1. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Ryerson 5-1 Chapter 5 Sales Knowledge: Customers, Products, Technologies

2. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Ryerson 5-2 Learning Objectives After studying this chapter, you should be able to: Explain why sales knowledge is so important Discuss the major body of knowledge needed for increased sales success. Explain the main technologies used by salespeople Develop a Features/Advantage/Benefit worksheet

3. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Ryerson 5-3 Chapter 5 Agenda 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

4. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Ryerson 5-4 Chapter 5 What’s It Worth? Pricing Your Product Know Your Competition, Industry, and Economy 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 Agenda

5. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Ryerson 5-5 Sources of Sales Knowledge Sources of Sales Knowledge Sales training Experience Literature

6. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Ryerson 5-6 Knowledge Builds Relationships Knowledge Builds Relationships Knowledge increases salesperson’s confidence Knowledge increases buyer’s confidence in salesperson More knowledge, more sales, more relationships

7. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Ryerson 5-7 Know Your Customers Know Your Customers Find out all you can Social Personal Business Hobby Family

8. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Ryerson 5-8 Know Your Company Know Your Company General Company Information Company growth and accomplishment Policies and procedures Production facilities Mission statement Service facilities

9. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Ryerson 5-9 Know Your Product 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

10. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Ryerson 5-10 Know Your Resellers Know Your Resellers Understand the channel of distribution Know as much about each channel member as possible The preferences of each channel member’s customers

11. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Ryerson 5-11 A FABulous Approach to Buyer Need Satisfaction FAB selling technique emphasizes benefit selling Feature Advantage Benefit Stressing benefits is a most powerful selling technique

12. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Ryerson 5-12 The Product’s Features: So What? Many salespeople emphasize features Must discuss the product’s advantages as they relate to the buyer’s needs Feature--physical characteristic

13. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Ryerson 5-13 The Product’s Advantages: Prove It! Advantage--a performance characteristic The chances of making a sale are increased by describing the product’s advantages How a product can be used How a product will help the buyer

14. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Ryerson 5-14 The Product’s Benefits: What’s in it for Me? Benefit--a result of advantage People are interested in what the product will do for them Benefits can be both practical and psychological Benefits should be specific statements, not generalizations Emphasizing benefits increases sales

15. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Ryerson 5-15 Order Can Be Important Order Can Be Important Standardized FAB Sequence can be used as follows The…(feature)…means you…(advantage)…with the real benefit to you being…(benefit)…. Note how a benefit is emphasized

16. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Ryerson 5-16 Exhibit 3-4: Match Buyer’s Needs to Product’s Benefits and Emphasize Them in the Sales Presentation

17. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Ryerson 5-17 Advertising Aids Salespeople Advertising Aids Salespeople Main ingredients of a firm’s promotional effort Types of Advertising Differ National advertising Retail advertising Cooperative, or co-op, advertising Industrial advertising Direct-mail advertising Internet advertising Trade advertising

18. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Ryerson 5-18 Exhibit 5-2: Advertising and Sales Promotion Information the Salesperson Tells the Buyer

19. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Ryerson 5-19 Why Spend Money on Advertising? Why Spend Money on Advertising? Companies advertise because they hope to Increase overall sales and sales of a specific product Educate the customer about the company’s 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

20. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Ryerson 5-20 Why Spend Money on Advertising? Cont… Reduce cognitive dissonance over the purchase Create sales or presell customers between a salesperson’s calls Inform prospects that a product is on the market and where to buy it

21. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Ryerson 5-21 Sales Promotion Generates Sales Sales Promotion Generates Sales Consumer sales promotion Trade sales promotion Point-of-purchase (POP) displays Shelf positioning Shelf facings Premiums Sales promotion on the Internet

22. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Ryerson 5-22 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

23. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Ryerson 5-23 Exhibit 5-4: Examples of Prices and Discounts Salespeople Discuss in Their Sales Presentations

24. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Ryerson 5-24 Know Your Competition, Industry, and Economy Understand competitors’ products, policies, and practices

25. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Ryerson 5-25 Personal Computers and Selling Personal Computers and Selling The top 10 PC applications include Customer/prospect profile Lead tracking Call reports Sales forecasts Sales data analysis

26. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Ryerson 5-26 Personal Computers and Selling cont… Sales presentation Time/territory management Order entry Travel and expense reports Checking inventory/shipping status

27. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Ryerson 5-27 Exhibit 5-6: Top 10 PC Applications

28. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Ryerson 5-28 Knowledge of Technology Enhances Sales and Customer Service Personal Productivity Contact management Calendar management Automate sales plans, tactics, and tickets Computer-based presentations Geographic information system

29. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Ryerson 5-29 Knowledge of Technology Enhances Sales and Customer Service cont… Communications with Customers and Employer Word processing Electronic mail Fax capabilities and support Customer Order Processing and Service Support Salespeople's mobile offices

30. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Ryerson 5-30 Sales Internet and the World Wide Web Sales Internet and the World Wide Web The World Wide Web The Internet Web page Links Surfing the Internet

31. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Ryerson 5-31 Global Technology Provides Service Global Technology Provides Service Increased worldwide interaction

32. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Ryerson 5-32 Technology Etiquette Technology Etiquette Netiquette Cell Phones Voice Mail Faxes Speakerphones and Conference Calls Pagers

33. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Ryerson 5-33 Summary of Major Selling Issues Summary of Major Selling Issues Company knowledge includes information on a firm’s history products procedures development practices distribution promotion pricing

34. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Ryerson 5-34 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 a powerful selling tool in sales presentations

35. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Ryerson 5-35 Summary of Major Selling Issues cont… Salesperson 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

36. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Ryerson 5-36 Chapter 5 - Appendices Sales Arithmetic and Pricing Types of Prices Discounts lower the price Markup and profit Unit Cost Value an ROI

37. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Ryerson 5-37 Types of Prices Types of Prices List price--standard price Net price--after discounts Zone price--based on geographical location FOB shipping point--buyer pays FOB destination--seller pays

38. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Ryerson 5-38 Exhibit 5A-1: Various Promotional Allowances Available to Resellers

39. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Ryerson 5-39 Discounts Lower the Price Discounts Lower the Price Quantity discounts noncumulative cumulative Cash Trade Consumer

40. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Ryerson 5-40 Exhibit 5A-2: Types and Examples of Discounts

41. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Ryerson 5-41 Resellers: Markup and Profit Resellers: Markup and Profit Markup Gross profit Net profit Channel of distribution markup Markup arithmetic Return on investment

42. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Ryerson 5-42 Exhibit 5A-3: Example of Markup on Selling Price in Channel of Distribution

43. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Ryerson 5-43 Exhibit 5A-4: Example of Using Unit Cost

44. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Ryerson 5-44 Organizations: Value and ROI Organizations: Value and ROI Value analysis Product cost compared to true value Unit costs ROI is listened to

45. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Ryerson 5-45 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) 100 $21.60 -6.36 $15.24 1.39 500 $7,620 $8,340 $720 9% 100 $21.60 -6.36 $15.24 1.89 1,000 $15,240 $22,680 $7,440 49% 100 $21.60 2.19 1,500 $32,400 $39,420 $7,020 22% 3-Day Special 2-Week Special Normal June 1 through June 30 a 5 cases per store d $8,340 - $7,620 = $720 b 500 X 15.24 = $7,620 e $720 ÷ 7,620 = 9% c 500 X 12 = 6,000 = $1.39 = $8,340a f $21.60 ÷ 12 @ case= $1.80 (regular cost) g $7,020 ÷ $32,400 = 22%

46. Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Ryerson 5-46 Notes