The relationship of current assets to current liabilities is an important indicator of the degree to which a firm is liquid. Working capital and the components of working capital also provide measures of the liquidity of a firm. Ratios that directly measure a firm`s liquidity provide clues concerning whether or not a firm can pay its maturing obligations. The current (or working capital) ratio and the acid-Test (or quick) ratio are important ratios that are used to measure a firm`s liquidity. Continue reading “LIQUIDITY RATIOS” »
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Some people still believe that in order to be a success in selling one must have a magnetic personality, a silver tongue, and a firm handshake. It is true that a person who possesses these qualities will certainly have the edge over one who does not. However, to say that you must be born with a certain set of traits to succeed in selling is as ridiculous as saying that you are born a lawyer, a doctor, or a minister. All of these professions had to be mastered through years of study and training. Salesmanship can also be mastered. But to be successful with it, you must be able to discipline yourself and constantly strive to improve your performance.
To qualify as a science in the strictest sense, salesmanship would have to make greater use than it does of the “scientific method.” This method proceeds in definite stages: first, data is gathered through observation; second, hypotheses are formulated through inductive reasoning; and third, the hypotheses are tested through further observation and controlled experiment. In science, the several variables involved in the experiment can be controlled, and the experiment will always produce the same result under the same conditions no matter when, where or by whom performed. For example, chemistry is a science in this sense because all the variables such as compounds, weight, and temperatures can be controlled with exact preciseness. Consequently, an experiment can be conducted today, tomorrow, next year, or even a hundred years from now and the same results can be obtained.
However, in selling, the several variables affecting the sale, such as customer behavior, competitive activity, the weather, and general economic conditions, cannot be controlled. Furthermore, each customer is different from all others in some way. Hence, each sales situation is uniquely different, and the salesperson`s approach must be varied according to the specific circumstance that prevails in each case. For these reasons, selling is not a science and will remain an art as long as there are varying circumstances and individual differences. But, this does not mean that the salesperson can be careless and lackadaisical in her approach to selling. On the contrary, the varied and ever-changing circumstances make it all the more necessary for her to be alert and well organized.
Our economy has shifted from a “manufacturing-oriented” economy to a “marketing-oriented` economy. This means that we generally do not first design and manufacture a product and then decide how to market or sell it. Instead, we first carefully study the marketplace to determine what the consumer needs and wants. Selling and promotional strategies are also determined, and then the product is designed and manufactured in accordance with these factors. In applying this concept, the function of selling becomes more important in the total business environment and involves a greater degree of coordination with the other business functions.
Each year more and more companies are operating on the basis of this “marketing concept.” Those who adopt this marking approach make important changes in their methods, usually with improved results. They focus on satisfying the consumer, but they also zero in on the accomplishment of the company`s objectives – increased sales volume, larger share of the market, but above all, if the company is to survive, adequate profits. All aspects of the business are integrated to achieve these goals. No longer is production allowed to become an end in itself or to dominate company polices.
In short, the marketing concept envisions a total system of operation in which satisfying the consumer leads to profitable sales. Satisfying the consumer is the means of achieving long-run as well as immediate profits. The customer, then, becomes the pivot supporting all the activities of the business. Implementation of this philosophy requires teamwork by all those in marketing research, product planning, sales forecasting, advertising, selling, physical distribution, sales analysis and control, and other related marketing activities. Selling plays a key role in this combined effort because a customer is not satisfied nor is a profit made until the product or service is actually sold.
Business today is also influenced by more competition, both domestically and from abroad. There are more rigid cost controls, and more and better information is now available regarding the products and services we buy-particularly over the Internet. Furthermore, labor, material, and operating costs have greatly increased, and profit margins are therefore narrower. All of these conditions have made the work of the salesperson more important and complex. Accordingly, selling today requires more knowledge and skill.
