Module: Distribution and customer loyalty

Duration: 1.5 weeks of theory

Prerequisites Willingness to study business processes in sales & distribution in depth Fundamentals of commerce I: Office organization and office management and Fundamentals II: PC as working tool

Contents

Fundamentals of communication and presentation

Communication rules 4 ear model Feedback rules Johari window Active listening/I-statements Body language Presentation techniques Basics of PowerPoint

Sales talk

Phases in sales talk Asking questions in sales talk Receiving complaints

Marketing

Marketing instruments Distribution channels Measures of sales promotion Service and guarantees Customer loyalty measures Pricing and calculation

Order processing and statistics

Overview of distribution processes Customer base Stock list Order processing Merchandise management system Excel and sales statistics

Learning andWorking methods

Guiding questions for preparatory ma-terial

Tutorial dialogue Role plays

Work assignments typical for the market

Self-guided learning E-Learning

Project work Merchandise management system Office technique Word, Excel, PowerPoint

Performance assess-ment Performance assessment of marketing and quotation calculation

Objectives of qualific-ation

Candidates must be able to Know and apply the rules of communication Know and apply presentation techniques Use PowerPoint applications Ascertain customer requirements and conduct sales or consultations successfully Know the marketing instruments Collaborate in work related to sales promotion and customer loyalty Prepare sales and turnover statistics Maintain master data and manage merchandise

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Contents Page

1. Definitions and basic concept of marketing.......................................3

1.1 Definitions.............................................................................................31.2 Basic Concepts.....................................................................................31.3 Order processing...................................................................................5

2. Marketing concept................................................................................9

2.1 Objectives.............................................................................................92.2 Strategies..............................................................................................92.3 Marketing mix tools.............................................................................11

3. Overview of Marketing Activities.......................................................12

3.1 Product Policy.....................................................................................133.2 Pricing Policy.......................................................................................173.3 Communication Policy.........................................................................183.4 Distribution Policy................................................................................25

4. Selected marketing activities.............................................................26

4.1 Distribution channels...........................................................................264.2 Promotional activities..........................................................................334.3 Service, customer service, and warranty services..............................354.4 Customer loyalty measures.................................................................36

5. Pricing and calculation ......................................................................38

5.1 Pricing methods..................................................................................385.2 Trade costing......................................................................................39

6. Sales and Customer Counselling......................................................42

6.1 The term communication.....................................................................426.2 Stages of the sales conversation........................................................45

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Sales and customer loyalty

1. Definitions and basic concepts of marketing

1.1 Definitions

Marketing refers to the targeted, market-oriented management of a company. The marketing industry in this context is not viewed as a functional area that is on an equal footing with the company. An essential feature of marketing philosophy and practice is that marketing contributes marketing solutions not only as a component function of the enterprise, but also all policies and objectives of the enterprise must align themselves with marketing problems. Planning for procurement, production, personnel, and finances must conform with the marketing plan.

Marketing means not only the effort to adapt to increasingly difficult market condi-tions, but also to shape markets in terms of providers, and thus actively influence customers and consumers. Stimulating needs doesn’t simply mean taking the path that says “tempt me”, but also going in the direction of “transform me”.

In line with the difficulties listed above, new interpretations are emerging for the keyword ‘marketing’:

Marketing means marketing philosophy and economic practice

Marketing is an activity that aims at fulfilling wants and needs through ex-change processes

Marketing means running a company by starting with the market

1.2 Basic Concepts

Sales/TurnoverSales refers to selling in quantity, and turnover means value-based selling.

Distribution/SellingDistribution must actively influence the sales market, and also selling practices must be developed. Selling is therefore subordinate to distribution.

Order ProcessingOrder processing performs functions in the field of credit assessment, design of sales offers, confirmations of orders (order acceptance), delivery notes, invoices and payment deadline monitoring. It handles distribution. Accounts Receivable accepts accountability to the tax authorities, stakeholders and creditors.

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Needs/Wants/RequirementsA need is a sense of lack that a person feels. Wants are shaped by the culture and by individual personality needs. Requirements refer to the needs fulfilled by pur-chasing power.

Market Potential/Market Volume/Market ShareMarket potential is the overall capacity of the market. By market volume is meant the actual or projected sales of a product by all companies. The market share re-flects the exhaustion of a company’s market volume. The market share is there-fore an enterprise’s share, as measured by the actual total sales again. In this context, time, product groups, segments and target groups and the packaging unit are included and are viewed or illustrated with percentages

The strategic importance of the market share and market growth is that compan-ies with the highest market shares also have, in principle, a higher cost reduction potential than competitors. On the other hand, the profit potential increases with increasing market share, provided that there is not a reduction in the market price. Moreover, since the amount of the cost reduction potential is determined by mar-ket growth, strategies prove to be most successful when they are seeking a relat-ively high market share in growing markets.

Production Program/ Product RangeProduction programs in industry involve the development of a product range. A product range is the sum of all products and services involved in a commercial operation.

Scope of Product RangeA wide range includes many categories (a department store), a narrow range in-cludes few categories (a specialty shop). In a deep product range, there are many varieties within one category of goods. A flat range has only a few varieties within one category of goods.

Range Adjustment/Production Program StreamliningA quality adjustment of a business (getting rid of slow sellers) leads to production program streamlining in the industry. Nothing is produced that is not in demand.

Domestic Consumption/ Pro-capita Consumption/Purchasing PowerIndicators for the development of domestic markets are domestic consumption, per capita consumption and purchasing power.Domestic consumption is the consumption of all people within a country during a certain period of time. It is based on domestic production plus imported products and minus exported products. Dividing domestic consumption by the segmented population, we can obtain per capita consumption.

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1.3 Order processingDD

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Customer is insolvent

Customer is solvent

Prepare a quotation Quotation

Order received

Enter orderOrder

Quotation

xor

Order entered

Prepare confirmation of

orderConfirmation of order sent

Generate delivery note

Confirmation of order

Delivery note

Delivery note ready

Pick up goods

Goods picked up

Prepare sales journal Sales journal

1

5

Department Result Function Data

Customer enquiries Credit screening Open item list

Distribution

1Outgoing invoice

Delivery note signed and returned

Outgoing invoice

dispatched

Preparation of outgoing invoiceEnter outgoing

invoiceCustomer

does not pay on time

Enter payment

Department Result Function Data

Outgoing invoice entered

Monitor payment date

Distribution Customer pays on time

xorOpen items

Payment entered

Fig.: Process chain of order processing

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Operational reminder

File process Archive

Accounting (invoice

verification)

End

remind

Bank account

In the wholesale trade and in the industry, merchandise management systems are used for processing commercial business processes like ordering system, storekeep-ing and order processing. If the master data of articles and customers has been first fed into the system, sales details can be entered quickly as transaction data in the or-der processing system. Using the selection fields, only the customer and article data is retrieved, and the order date and ordered quantities are entered. The data is then passed on by the system for creating the commercial documents like confirmation of order, delivery note and outgoing invoice. Thus, entries for accounts receivable can also be automated.

The customer‘s enquiry represents the request for submitting a proposal. Its purpose is to obtain information.

In the enquiry, the supplier is asked to send a price list or a catalogue or for a visit by his representative. The customer wishes to know about the available choice or he wishes to be advised before the purchase.

The enquiry has a free form. It can be written or verbal.

A legally effective declaration of intent is given only by a proposal (quotation or or-der). Thus, enquiries can be aimed at many suppliers without entering into any con-tractual obligation.

The supplier will verify the credit-worthiness of the customer before making an offer. This can be done internally by accessing the list of open items in the bookkeeping system. Externally, there are commercial verifiers and providers of information avail-able with regard to a customer’s credit-worthiness.

If the supplier makes an offer, he is bound by this proposition, if it is made specifically to an individual. Canvassing made generally to the public (showcase exhibits, can-vassing made in the shopping pages in the Internet) are legally not propositions and are therefore not binding.

The quotation or offer is a declaration of intent directed to a particular individual to supply goods subject to specified conditions.

Even for the offer, there are no formal rules. It can be verbal, written, or submitted also through conclusive negotiation.

An offer includes details about the type, characteristics, quality, quantity, price, delivery and payment conditions, place of fulfilment and place of jurisdiction.

The order is the declaration of intent by the purchaser to buy a particular item subject to specified conditions. The order has a free form.

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If written, it can be sent by a postcard, letter on a printed order form or product list. The ordering individual is legally bound by his order, which is only then effective when the order has reached the recipient.

Therefore, it is a declaration of intent subject to receipt. The supplier must receive the cancellation, if any, latest simultaneously with the order.

The confirmation of order (acceptance of order) is a declaration of intent by the seller by which he declares his willingness to supply the ordered goods subject to

specified conditions.

The confirmation of order also has a free form. It can be written, verbal or through conclusive negotiation.

Legally, it is only necessary if the sales contract has not already materialized through the offer and the order. The confirmation of order is also not bound by any form. But, in order to avoid errors and to have a proof, in wholesaling and in the industry most declarations of intent concerning a sales contract are in a written form.

The delivery note is a proof and meant for the transport of goods. The invoice repres-ents a request for payment. The outgoing goods ledger, together with the incoming goods ledger, provides information about actual stocks in store.

