720 $720 ÷ $7,620 = 9.0% f $21.60 ÷ 12 @ case = $1.80 (regular cost) g $7,020 ÷ $32,400 = 22% e $21.60 2.19f 1,500 $32,400 $39,420 $7,020 22%g Organizations: Value and ROI Value analysis Product cost compared to true value Unit costs Return on investment (ROI) is listened to Organizations: Value and ROI How your product’s features, advantages, and benefits compare to the product currently being used? Can your product 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 McGraw-Hill/Irwin Copyright © 2007 by The McGraw-Hill Companies, Inc All Chapter ... Personal Computers and Selling Chapter Main Topics Knowledge of Technology Enhances Sales and Customer Service Sales: Internet and the World Wide Web Global Technology Provides Service Technology... McGraw-Hill Companies, Inc All Chapter 5-3 Chapter Main Topics 5-4 The Tree of Business Life: Knowledge Sources of Sales Knowledge Knowledge Builds Relationships Know Your Customers... 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,