The modern salesperson must not only be skillful in selling her product or service but must also be able to show the individual customer how to use the product or service in solving her particular needs or problems. If she sells a product to a merchant, she may also be required to show the merchant how to retail the product and be prepared to advise her on activities ranging from choosing a store location to developing inventory methods, preparing advertising, analyzing consumer behavior, setting prices, and others. With this expansion in the activities of selling, the modern salesperson of today must be knowledgeable in many areas of business and be capable of adjusting to a multitude of varying circumstances.
Personal selling plays an important role in our lives. Among its functions in, and contributions to, our business and economic system are the following:
It has helped make the United States one of the most productive economies in the world.
It has given our country the highest standard of living in the world.
It is the major objective of every business enterprise and the only function that generates direct revenue and profits. In this sense, then, it is the heart of our business economy.
It helps to maintain the spirit of competition, which is the basis for a free enterprise system.
In today`s mass society, “the world will not beat a path to your door,” and selling becomes the bridge for introducing new products and services.
When a new product or service is introduced by a competitive firm, a company offering an established product or service will often rely on improved salesmanship to retain its share of the market.
Personal selling is a useful vehicle for communicating with present and potential buyers.
Nature of Personal Selling and Sales Management
Personal selling involves the two-way flow of communication between a buyer and seller, often in a face-to-face encounter, designed to influence a person`s or group`s purchase decision.
Personal selling also occurs by telephone, through video teleconferencing, and the Internet between buyers and sellers.
The tasks involved in managing personal selling include: (1) setting objectives; (2) organizing the sales force; (3) recruiting, selecting, training, and compensating salespeople; and (4) evaluating the performance of individual salespeople.
Personal Selling in Marketing
Salespeople match company interests with customer needs to satisfy both parties in the exchange process.
Salespeople represent what a company is or attempts to be and are often the only personal contact a customer has with the firm.
Personal selling may play a dominant role in a firm`s marketing program if a firm uses a push marketing strategy.
Creating Customer Value through Salespeople: Relationship and Partnership Selling
Salespeople can create customer value in many ways:
Identifying creative solutions to customer problems.
Easing the customer buying process.
Following through after the sale.
Relationship selling is the practice of building ties to customers based on a salesperson`s attention and commitment to customer needs over time. It:
Involves mutual respect and trust among buyers and sellers.
Focuses on creating long-term customers, not one-time sales.
Partnership selling (or enterprise selling) is the practice whereby buyers and sellers combine their expertise and resources to create customized solutions, commit to joint planning, and share customer, competitive, and company information for their mutual benefit, and ultimately the customer. It:
Relies on cross-functional business specialists who apply their knowledge and expertise to achieve higher productivity, lower cost, and greater customer value.
Complements supplier and channel partnering.
Relationship and partnership selling represent another dimension of customer relationship management (CRM).
The Definitions Committee of the American Marketing Association defines selling as “the personal or impersonal process of assisting and/or persuading a prospective customer to buy a commodity or service or to act favorably upon an idea that has commercial significance to the seller.” However, in actual practice, the applications of salesmanship are much broader in scope, for it is an activity which permeates almost every avenue of human endeavor. The ability to convince people is a necessary skill for lawyers, teachers, ministers, politicians, and many others. It is a skill used by the doctor when she attempts to convince her patient that she should stop smoking; or a skill used by a mother when she explains to her young son that stealing is wrong. Actually, then, personal selling is the ability to influence and convince others, and we practice it almost every day.
Sales management is concerned with all activities, processes and decisions involved in managing the sales function in an organization. It involves planning the selling program and implementing and controlling the personal selling effort of the firm. Sales Management in the Twenty-First Century is characterized by
Innovation fuels success in selling today.
Sales effectiveness is enhanced through technology. Sales management must be smart and nimble and provide technology-centered solutions to support the sales effort.
Leadership is a key component in sales management success.
Sales management is a global endeavor.
Ethics underlies all selling and sales management activities.
Advertising is addressed to the masses, while personal salesmanship is geared to specific individuals. Advertising is also designed to presell the product or service, and personal salesmanship is used to follow up with more detailed information and to close the sale. Effective advertising and personal salesmanship work together to achieve the same objective – namely, to stimulate sales. Each is important, and these two functions must operate together as a coordinated effort.