In nearly all segments of industries, software programs are used for processing or-ders. There are many standard software packages or even industry specific solutions available. An expensive individual software application for order processing is mostly only then necessary, if the processes have a very sophisticated structure.

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2. Marketing Concept

A marketing concept (policy paper) includes goals, strategies (paths to the goal) and an operational element (use of tools which are conducive to the achievement of ob-jectives).

Objectives Strategies Marketing mix Tools (operating element)

Figure: Marketing Concept

2.1 Objectives

In addition to the abstract goal of profit maximization, other goals come into play, such as financial goals, market position goals, power and prestige goals, profitability goals, personal goals and marketing goals. Marketing objectives such as brand awareness (distribution ratio per capita) and image, distribution ratio (availability of products) and popularity are pre-economic in nature and are difficult to quantify. Thus, productivity, efficiency, profitability and liquidity are corporate objectives as well as predictable indicators and markers for operational success.

In general, goals should not be set too high or too low. They must be realistic. They also need to be controlled (target-performance comparison).

2.2 Strategies

Strategies describe the way to achieve a goal. Without laying claim to completeness, some possible ways are described below. In addition to market segmentation, total market coverage, strategies for differentiation, imitation, trademarks, and pricing can be mentioned.

Market segmentation

Market segmentation means the division of a varied (heterogeneous) overall con-sumer market into (similar) homogeneous sub-layers (sub-segments, target groups). It is a marketing strategy that seeks a more efficient use of the marketing budget. Target groups are formed according to socio-demographic characteristics such as income, gender, age, marital status, place of residence, etc., and accord-ing to psychological criteria.

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Object-ives

Strategies

Marketing tools

Strategic Element

Operating Ele-ment

The differences in consumer behaviour according to actual purchasing decisions and consumer types are measured. Relevant subcultures are expressed in geo-graphical differences: Regional differences in cuisine, wine culture.Members of the same age groups are suitable for segmenting, with relative homo-geneity existing only in the adolescent group. Members of social groups such as professional groups and positions are also suitable for socio-demographic seg-mentation. Entire lifestyle concepts and surroundings are conceptualised, with exclusive at-tention given to consumption habits.

Total market coverage strategy

This strategy addresses the overall market, without making any segmentation. Problem solutions for anyone at any time are offered, with no reward or punish-ment regarding individual or social standards. These ‘socially-acceptable’ products are aimed at a total market coverage. They are characterised by relat-ively consistent sales and revenue without a product life cycle (Coca Cola, VW Beetle, Swatch watches or McDonald’s). With regard to distribution channels, here franchise systems for multiplication of business ideas are available, since the structure of store systems with a total market coverage strategy for an indi-vidual company would be very costly.

Differentiation strategy

An attempt is made to differentiate oneself from the program of competitors. A new, unique program is offered.

Imitation strategy

An attempt is made to imitate the program of competitors. An investigation must be made as to what extent the program can be imitated. Thus, with ‘me too’ products the effort of building a product personality is removed.

Brand strategies

Ideally, a distinction should be made between strategies for monobrands, brand families and umbrella brands.

For monobrand strategies an individual product personality with its own brand name is developed for a strategic business area. The manufacturer remains largely unknown (Nestle product range). With brand families, members benefit from the advantages or usefulness of goods with the main brand (Nivea for men, Nivea for sun, Nivea milk or Bild am Sonntag, Bild Computer, Bild Sport, etc.). The family members must have the same quality of the parent brand, so that there is no loss of image.With umbrella brand strategies, only the company image is dealt with. Brand name products, all bearing the name of the company, profit from the image of the company (Dr Oetker). This depiction of the way to the goal is an ideal one, and in actual practice combinations are made.

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Pricing strategies

Discount and premium pricing strategies can also be identified. Medium price ranges are increasingly disappearing from the markets. This allows cheap cigar-ette brands to compete with and to pick up brand switchers. Premium pricing strategies require approaches using quality policies for the extended life of products in the aftermarket as well as in the integral quality of contact quality and imaginary quality. A higher price can be justified for innovative offerings or qualitat-ive, high-level offerings.

2.3 Marketing mix tools

The following tools are available for operational deployment options:

Product policy Pricing policy Communication policy Distribution policy

These tools should not be viewed in isolation, but rather they depend on each other, taking into account the objectives and strategies that apply to corporate design and identity in the marketing mix within the given budget.

Figure: Marketing mix tools

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Marketing mix tools

Product policy Pricing policy Communication policy

Distribution policy

3. Overview of Marketing Activities

We have the following operative fields of application as instruments:

Product Policy Pricing Policy Communication Policy Distribution Policy

We should not see these instruments in isolation, but apply them together with their interdependencies, taking into account the objectives and strategies, the Cooperate Design and the Cooperate Identity in the marketing mix within the prescribed budget.

Fig.: Marketing mix instruments

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Marketing mix instruments

Product policy Pricing policy Communication policy

Distribution policy

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3.1 Product Policy

Product policy deals with, among other things, the development of new and modifica-tion of existing products, with product positioning, with the product name, packaging and recycling, handling, with product range creation (production program develop-ment) and product range adjustment (production program streamlining), with the product life cycle for derivation of advertising and sales promotion, with projections of the quality policy, with the branding (brand development) and also with investment decisions for products. To achieve a better overview of marketing activities, only as-pects of the of product concept, product developments and modifications, and the de-velopment of program or product range design will be considered in more detail be-low.

a) Aspects of the product concept

In the broadest definition, goods are anything that be offered on the market for ac-quisition, use or consumption in order to meet a need or a want. Today there is less reference to products than to problem solving. The consumer is looking for a solution to his problem.

The benefits of buying a product can be divided into three levels:

the core product as the basic benefit of the product (driving a car, washing with soap)

the formal product, that is the actual physical entity that is recognised imme-diately as a sale item (brand name, packaging, price styling, quality, etc.)

the extended product represents the total of all benefits received by the buyer with the purchase of this product (service, free delivery, installation, war-ranty services, instalment payments, financial advice, expertise and mainten-ance, etc.).

Each product thus has both tangible and intangible components. A basic benefit and one or more additional benefits. Someone who buys a car acquires not only a way to move but also speed, prestige, etc.That is, each product represents a benefit bundle that allows us to assume that the consumer prefers products with the best quality and highest performance, that con-sumers are looking not only for certain products, but also for solutions to problems. The consumer buys a solution for his problem. Thus, not only the product is import-ant, but also the distribution channel, the right approach. A product is therefore a whole consisting of many elements. Each of these elements can be designed and modified.

Depending on the frequency of purchase or on the need for advice, products can be divided into:

Convenience goods Shopping goods Speciality goods

With the purchase of butter (convenience good), there is no special need for advice because people buy these products every day and the properties of fat are already

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well known. When you buy a sweater (shopping good), something less frequently purchased, there is a need for advice regarding the material, washing instructions, colour combinations with other garments, air permeability, etc. The purchase of a pi-ano (speciality good) is likely to take place even less frequently for the customer, provided that we are not dealing with a reseller of musical instruments. There is a great need for advice.

b) Product development and change

Product innovation means the first commercial use of a problem solution for a par-ticular customer need. From a marketing perspective, it is crucial for product develop-ment whether the target group classifies the product in terms of a benefit component of the product significantly different from in the past.

We can make a distinction between basic innovations (products new to the market, the product is new in every respect) and improvement innovations (further develop-ments). The technical and economic implementation of an invention is generally re-ferred to as innovation.

In mature markets, products must be modified on a permanent basis to achieve satis-factory sales. If the basic use (benefit) of the product is changed, this is called product differentiation

If you modify only the formal product, that is the package, name, design or treatment, this is called product variation

Product variation involves the modification of the formal product. Here, the design, size, packaging or colour of the product is changed.

Examples of product variation

0.33 litre bottle, 1 litre bottle, 1.5 litre bottle for magnum consumers chocolate in small and large squares red, green or black VW Golf deodorant as roll-on or spray new user interface for an operating system

Often, a variation in a product is insufficient to convince a consumer to make a pur-chase. Here, modifying the basic benefits of the product can be helpful.

Product differentiation involves the modification of the basic benefits of a product. For this purpose, industrial machines must often be refitted. Sometimes it is sufficient if only one component is omitted or a new component is added.

Examples of product differentiation

beer, non-alcoholic beer, lemon beer, etc. 105 hp Golf , 135 hp Golf, Golf Injector, etc. Coke, Diet Coke, Cherry Coke, Vanilla Coke, Coke Zero, etc. hairspray for brittle, dry hair and oily hair, etc. operating system with new network components, etc.

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c) Program or product range design

The program or product range policy is concerned with the optimal composition of the production program (in industrial enterprises) and the product range (in retail firms).

A product range is defined as the sum of all goods and services offered by a com-mercial establishment. As mentioned in Section 1.2 (Basic Concepts), a wide product range covers many groups of goods. A narrow range, however, contains only a few product groups In a deep product range, and there are many varieties within one category of goods. A flat range has only a few varieties within one product group.

While the number of product groups determines the range width, so the number of items and varieties determines the range depth.

In retail stores, product ranges are determined less by material types than by use Thus one finds, for example, in DIY (do-it-yourself markets) product ranges like ‘at-mosphere’ that unite product groups by colour, wallpaper, lamps, floor coverings in one range of products. In the products range ‘garden’, there are plants and soil as well as garden tools and garden equipment.

The product range wholesaler is a type of wholesaler that makes his variety of goods available to banch-oriented needs of businesses at the retail level by offering a widely structured combination of different categories (broad but mostly flat range of products) that allows for additive buying opportunities for the retailer. A substantially complete supply of goods offers the retailer the ability to streamline purchasing.

These special wholesale businesses focus their product range on a few complement-ary groups of merchandise which are organised deeply, and offer alternative pur-chase options. As a rule, they are more likely to be oriented towards materials. The special wholesaler seeks to offer from a narrow product range as complete a selec-tion as possible of varieties from one product group.

Product range adjustments must be made to follow changes in fashion, technical de-velopments, market saturation or a decrease or increase in the purchasing power of customers.

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The adjustments of product ranges to changing market conditions can take place by the addition of new product groups (product range diversification, diversification) or by the elimination of product groups, items or ranges, (product range streamlin-ing).

If new products are added to an existing product range that are not new to the mar-ket, but possibly are operational innovations, then this is called diversification.

Product diversification (addition of new items to an existing program or product range) is undertaken in order to spread risk. New products are added to an existing product range in order to cover risks in the core business. The products involved here are not new to the market, but are associated with product knowledge, supplier selection, etc., that are new for the company.

Examples of diversification

Diversification at the product level: A petrol station sells cigarettes and magazines A barber shop adds nail care services

At upstream and downstream production stages Oil producers open petrol stations A shampoo producer establishes hairdressing salons

To round out product ranges without having to diversify, options might be shop-in-shop systems, commission shops and rental of retail space.

With product range streamlining, positive contributions to variable costing must be taken into account since not replacing products with positive profit margins can con-tribute to a deterioration of the overall profits (see Accounting). In addition, the syn-ergy effects on other items due to the streamlining of the product range must be considered.

Product range monitoring is implemented with statistics for sales revenue and volume, and best-worst seller lists. A best-worst seller list contains the top-selling items at the beginning, and the lowest-selling items at the end of a list, arranged ac-cording to sales. Product range monitoring can also be implemented with a short-term income statement as part of cost and management accounting (see Account-ing). Ongoing assessment of operating income compares the costs and benefits for each individual item and thus the profits.

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3.2 Pricing Policy

Pricing policy is concerned with the determination and establishment of prices, with discounts such as cash, quantity, and loyalty discounts and sales rebates and pricing strategies. To give an overview of marketing activities, two pricing strategies will be described: price differentiation strategy and absorption strategy. The determina-tion and establishment of prices is discussed in section 5, pricing determination and costing.

If a company charges consumers different prices for a product, this is called price differentiation. Different prices are charged for the same services. The total market is split into sub-markets in which then different prices for the same goods are re-quired.

As for types of price differentiation, we can distinguish spatial, personal, time and quantity price differentiations.

Thus, with spatial price differentiation, there are domestic and international prices. Personal price differentiation can be found, for example, with electricity rates (more expensive household power, cheaper industrial power) or with lower ticket prices for students. Temporal price discrimination exists, for example, with seasonal price graduations. The granting of rebates constitutes a quantitative price differentiation.

An additional pricing strategy is the skimming strategy or absorption strategy. This is a strategy in which a product is initially introduced at a high price that is then later reduced gradually. This is not a premium pricing strategy (high-price strategy) since the price is not permanently high with an absorption strategy, but rather is first set high and is then gradually lowered and then corrected gradually due to increasing market penetration or because of technological developments. With a high starting price, only lower volumes can usually be achieved, but at the same time relatively high profit margins are realised per unit. An absorption strategy targets customers who are ready to pay a high price for a new product to ‘absorb’ it, that is to keep the consumer surplus as low as possible. The high price appears justified by the development costs.

The absorption strategy is recommended especially for new products based on in-novations that are in high demand because of their novelty. Therefore, first-time cus-tomers who are willing to pay the high price are called innovators, early adopters, trendsetters or fashion leaders.

A classical example of the use of skimming strategies can be found with hardware or consumer electronics (mobile phones, TV sets). Here, new and innovative products are put on the market at relatively high prices but get cheaper after a short time.

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3.3 Communication Policy

The main objective of market communication is to pass on information and content concerning the product to others for the purpose of guiding their opinions, attitudes, expectations and actions following a specific aim. Communication policy means therefore the conscious shaping of a company’s in-formation directed towards the market.

Its main instruments are mainly advertising, sales promotion, public relations and personal selling.

Fig.: Communication policy

a) Advertising

Classic advertising is the planned and conscious manipulation of potential buyers for the purpose of changing their actions. This intentional and non-coercive form of influencing is meant to initiate people to fulfil the objectives of advertising. Advert-ising attempts to draw customers to the product.

Advertising aims at intentional and non-coercive manipulationof potential customers.

Types of advertising

Depending on the number of people advertising, a distinction is made between indi-vidual advertising (exclusive advertising) and collective advertising. If the manu-facturers disclose themselves by name, then, it is collective advertising; but if the manufacturers remain anonymous, it is community advertising as in slogans like: Eat more German butter; drink more German beer).

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Communication policy

Advertising Salespromotion Public relations Personal selling

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If we differentiate advertising according to the advertising objects, advertising can oc-cur in the form product advertising or in the form of retail outlet advertising (com-pany advertising). We often come across shopping centre advertising in trading (Come to Media Market - Greed is good), whereas it is primarily the industry that runs product advertising.

Following the strategy of influencing the target group, advertising can be categorized into introductory advertising, preservation advertising, expansion advertising, promo-tional advertising and reminder advertising.

Advertising effect

The advertising effect can be described by the AIDA formula:

A = Attention (draw attention)

I = Interest (interest in the performance)

D = Desire (to purchase)

A = Action (action, purchase)

Planning advertising

When planning advertising (policy paper), one must take into account the following criteria of planning:

Budget Aims of advertising Target group Advertising media Distribution area Distribution period Advertising pressure Message Atmosphere, tonality Limitations (e.g. Maggie colour red)

Objectives of advertising

We measure the success of advertising in its objectives. The objectives of advertising can be to:

Spread the familiarity and level of information about the offer Gain the target group’s sympathy Convince potential buyers about the benefits of the offer or confirm the same

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The objectives of advertising must be defined so that they can be measured:

Raise the active degree of familiarity of a brand in a particular target group in a particular period

Disseminate product knowledge, so that a certain percentage of the defined target group knows that a particular brand possesses a particular attribute.

The advertising budget can be derived from the defined objectives of advertising with reference to a period.

Advertising pressure

After determining the objectives of advertising, the budget and the target group we need to decide how often we address the individual target group members (determin-ation of advertising pressure).

For orientation in determining the advertising pressure, the following criteria are help-ful:

The higher the advertising pressure by competitors, the more intensive must be the advertising pressure.

The more elaborate and complex your own advertising statement, the more in-tensive must be the advertising pressure.

The more stable the consumer’s actions or, the stronger the purchasing action is opposed to your own marketing aims, (the product is new, the consumer prefers competitor’s products), the more intensive must be the advertising pressure.

The less the buyer is interested in the product, the more intensive must be the advertising pressure.

The less attention and care the media user shows for the product, the more frequently the target group must be addressed (the intensity of usage of radio is relatively less compared to media like a magazine).

Selection of advertising media and advertising media category

Important advertising media are advertisements, direct mail, posters, and radio ad-vertisements, promotional TV commercial spots and promotional gifts. Advertising media can be designed as visual (reading), acoustic (listening) or audio-visual (read-ing and listening) material.

Important advertising media are newspapers, magazines, radio, TV, cinema, advert-ising columns but also vehicles or individuals in the context of mobile outdoor advert-ising.

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When selecting the advertising material or media, we must consider the following points:

the target group (in which information is circulated) for canvassing, the area of circulation in which advertising is carried out, the time of circulation, i.e. when and how often advertising is carried out, the range, i.e. the number of people the advertising message must reach at

least once, the cost of advertising.

When selecting the advertising material or media, it is important to know which people can be reached and at what cost, and how these people can be selected ac-cording to target groups (options). The options in the advertising media like newspa-per and magazines are apparent due to the reader structure, whereas with posters the exact target groups cannot be determined.

Also the time of dispersion of the advertising media is important. Thus, it is possible to plan according to the day and time very precisely, for example, in radio advert-ising, where its use is only on that day.Also note that different advertising media offer different ways of contact with the tar-get group. While advertisements in magazines provide multiple contact opportunities in magazines, a TV spot has only a single chance to be seen.

Thus, the following are the quantitative selection:

Cost, in relation to the people being addressed (how expensive is it to address thousand people)

Possibilities of selection for the target group

Planning the time of circulation of information

Contact chances (single contact/multiple contact)

We can compare the expenditure for various advertising media by calculating the price for one thousand people. This indicates how expensive it is to address 1000 people.

Price for a thousand = Price of each page of advertisement *1000_____________________________________Readers of total edition

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In the qualitative method of selection, particularly the type or situation of usage of the media by the public plays a role. While magazines have a high intensity of use, the radio is used rather fleetingly. Journals with interesting topics are more thoroughly processed than the use of radio during household work, while driving or, perhaps, the use of a poster advertisement when passing by. The more intensive the use, the greater the expected advertising effect per contact.