It is the salesperson`s responsibility to keep abreast of all current advertising conducted by her company. She must know the content of each ad and when it appeared. She should be able to explain to dealers the uses and advantages of advertising and show them how it can help them move the product off their shelves after she has sold it to them. The following are some common points she can mention: (1) advertising increases demand for the product or service. A dealer can sell advertised products more quickly than unadvertised ones because the consumer is presold to a certain extent and is already aware and informed about the product; (2) advertising creates faster turnover of inventories, and faster turnover means lower operating expenses and greater profits; (3) through advertising and branding, consumers can identify quality products that they wish to buy again. Such identification also helps to establish a good reputation for the dealer who handles the product; (4) advertising not only helps the customer to identify products, but also provides her with valuable information about their quality and performance.
Advertising also helps the salesperson in many ways:
It develops customer interest and helps to presell products and services.
The salesperson can use advertising to emphasize and reinforce sales points she mentions in her presentations.
Advertising reaches the masses and serves as a means for securing new leads and contacts. Thus, it often reaches some people whom the salesperson, because of distance or other circumstances, is unable to contact.
Sometimes the salesperson is unable to call on all her customers as often as she would like, and advertising helps her sell between calls.
The presentation of new ideas and information through advertising stimulates interest and increases motivation in the salesman herself.
To use company advertising effectively, the salesperson should carry copies of current advertisements to show to prospective buyers. She should also be well informed on her company`s total advertising program and be able to explain its uses and benefits to the buyer. Sometimes a buyer will ask questions on how she can tie her efforts in more effectively with the advertising campaigns, and the salesperson should be able to give the buyer appropriate suggestions. It is also the salesperson`s responsibility to get the buyer to use any direct mail, point-of-purchase, or cooperative space advertising her company provides. Finally, she should obtain the buyer`s reaction to, and suggestions concerning, her company`s advertising in order to make it more effective.
It is recognized that the salesperson`s knowledge of her company, her product, competitive products, and current advertising will vary with her experience and training. It sometimes takes months and even years to prepare for a particular sales position. Furthermore, it is a continuing process, for markets and products are constantly changing. To keep abreast of these changes is an important responsibility of the salesperson, which will greatly determine her success or failure.
Indicate whether each of the following statements is true or false by writing “T” or “F”.
The salesperson serves as a personal representative of the company and should be well informed about its history, growth, and development.
It is enough that a salesperson thoroughly understands her company and its products in order to be successful.
Once a salesperson learns all about her company`s products, she can concentrate on other problems and not study her own products any further.
Advertising is an aid to the salesperson, and she should carry copies of current advertisements to show to prospective buyers.
True. A salesperson should know all about her company, especially its pricing policies, discounts, delivery, credit, and other services.
False. Being informed about her own company and products is not enough for a salesperson. She must also be well informed about the products or services offered by competitors in order to discuss the relative advantages and disadvantages.
False. Most products are periodically changed and improved, and keeping up to date on product knowledge is a never-ending process.
True. Advertising helps the salesperson by increasing demand for products, establishing a good company image, providing consumer information, reaching people the salesperson cannot, and stimulating and motivating the salesperson herself. The salesperson should use these ads to support her presentation. The salesperson should also provide feedback from the customer to make future ads more effective.
Advertising is any form of paid non-personal communication of messages designed to promote products and services to target markets utilizing the mass media.
What are the objectives of advertising?
The objectives of advertising are to educate, convince, and remind target markets.
- Educate. Educational advertising is essential in the early stages of product or service introduction. Education advertising informs the target consumer about the advantages of a particular product or service and how it can be useful.
- Convince. In competitive markets it becomes essential to convince consumers about why one product or service is more advantageous than another in terms of features, services, price, or status.
- Remind. In mature markets it is necessary to continuously remind consumers to use a particular brand or service. It is also useful for overcoming buyer`s remorse, and consumer second thoughts about a purchase, by reminding them of the strengths of a particular product or service. Continue reading “ADVERTISING” »