The possibilities of presentation result from the technical conditions of the medium. While in the case of radio only acoustic stimuli are possible and print advertising al-lows only a static representation, cinema and TV live on motion and multi-channel display options. Therefore we can name the following qualitative selection criteria:

Type of usage/usage situation (intensity of usage)

Possibilities of presentation

b) Sales promotion

While advertising tries to draw customers to the product, attempts are made to through sales promotional measures to bring the product closer to customers. Sales promotion aims to support the classic sales advertising through measures to promote sales and to increase the power of sales helpers and marketing intermediaries.

Sales Promotion aims atshort-term increase in sales

Marketing intermediaries and potential buyers are directly addressed at the place of sales applying special measures and methods. In the past, in the area of consumer goods, the focus between classic advertising and sales promotion, measured in terms of the effort, has shifted in favour of sales promotion.

Examples of measures to promote sales:

Sweepstakes Prize contests Location plan Natural discounts in the form of token payments and bonuses Advertising gifts (Give Aways) Sales competitions Events and travel as incentives for employees and customers Product presentations Product demos Coupons User instruction manuals …

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Sales Promotion covers all measures in order to increase the sale of goods offered by a company. In the process of sales stimulation, we differentiate three types of sales promotion, namely sales promotion that is field service-related, trading-related and end user-related.

Field service promotion

The field service-related sales promotion involves appearance in exhibitions and fairs. In this, the products are directly presented to end users, but also to sales rep-resentatives of many other trading companies. If the purchase incentive in this is good enough for the end users and field staff of other companies present, it will lead to new orders. The stimulation of sale can be realized here by sales competitions with awards and gift items for sellers. Well-trained personnel with attractive product presentations provide support to sales in the field.

Trader promotion

Trading-related sales promotion covers the purchase incentive through price reduc-tions on bulk purchase, loyalty and natural discounts. In addition to surplus quantit-ies, functional and display discounts are accorded to trade for special presentations. The industry provides presentation material to trade and offers training for sales per-sonnel in order to increase sales in the trade.

End user promotion

In addition to natural discounts and samples for product familiarization, additional gifts for product purchase, a special position and presentation of goods in the market (place of sale), competitions and product demos, tasting campaigns, coupons and loyalty awards are offered in the end user-related sales promotion so as to create more purchase incentives and thus to increase sales.

Visual marketing at the point of sale is aimed at simplifying and embellishing the buy-ing experience for the customer. Following examples can be named in commercial marketing at the point of sales:

Good signage to the retail shop Good signage in the market Significant information boards (Info-Points) to product line areas Magnifiers on the shopping trolleys or at the shelves Water dispensers and special illumination Appealing facade design Appealing showcase design

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c) Public relations

The Public relations exercise refers to advertising for gaining public trust. The aim is to influence the attitude of the general public towards the company as such and to render it positive. The point is to create an image of the company that would contrib-ute to achieving the defined objectives of the company.

Public relations exercise aims at image building

Examples of PR activities or instruments of communication for public relations exer-cise:

Trade fairs and exhibitions Open day Company visits Corporate magazines Press releases Recreational parks Online PR …

The online PR attains more and more importance. The online PR improves the clas-sic PR tools by adding services (e.g. online newsroom) and develops its own tools and strategies (e.g. corporate websites, themed websites, corporate blogs, online magazines and online campaigning).

Some of the activities are sports sponsorship, arts and cultural sponsorship, philanthropic sponsoring and sponsoring science. The intention is to transfer the good reputation of a musician, a football team, an actor or a scientist to the company.

Sponsoring aims at image transfer

d) Face-to-face selling

In face-to-face selling, the customer needs to be convinced about the benefits he would derive from acquiring a product to solve his problem. This is described better in the phases of sales talk through reasoning techniques.

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3.4 Distribution Policy

The distribution policy as a tool for marketing mix deals with the organizational and physical distribution of products.

The main question here is: how does the product reach the end user from the manu-facturer?

The physical movement of goods by external transport carriers within the frame-work of distribution logistics deals with the choice of the external mode of trans-port, in which factors such as the speed of transport, cost of transport, safety of transport, environmental strain, flexibility and legal norms play a significant role.

The organizational aspect of the distribution policy deals with the internal and ex-ternal sales organization.

The three core tasks of distribution policy are:

Choice of the path of salesHow should the way of products be structured from the manufacturer to the cus-tomer?

Choice of the organs of salesHow should the contact with the customer be established?

Question of logisticsHow should the products be delivered to the customer?

The internal sales organization is concerned with the organizational questions: How can the functional area of sales (distribution, marketing) of the company be organized according to different criteria?

Sales organization according to geography (e.g. inland sales, foreign sales) Sales organization according to functions (drafting of quotations/quotation

design, drafting confirmation of orders, drafting delivery notes, invoicing, re-minder system, sales promotion, face-to-face sales etc.)

Sales organization according to objects/articles or different categories (Ger-man magazine titles ‘Schöner Wohnen’, ‘moderne Bauelemente’, ‘Garten-bereich’)

Depending on the internal sales organization, posts or employment is created in the sales division of the company. The above-mentioned criteria for creation of posts shown in the ideal form, but in practice they can occur in a combined form.

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4. Selected marketing activities

4.1 Distribution channels

a) Sales organs

The external sales organization deals with distribution channels and sales organs.

Sales organs are all individuals and institutions that help a company to deliver the products produced to the ultimate end buyer. Here we can distinguish roughly between in-house sales organs (belong to the company), sales assistants (only fill or-ders, have no ownership of the goods) and the affiliated sales organs (legally inde-pendent but economically more or less clearly connected to the manufacturer) and outside sales organs (have ownership of the goods)

Sales organs

In-house sales or-gans

Sales assistants Outside sales or-gans

Affiliated sales or-gans

Management Sales agent Wholesale Authorised dealerCompany stores Commissioned

agentRetail Franchising

Travelling salesper-son

Broker

Online salesetc.

Figure: Sales organs

For the external sales force, a company can use organs outside the company for the distribution of finished products (wholesale, retail), or it can distribute the products to end buyers without involving a reseller directly by using its own sales outlets, online stores or sales staff such as field representatives, sales representatives and agents.

b) Direct and indirect sales

Direct sales means that an industry sells its products to the end user directly or through sales assistants.

Indirect sales means that any number of sales levels of are inserted between produ-cers and end users.

Often, industry uses wholesalers and retailers when selling products in order to save order processing costs and use the storage facilities of the company.

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c) Online sales

In addition to Internet portals to increase visibility and image building, more and more companies operate their own shopping site on the Internet for worldwide distribution of their products. In e-commerce, there is a distinction made between B2B (Business to Business) and B2C (Business to Customer).

The following advantages can be cited from the company's point of view:

worldwide sales open 24 hours savings on overhead (it eliminates the face-to-face sale) increased distribution ratio (availability of products)

Since shopping on the Internet involves multimedia businesses (distance selling), the consumer has a 14-day right of cancellation for consumer sales after the receipt of the goods even if the reason is ‘not satisfied’.

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d) Sales assistantTravelling salesman Sales representative Commissioned agent Broker

Legal Status(Independent, dependent)

Commercial employee Independent merchant ac-cording to the HGB (Ger-man Commercial Code)

Independent merchantaccording to the HGB

Independent merchantaccording to the HGB

Contractual relationship Employment agreement as a service contract

Agency agreement (proxy contract)

Commission contract Brokerage contract

Activity Signing and arranging for contracts in the name of and on behalf of third parties

Signing and arranging for contracts in the name of and on behalf of third parties

Entering into contracts in his own name and on be-half of the principal,

Negotiation of Contracts

Duration of activity(permanent, case by case)

Permanent Permanent Permanent and case by case

Case by case

Compensation claim Fixed salary, sales com-mission, reimbursement of expenses (expenses)

Sales commission, pos-sibly collection commis-sion, del credere commis-sion

Commission, any reim-bursement of expenses

Commission

Other rights and obliga-tions

Rights and duties of clerks Rights: Documents, notific-ation, compensation claims Duties: Obligation to per-form, notification obliga-tion, due diligence, confid-entiality, non-competition clause

Rights: Self contracting, lienDuties: Compliance, due diligence, notice, state-ment, liability for goods on consignment

Diligence, compliance, set-ting a final note, diary, in-formation, storing samples and patterns

Benefits for the Represented party

Travellers are bound by in-structions. They can also be used for other activities and represent only by their own company

No fixed costs, develop-ment of new and unknown market areas

Sales of products with sales risks

The brokers know about many potential contractors. Certain goods are for sale only through brokers (se-curities)

Figure: Table Sales Assistants, source N. Böing - www.nboeing.de

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The commercial agent is an independent merchant who is given permanent power to do business for another company or in the name of and on behalf of others. The company makes an agency agreement with the agent (proxy agreement), in which optionally all the regulations of the German Commercial Code are specified. Unless otherwise provided, the representative may represent several companies simultan-eously. This does not apply to competing products, but only for additional products.

The representative may have the ability to make an agreement or act as go-between. If the commercial agent makes valid agreements in the name and on behalf his con-tractor, then he is referred to as a contract representative. If he only carries out trans-actions, then he is a mediation representative.

According to business activities, a distinction is drawn between local agents, district agents and travelling agents. District agents will receive a sales commission on all sales realised in their district. Travelling agents receive a commission only on sales arranged by them or completed transactions.

According to area of responsibility, a distinction is drawn between sales agents, in-surance agents, shipping agents and transport agents. The duties of the sales agent include an obligation to perform, due diligence and the duty to notify.

For the negotiation or the conclusion of transactions, the agent receives a commis-sion. A district representative also receives commission for orders from his district that did not come about because of its activity. For duly rendered funds received, the sales representative receives a debt collection commission. He also receives a del credere commission if he is liable in writing for the receipt of payments. To check the monthly statement, the sales agent may require an accounting state-ment with all commissionable transactions for him.After termination of the contract (system of representation) the sales agent has a right to compensation if the contractor further realises customer transactions ar-ranged by the agent. The compensation shall not exceed a commission based on the average of the last five years.

In contrast to the sales agent, the commissioned agent is acting on his own behalf and on behalf of others. The commissioned agent is not the owner of the goods. He may, however, transfer ownership of the goods to a third party. In contrast to the sales agent, the commissioned agent should examine the goods upon receipt imme-diately and, if a defect is present, make a claim. This is necessary, since he is acting in his own name, that is, warranty claims of his customers are directed against him and not against the principals. In addition to due diligence and the duty to notify, the commissioned agent must follow the instructions of the principals. The commissioned agent is responsible for the loss and damage of goods in his custody, unless the loss or damage is due to circumstances which could not be averted through the diligence of a prudent merchant.

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The commissioned agent may require a commission when the transaction has been executed. In addition, the commissioned agent has a legal security right to the com-missioned goods as long as they are in his possession. If a company opens up foreign markets abroad, then the commissioned agent will also make available storage facilities. As opposed to sales agents, commissioned agents often maintain their own private warehouse. Commissioned transactions often involve international transactions in goods for which a surplus exists. One party (de-livery) in a commission business must reach a settlement promptly (commission statement) because otherwise the principals may be inclined to change their commis-sioned agents.

The commercial broker mediates contracts only on a case by case basis. The trading broker must produce for each party immediately after completion of the transaction a signed contract note once again setting forth the core principles of the agreement. If nothing has been agreed between the parties about who should pay the commission, it shall be payable by half for each party in the absence of differing local practice.

e) Employed traveller or an independent agent

Whether the contractor will use to sell its products its own sales assistants (external sales agents or travellers as company employees) or outside sales assistants (inde-pendent sales agents) depends on a number of factors (criteria). In addition to the cost of sales assistants, also involved are reductions in fixed costs, dependence on third-parties (sales agent), the flexibility in the application area of marketing agents and also the market knowledge of the relevant market agents. To get a first overview of the cost structure of the sales agents, the so-called critical revenue can be calcu-lated in which the sales representatives and sales representatives earn the same amount. Below the critical turnover level, it is it better to use the external services of a sales agent. Above the critical level, it is cheaper because of economies of scale to make a choice of affiliated travellers as outside sales agents for the sale of products. In this calculation, however, only the costs are taken into account in the decision that would result in future forecasted sales.

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Example

The management of the Danish company, Phoenix Ltd., which specializes in the sale of office furniture to customer specifications would like to expand their sales territory to Germany and is considering distributing its products via field employees or sales agents. The estimated revenue of an accounting period is: € 1,200,000.00

Calculate the critical sales level, provided that the sales agents receive 12% of sales, and the field representatives receive a fixed amount of € 3,500.00 and 4% commis-sion on sales.

Cost function sales representatives

K = 12 * x 100

Cost function travellers:

K = 4 * x + 3500 100

If one makes the two cost functions now equal and solves the equation for the un-known (x = sales), then one gets the sales level at which the two agents have the same pay for the sale of the products.

12 * x = 4 * x + 3,500/ - 4 x 100 100 100

8 x = 3,500 / 100 *100

8 x = 350,000/:8

x = 43,750

With a turnover of € 43,750.00, the costs for the field representatives and the sales agents are the same.

For the decision, other criteria such as the dependence on foreign suppliers, the company's know-how in the operation or the reduction in fixed costs must be in-cluded.

While an in-house employee receives six weeks of sick pay from the company if he is ill, the sales agent, as an independent merchant, need not be paid any benefits in case of illness. Also voluntary benefits such as paid holidays and Christmas bonuses do not arise for a sales agent. The traveller (assistant) is an employee and subject to instructions. He can be employed for other activities during order processing.

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The sales agent cannot be used as flexibly since he only has the responsibility to ne-gotiate or complete transactions for the company on an ongoing basis. A representat-ive may represent more than one company, while a traveller, as an external em-ployee, represents only the company with which he has signed a contract of employ-ment for services.

A careful consideration of all the criteria for the distribution decision is necessary.

f) other distribution channels

Authorised dealer

An authorised dealer works as a legally independent merchant in his own name and on his own account.

He is subject to the manufacturer or to his marketing concept through a long-term contract. For this, the authorised dealer usually receives territorial protection from the manufacturer, that is, he receives from the manufacturer the right to sole distribution in a defined area. In return, the dealer often agrees to carry exclusively the products of the manufacturer. Depending on the contract details, the relationships of an au-thorised dealer to the manufacturer can be different. Extensive contractual commit-ments especially have to do with commitment to the product range, the customer groups served (distribution agreements), or even minimum sales or minimum stock levels. Other types of agreement with respect to the marketing concept of the manu-facturer are possible or can be arranged.

Franchise systems

Franchising refers to the sale of a marketing concept to a large number of independ-ent merchants (franchisees).

The franchisor provides franchisees with a sophisticated marketing concept for a payment (one-off and ongoing revenue-based fee). The franchisee supplies his cap-ital and labour, the franchisor his know-how, image and use rights for trade marks (property rights). In addition, the franchisor takes over the ongoing support and as-sistance to franchisees. The most famous franchise system is probably McDonald’s. But there are other examples besides the food service industry. In the apparel in-dustry, for example, Benetton and Marco Polo are examples of franchise systems. Even with such services as car rentals, Sixt can serve as an example of franchise systems.

The advantage for the franchisor is the possibility of having an expansion policy without huge investments. In addition, he will receive a one-time fee and ongoing sales fees.

Franchisees can take the leap into an independent business without extensive know-how. The franchisee uses the image and the expertise of the franchisor.

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He receives training from the franchisor. In addition, he can participate in inter-re-gional advertising, sponsorship promotions or rebates of the franchisor.

With appropriate standards of corporate identity and corporate design of the fran-chisor, business ideas can be multiplied in this way.

4.2 Promotional activities

Promotion (sales promotion) comprises all measures designed to increase the sale of the goods offered by the company. Stimulating sales involves three types of sales promotion: external service-related, dealer-related and end-user-related.

External service promotion

External service-related promotion includes participating in shows and trade fairs. Here, the products are directly presented to end users, but also to the sales repres-entatives of many other trading companies. If the incentive is great enough for end users and field service employees from other companies in attendance, this will lead to new orders. Stimulation of sales can also be realised by sales competitions with awards and gift items for vendors. A well-trained staff with appealing product present-ations can support sales in the field.

Dealer Promotion

Trade-related promotion includes a purchase incentive through discounts such as for quantity, loyalty, and free goods. In addition to higher volumes, function and display discounts are available to the trade for special presentations. Industry makes the trade presentation materials available and offers training for sales staff to increase the sales in stores.

End-user promotion

In addition to free goods and samples for getting to know the product, there are also gifts for purchasing the product, a special placement and presentation of goods in the market (point of sale), sweepstakes and product demonstrations, sampling cam-paigns, coupons and loyalty rewards that can be offered in order to create additional incentives and thus an increase in sales.

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Merchandising

The term merchandising is used in three contexts.

When speaking in the trade of merchandising, sales promotion is usually meant. This includes activities at the point of sale such as shelf placements, displays and stands. Visual merchandising is therefore the visual presentation of the goods offered at the point of sale.

Visual marketing at the point of sale should facilitate and improve shopping for the customer. The following are examples of retail marketing at the point of sale:

good directions to the place of purchase good direction inside the store meaningful information signs (info-points) for key products segments: magnifying glasses on shopping carts or on the shelves water dispenser and special lighting. attractive storefront design attractive window displays

Merchandising also means using famous images (characters, stories, etc.) for products. Well-known cartoon characters with a large assortment of merchandise: Mickey Mouse, Spider-Man, Batman, Garfield

Well-known movies with an extensive assortment of merchandise: Star Wars, Juras-sic Park, Star Trek, Harry Potter, Transformers

Well-known musicians with an extensive assortment of merchandise: Michael Jack-son, The Rolling Stones, Bob Marley

Well-known athletes or sports teams (sport brands) with an extensive assortment of merchandise: David Beckham, FC Bayern Munich, Borussia Dortmund

Well-known video games with an extensive assortment of merchandise: Pokémon, Final Fantasy, Need for Speed

Often, the main product is an entertainer or a movie, whose character is then re-cycled. Occasionally, there is also the reverse case, for example, when an animated series is designed to improve the marketing of already existing toys (‘He-Man and the Masters of the Universe’ or ‘Transformers’).

The scope of merchandising products ranges from video, images and sound record-ings through books, scrapbooks and computer games to collecting items such as fig-urines, kits, models, stickers, trading cards etc. and useful items such as plates, cups, keychains, clothing (especially T-shirts, polo shirts, sweatshirts, college jackets, rain jackets) and so forth.

Merchandising also means brand transfer. With brand transfer, an established trademark is transferred to a new product. Thus, brand awareness and image of the

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parent brand can be used for growth potential for a new creation. At the same time, this spurs the interest of the customer, rather than sinking in the consumption jungle. Example: A face powder with an unknown name such as ‘Madame Beauté’ would have a hard time making it. But if the same product is called Nivea Beauté, the busi-ness will virtually take off by itself. Is it any wonder, then, that Beiersdorf is now using its successful brand name for cosmetics?

4.3 Service, customer service, and warranty services

Services, warranty and customer service play an important role in achieving an addi-tional benefit (extended product) for consumer goods.

‘Service’ means the totality of services that the customer expects for the product or the basic service in relation to the price, the image and reputation of a company. Customer loyalty can only be achieved by such services if expectations are ex-ceeded.

Services can be provided before, during and after the purchase.For example, a customer expects a demonstration of the car, the possibility of a test drive and a personal welcome before buying a BMW. During the actual purchase, the customer expects financing plans and the return of the used vehicle. After the pur-chase, he expects the most minor of repairs to be made speedily.

Before use During use After useTechnical Services

technical advice

Dismantling of old equip-ment or facilities

Technical briefing Installation Repair and mainten-

ance

Remodelling, Extension Disassembly, Disposal

Commercial services

Test Delivery Financial ad-

vice

Training Spare parts supply Complaint management

Information new develop-ments

Discounts for Updates

Customer service includes all the services and measures that enable and facilitate the use of the product. Just as with service features, customer service can be free or for-pay. The following table suggests possible customer services before, during and after use.

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Many manufacturers supply their products with a warranty for the service life of the products. While the warranty law according to German civil law applies only to de-fects that exist before the transfer of risk (transfer) and are due to production, a war-ranty is a voluntary service feature of manufacturers that also covers problems that result from use.

In addition to durability and service life, there can also be warranties for delivery time, customer service, price, redemption and satisfaction. Thus, a key selling point may be a guaranteed fast delivery time or a low price guar-antee for a range of clients.

4.4 Customer loyalty measures

Often, the acquisition of new customers is more expensive than customer retention efforts. Customer loyalty programs have their origin in retail sales. Today these also common with airlines (miles and more), hotel chains, car rental companies, telecom-munications companies and financial services companies.

Loyalty cards that include special services, discounts and/or payment functions are a popular device to achieve customer loyalty. They are becoming more and more at-tractive and always offer many opportunities for customers and for the issuing com-pany. The costs associated with the card services are extremely diverse. In addition, companies can use the issuing of cards to collect customer data and purchase in-formation obtained in the course of time for targeted direct promotions that are geared to the specific needs of the customer. The introduction of loyalty card programs has led in recent years to so-called multi-partner programs where several companies join together to operate a common loy-alty card program.

Also, reward points promotions that are issued for buying a certain product amount can help to connect customers with the retail outlet. By redeeming loyalty points, the customer has the opportunity to buy a particular item from this shopping site at a re-duced price. Often this discounted merchandise is a high-quality branded product that belongs to a specific collection so that the customer continues to collect loyalty points at this shopping location in order to enlarge his collection.

In the area of online marketing and online stores (shopping sites), there are cus-tomer loyalty programs based on communication, price, product, and ones which are related to an online shopping site.

Customer loyalty programs focusing on communication include regular newsletters, contacts for special occasions (birthdays, ‘you’ve been our customer for a year now’, anniversaries, etc.) and one-to-one communication with personalised content and a Exclusive Customer Area in the store with tips, advice, news, etc.

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E-coupons, customised coupons, discounts, combo specials loyalty points/incentive schemes with appropriate incentives, promotional items, corporate gifts, promotions (such as special offers on certain dates, free shipping on orders up to a certain date; if you buy three items, the cheapest one is free) and cash discounts are among the customer loyalty programs in online shops which focus on price.

Product range-based customer loyalty programs in online stores have exclusive product offerings and cross-sell recommendations with and without special terms.

Product range-based customer loyalty programs in online stores provide customers with important contact details and benefits, retaining of customer data for simplified ordering process, additional purchase recommendations tailored to the interests of the customer and automated reminders for products where regular additions or re-placements are recommended.

Customer loyalty policies in online marketing can also refer to the orientation of the shop. There are notes about interesting items that can be saved online and used on later visits, a personalised presence for return visitors, status monitoring of orders placed, of orders made and virtual communities: product reviews, experience in theme-oriented forums, greeting cards, scrapbooks, club memberships.

In the retail and service sectors, the personal conduct of a vendor or consultant (pro-fessional advice, kindness, sympathy) can ultimately lead to customer loyalty by cre-ating personal preferences. A high level of contact quality with a friendly manner may also engender customer loyalty.

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5. Pricing and calculation

5.1 Pricing methods

Basically, a price is understood to be the amount of money that the buyer has to spend to acquire a particular item.

A basic distinction is the cost-based and market-based pricing or price structure. While the cost-based pricing in the calculation adds up the costs and desired profit so as to arrive at the sale price, the market-based or competition-based pricing follows the competitive environment for the formation of the sales price.

The number of market players is a crucial criterion for pricing. Monopolists (one seller faces a multitude of buyers) can pursue cost-based pricing (forward calcula-tion) if they take into account the elasticity of demand. Demand is elastic if the buy-ers can rely on substitute goods. Only with an inelastic demand, the monopolist has the power to dictate prices.

In polypolistic markets (many sellers face many buyers) the price is dictated by the market, the price is a datum (fixed component) for the individual company. The com-panies in polypolistic markets must accept the market price and be willing to stand out from the competition through their services.

In oligopolistic markets, such as the oil products market in Germany, a few suppli-ers face a large number of buyers. Since the market pricing is transparent due to less number of providers, they can operate on the basis of price wars or price fixing which is, however, prohibited under the antitrust laws.

Depending on the industry, product and cost situation, there can be pricing flexibility. While the seller of goods has a price floor (he has to get at least as much for the product), the buyer has a price ceiling (he is willing to pay as much for it at the most). Between the seller’s reserve price and the buyer’s price ceiling there are several, po-tential settlement prices.

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5.2 Trade costing

Example

The list purchase price of a product is € 2,400.00. The supplier gives us a rebate of 10% and a discount of 3%. The transport and shipment packaging charges are € 200.00. The handling charges are calculated at 60% and the profit at 16%. What is the list sale price derived if the cash discount is 3% and the customer rebate is 10%?

Trade costing – Forward calculationList purchase price   € 2,400.00 - Supplier rebate 10.00% € 240.00= Target purchase price   € 2,160.00- Supplier discount 3.00% € 64.80= Cash purchase price   € 2,095.20+ Acquisition cost € 200.00 € 200.00= Purchase price   € 2,295.20+ Handling charges 60.00% € 1,377.12= Cost price   € 3,672.32+ Profit 16.00% € 587.57= Cash sale price   € 4,259.89+ Customer discount 3.00% € 131.75= Target sale price   € 4,391.64+ Customer rebate 10.00% € 487.96= List sale price   € 4,879.60

In trade costing as a forward calculation, prices are calculated from the list purchase price to cash price on a percent basis (of the base value). From the cash sale price to list sale price the calculation is within hundred (reduced base value). The last two steps must be calculated within hundred, since the supplier’s sale prices represent the customer’s purchase prices. If the cash discount is 3%, the cash sale price is 97% and the target sale price therefore 100%

In single product companies, a calculation surcharge can be estimated at constant capacity using which from the purchase price to list sales price can be calculated in one step.In our example above, the calculation surcharge is 112.60%.

Costing surcharge = Gross profit ___________ * 100

Purchase price

The gross profit is derived from the difference of list price – purchase price.

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Costing surcharge = (List sale price – Purchase price)_________________________________ * 100

Purchase price

In trade costing as a backward calculation, in the framework of market-based pri-cing the calculation is backwards from the given market price (average competition price). In this, the following question is answered: What should the goods cost me at a given market price and considering my cost structure and my profit expectations in terms of acquisition or as a list purchase price?

Example

The average list sale price of the competition for a product is € 1,160.00. We offer our customers price reductions in the form of a rebate at 5% and a discount at 3%. The handling charges were calculated at 68%, the profit expectations by 28%. What may our list purchase price be if the acquisition cost for the product is € 60.00 and our supplier gives us a bulk discount of 5% and a cash discount of 2%?

Trade costing Backward calculationList purchase price   € 469.48 - Supplier rebate 5.00% € 23.47= Target purchase price   € 446.01- Supplier discount 2.00% € 8.92= Cash purchase price   € 437.09+ Acquisition cost 60.00 € € 60.00= Purchase price   € 497.09+ Handling charges 68.00% € 338.02= Cost price   € 835.11+ Profit 28.00% € 233.83= Cash sale price   € 1068.94+ Customer discount 3.00% € 33.06= Target sale price   € 1.102.00+ Customer rebate 5.00% € 58.00= List sale price   € 1,160

The list purchase price must not exceed € 469.48, so that the desired profit of 28% is earned for a given cost structure.

In the backward calculation, from the list sale price to the cash price (two steps) the calculation is on a percent basis (from the base value), from the cash sale price to cash purchase price on hundred (increased base value) and from cash purchase price to list purchase price within hundred (reduced base value).

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The margin is a percentage discount on the list sale price to get from the list sale price to purchase price in one step

Gross margin = (List sale price – Purchase price)_________________________________ * 100

List sale price

In our example, the gross margin is rounded off to 57.15%.

In the difference calculation, the profit is sought from the given market prices and given list purchase prices, which is derived in the light of own cost structure. Everything here is calculated in percentages, i.e. from the base value.

Example

The list purchase price of a product is € 3,600.00. Our supplier gives us a rebate of 8% and a discount of 3%. The acquisition cost is € 420.00. The internal business costs amount to 30%. How high is the profit in Euros and in percentage, if the list sale price in the market is € 5800.00 and we give our customers a rebate of 10% and a discount of 2%?

Trade costing Difference calculationList purchase price   € 3,600.00 - Supplier rebate 8.00% € 288.00= Target purchase price   € 3,312.00- Supplier discount 3.00% € 99.36= Cash purchase price   € 3212.64+ Acquisition cost 420.00 € € 420.00= Purchase price   € 3,632.64+ Handling charges 30.00% € 1,089.79= Cost price   € 4,722.43+ Profit 8.33 % € 393.17= Cash sale price   € 5115.60 + Customer discount 2.00% € 104.40= Target sale price   € 5,220.00+ Customer rebate 10.00% € 580.00= List sale price   € 5,800.00

The profit is € 393.17 (8.33% of cost price) at the given purchase and sale prices, for a given cost structure.

In the calculations of cost accounting, mainly the cost price is calculated, i.e. in the cost unit accounting, the cost price for a unit is calculated in order to take pricing policy decisions.

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6. Sales and Customer Counselling

6.1 The term communication

Communication refers to the exchange of information between a sender and a re-ceiver. For the transmission of information to the receiver, the sender has various options. The information may be provided, for example, by language, by a newspaper, corres-pondence, or an image. Verbal communication is carried on with words (written or oral). Language is sup-ported by non-verbal communication, by body language (gestures, facial expres-sions, posture, etc.)

When advising customers during the sales conversation, there is a constant role re-versal between the transmitter and receiver. If the customer uses language to ex-press his wants, he takes on the role of the sender, while the sales person listens and thus acts as a receiver. Subsequently, the clerk acts as a sender by conveying information about the product. Now the customer is the receiver.

The communication model of Friedemann Schulz von Thun supports the analysis of verbal communication. The model derives its level of awareness from the so-called ‘four-ear model’ that divides verbal communication into four levels of meaning. Each utterance thus contains four messages to the receiver on four different levels.

Factual levelThe information about a thing is in the foreground. Facts and circumstances are com-municated.

Self-declaration The utterances of the sender always include information about the sender himself. This can be done either intentionally or unintentionally.

Relationship levelBy intonation or certain formulations of the utterance, the sender shows what rela-tionship he is in to the receiver.

AppealHere, the sender influences the receiver. The sender communicates advice, instruc-tions and appeals.

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Example

Husband: ‘Where did you put the front door key?’

This utterance can reveal the following about the sender:

Factual levelThe husband determines that the front door key can’t be found. Relationship levelThe husband makes it clear that he holds his wife responsible that the front door key can’t be found.

Self-revelation levelThe husband makes it clear that he will not look for the front door key. He is an-noyed. Finally, he himself is indeed a careful person who always hangs the front door key on the keyboard.

Relationship levelThe husband wants his wife to be as careful as he is since it affects both of them.

AppealThe husband expects his wife to look for the key give it to him without being asked.

At the same time the wife receives this information and listen to the news with her ‘four ears’:

Factual levelThe wife makes sure that the key is not hanging on the keyboard.

Self-revelation levelThe wife is sure that the husband is annoyed about the fact that the key is not where it belongs.

Relationship levelThe wife doesn’t like his tone of voice.

AppealThe wife feels compelled to look for the key.

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What kind of person is this? What does the situationWhat’s wrong with him? mean

How is he talking What should I do, to me? think, feel Who does he because of his messagethink I am?

Figure: The ‘four ears receiver’

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6.2 Stages of the sales conversation

Every sales conversation involves different stages that do not always ideally take place one after the other, but rather engage with each other in a different order and can be repeated. For example, when showing merchandise, useful features can be mentioned or customer objections can be countered.

The scope of the advice needed will depend on how often a customer purchases the article in question. With items that are used every day, such as the buying butter (convenience goods) there is no special need for advice. Since people buy these products every day, the features of the product (fat content) are already familiar. When you buy a sweater (shopping good), something less frequently purchased, there is a need for advice regarding the material, washing instructions, colour com-binations with other garments, air permeability, etc. The purchase of a piano (special-ity good) is likely to take place even less frequently for the customer, provided that we are not dealing with a reseller of musical instruments. There is a great need for advice.

In a successful sales conversation, regardless of the stage, it must be explained to the customer what benefit he will receive from the purchase to solve a problem (product, commodity, item). Analysis of the individual stages can help, however, in showing how to carry on a conversation with a customer in order to be able to give professional advice.

The following stages will be treated:

The welcoming stage, Needs assessment, Presenting merchandise Techniques for persuasion, Ways to handle objections, Mentioning the price, Closing techniques help in making a decision Presentation of supplementary offers, Service features Alternative items and adoption.

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Welcoming phase

Welcoming or receiving or communicating with potential customers is crucial for the rest of the conversation. Regardless of the type of sale, in retail sales you should make eye contact with the customer to signal to him that you are welcoming him. Es-tablishing contact with the customer then depends on the sales system. In the retail sector (where products are provided to end users), there are three methods: service systems, code systems and self-service systems.

With service systems, you should make immediate contact with customers when they enter the shopping venue. Talk with customers in a strong, friendly voice. For-mulate the greeting so that the customer experiences it as a friendly approach that is hospitable. If this is an existing customer, you should, of course, use his name.

ExampleSalesperson: ‘Hello, Mrs Berger. Nice to see you at our store again. How have you been? What can I do for you today?’

With code systems, customers first look around the shop on their own without being disturbed. Only in certain cases do customers expect advice on the part of the sales staff. Often customers will speak to the seller or consultant on their own. Shy custom-ers often show by unconscious behaviour that they need help and advice. It is your responsibility to detect such signals and then speak with the consumer.

The customer looks around for help The customer holds merchandise for a long time and looks at it intently from

all angles The customer tries out the merchandise The customer compares merchandise

Don’t ‘leap’ on the customer right away. Pay attention rather to his body language, to his signals that advice is needed. If you are currently busy with another sale, do not let your customer go unnoticed, but signal that you have noticed them by nodding, or asking them to wait a moment,

In types of sales such as pre-set systems, it makes sense to talk to the customer about the merchandise.

ExampleSalesperson: ‘This aluminium safety ladder with its duo-feet is just right for any type of floor, no matter how delicate. It doesn’t make any scratches on the floor - the fold-able feet provide stability on all types of floors ".

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Avoid superficial clichés. The customer would then have the opportunity to ignore your sales conversation with short answers.

ExampleSalesperson: ‘ Are you looking for anything special?’Customer: ‘I’m just looking around’. Salesperson: ‘Can I help you with something?’Customer: ‘Well, not right now. I might ask for some help a bit later’.

With self-service systems, the customer does not expect contact from the salesper-son. Nevertheless, you should treat customers at a self-service system in a friendly way. With a nod to signal you have noticed them. Every now and then customers speak to staff to find out where something they are looking for is located. If the cus-tomer needs help, you should of course be there, even if you are busy with putting away merchandise or other activities.

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Needs assessment

This very important stage involves using appropriate question forms (questioning techniques) to find out what the customer really wants. You can give customers good advice only if you know their needs and motives well. Because people differ in their needs, preferences and requirements, there are also different buying motives or reasons for the purchase. While one customer clearly needs to buy new wallpaper because of a recent move and the need to redecorate an old flat, for another cus-tomer, buying wallpaper can be a pleasant experience because he is decorating a new place and experiences this as a form of self-fulfilment and prestige and recogni-tion brought about by a comfortable place to live in. There are both rational (object-ive) and emotional (subjective) buying motives.Rational buying motives can derive from necessity, the need to save money and time, convenience, environmental awareness, etc. Emotional buying motives can derive from recognition, prestige, security, attractiveness, fun, experiences.

The direct determination of requirements takes place when you ask questions dir-ectly of the customer. The indirect determination of requirements takes place when you make the customer a provisional a trial offer.

With the direct identification of needs, use open-ended questions when you be-gin the conversation. The open-ended question form begins with a Wh-question (Who? How? Where. What? When? Why? How? Which?, etc.). Open-ended ques-tions are used to obtain information and require the customer to give a detailed an-swer. Thus, you can have some time to get to know customers and find out some-thing about the purpose and motive for their purchase.

ExampleSalesperson: ‘How old is your daughter?’ ‘What do you need this saw for?’ ‘What do you plan to use this countertop for’? ‘How many people are you expecting at the bar-becue?’

The advantage is that the salesperson obtains information and is able to size up cus-tomers much better than without it. He gets the customers to speak, and can figure out strategies from their responses. It might also be that he gets simply too much in-formation by using open questions, perhaps even things he doesn’t need to know and answering the questions can take too much time. The advantage of an open conversation is that all the information is included in the conversation. A disadvantage for the salesperson may be that this type of conversa-tion is difficult to control

If you have narrowed down purchasing needs in the course of the conversation, or it is clear from the beginning what the customer wants, then ask more direct questions. With the direct questioning technique, the customer can only answer ‘yes’ or ‘no’. They guide the customer’s thinking in a certain direction and spare him the often la-borious task of formulating his shopping wants.

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With direct questions, you can further narrow shopping wants.

ExampleSalesperson: ‘Were you able to find the right size?’ ‘Do you need this colour for the interior?’ ‘Do you like woodchip wallpaper?’ ‘Do you want some more information about this component?’

The advantage of direct questions is that the salesperson can get many short and objective responses within a short time and can size up the person he is talking with. Since with direct questions the customer can only discuss matters within a given framework, the seller is not able to get nearly as much information as with answers to open questions.

With the indirect determination of needs you can offer the customer merchandise quite quickly while suggesting a provisional trial offer. This is only an issue if the cus-tomer has directly expressed a desire to make a purchase. Make sure when making trial offer that you make a connection between the intended use expressed by the customer and a product feature of the merchandise.

ExampleCustomer: ‘I'm looking for work gloves for gardening’.Salesperson: ‘These work gloves are very sturdy (merchandise feature) and so they are perfect for cutting rose hedges (intended use)’.

In a sales conversation, open and direct questions are used not only in their pure form. There are possible variations that help to make the conversation more diverse and help the customer more directly. An examination of questioning techniques can provide some information.

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Questioning techniques

Information questions are mostly open-ended questions that will help the salesclerk to find out information about the customer, his needs, wants, preferences, buying motives. This frequently-applied questioning technique is used at the beginning of the needs assessment. It activates the customer.

ExampleSalesperson: ‘What do you need this handle for?’ ‘What do you mean, Mr Ammer?’ ‘What kind of model were you thinking about?’ ‘What do you mean by quick delivery?’ ‘What do you think about this deal?’ ‘How do you like this line of products?’

The alternative question is a question that gives the customer two or more possibil-ities to choose from. Alternative questions should be balanced. Usually, the alternat-ives provided should be of equal value.With an alternative question, the salesclerk can assume that the customer wants to buy a product. He only gives him choices. Alternative questions have particular ap-plication in the stages of merchandise presentation, sales conversations and pur-chasing decisions.

ExampleSalesperson: ‘Would you like an electric lawn mower or one with a petrol engine?’ ‘Do you prefer a small or a large housing?’ ‘Do you want a floor lamp or a hanging lamp?’ ‘Are you looking for a solid colour or a patterned cover?"

The confirmation or hedging question is a question with which the seller obtains a confirmation of the views and opinions of the customer. Phrases like ‘You’re telling me that’ or ‘Don’t you think so’ are often used.The salesperson should use these questions during the sales conversation several times if possible in order to assure partial successes and to give the customer the feeling that he has already taken a major step forward.

ExampleSalesperson: ‘Don’t you think that we have had a good talk so far?’ ‘Do you see it that way?’ ‘These delivery terms are OK with you then.’ ‘The price and other terms are OK, right? "

The trick question is a question that the seller uses to get information he cannot find out directly. This might be referred to as an ‘indirect question,’ although it is not ne-cessary to make inquiries using a third person as in opinion surveys. The answer to this question type can provide the seller with important information. Nevertheless, it should be used with caution. The customer can quickly get the feeling that something funny is going on.

ExampleSalesperson: ‘You’re going to buy this product at a building materials store?’ Salesperson: ‘Do you need the roof battens for the floor edgings?’A rhetorical question is answered by the salesperson. They are particularly well suited to get ready for any objections the customer might have.

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ExampleSalesperson: ‘You’re probably wondering if this product does what it says it will?’. ‘You’re probably wondering how you can get such a high level of quality at such a low price?’

The stimulation question or motivational question is supposed to stimulate the customer, praise him and validate him. Stimulation questions are designed to estab-lish a positive mood.

ExampleSalesperson: ‘As an expert, what do you think about that?’ ‘Do your customers have such high expectations for your products?’

Leading questions are characterized by words such as ‘but, certainly, also.’ A lead-ing question is supposed to influence the customer. This type of question can steer the customer in a direction he actually doesn’t want to go in and should be used very rarely. One danger is that salesperson and the buyer can make false assumptions. These are questions which are supposed to talk the customer into something and elicit his direct approval.

ExampleSalesperson: ‘Surely you want to have durable flooring for the children’s room?’ ‘So you agree then that the price for these plugs is not too high?’ ‘So ease of use is im-portant to you?’

In applying questioning techniques, speech rates can vary. Short, concise, easy to understand formulations should be used. In addition, pauses should be added. Point-ing out positive aspects and showing benefits is as important as showing interest and understanding. Also, active, intensive listening is part of the true art of selling.

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Presenting merchandise

When presenting merchandise, use the five senses of the customer. The customer should ‘understand’ the merchandise in the truest sense of the word. Stimulate the five senses of the customer. The customer should handle the goods, try them on, try them out. The sense of touch, hearing, the sense of smell should be addressed. The sound of fabrics, the smell of leather can help to promote sales. The desire to buy something increases all the faster and more intensely if the senses of the customer are activated.

The more precisely the requirements (purchasing power needs) of customers are communicated, the easier it is to present the appropriate goods. Basically, the sooner the product is presented, the better. To present the merchandise too soon, in turn, is also not good because the customer could feel misunderstood. If merchandise in the mid-price category is presented, depending on customer re-actions, there is some room open for lower and higher price ranges.

The merchandise should be presented so that it shows the product value in the best light and the use benefits are obvious. Thus, for example, particularly high-quality tools cam be presented using stark lighting and dark felt pads, and thus using the shiny quality to increase the impression of value.

Only absolutely perfect, merchandise in good condition should be presented. Items that are dusty and covered with fingerprints are in bad taste. A proper demon-stration or handling can be useful so that the customer can follow your lead without any problem.

The merchandise presentation should be supported with statements about product features and customer benefits that are available (persuasion stage).

Customer reactions to the merchandise can provide important conclusions.

Any negative facial expression or a slight hesitation may be signals to the salesper-son that the item is not the right one. Use these signals to hone in on the desire to purchase.

Articles no longer needed must immediately be set aside or put away in order not to confuse the customer.

About two to five articles is generally ideal in order to have a positive effect on a con-sumer’s purchasing decision. Do not present too many different models, otherwise the customer will need to think about his decision again or perhaps ‘sleep on it’.

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Here is a summary of the hints for the merchandise presentation stage:

stimulate all five senses of the customer put customers in touch with the merchandise as soon as possible begin with the mid-price category present the value of the product in the best light show only perfect products demonstrate proper use observe customer feedback clear away unneeded goods

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Persuasion techniques

Persuasion means nothing more than giving proof. It must be proved that the cus-tomer will have an advantage if he decides on our problem solution. It should be stressed again and again what the benefits are that the customer will receive. The point is to gather together arguments in favour of our product.

Using persuasion strategies, try to convince the customer of the advantages of the merchandise offered.

A persuasion strategy is based on individual arguments that are bound together in a logical and purposeful way. An argument is a statement that supports a specific product or service feature and should convince the customer that the salesperson is right. An argument that is effective with a customer, must, in addition to pure state-ment of facts contained in it, also include an element that convinces the customer. In general, this has less to do with product features than with the use that the customer associates with them.

Ideally, an argument is so constructed that statements of proof and advantages fol-low step by step.

The structure of a sales argumentation proceeds in three steps:

First step: listing product featuresSecond step: describing advantages of the merchandiseThird step: showing customer benefits

ExampleProduct features for a floor covering:Material: natural corkSealed cork surfaceThickness: 8 mmSurface dimensions: 60 x 60 cm

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Describing merchandise benefits

Whether the material is natural cork or another material, whether the material is 5, 6 or 8 mm in thickness and whether the cork surface is sealed or not, is only relevant for the customer if he knows what benefits are associated with these features. List merchandise benefits that show the customer the potential uses provided by the item you recommend.

ExampleMerchandise features and advantages of a floor covering

Merchandise charac-teristic

Merchandise advantage

natural cork material excellent thermal insulation, cork is warm underfoot and re-laxes the spinecan be precisely altered, any floor design can be accommod-atedvery easy to clean.produced without harmful additives, therefore an excellent alternative for people with allergies

Sealed cork surface a sealed cork surface is completely waterproof and can therefore also be used in bathrooms or kitchens,

Thickness 8 mm for high traffic floors in the area used and further separation for premises without cellars

Each article offers a variety of advantages. A schematic list of all benefits for the cus-tomer, however, would cause the customer to lose interest and disconnect. There-fore, mention only the benefits that are available for the solution of the problem of the individual customer.

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ExampleA client is looking for a floor covering for the children’s room of her five year old daughter. For her, it is important that it is warm underfoot, durable, easy to clean, healthy and made of healthful low-noise material.

Salesperson: ‘This flooring is made of natural cork (product feature). It has excellent thermal insulation (advantage). Your daughter can even run barefoot and slide across the floor. It will feel warm and you can be sure that their daughter stays healthy (advantage). The material is very durable, resilient and doesn’t scratch as quickly as wood parquet (advantage). The durability (advantage) is reinforced by the 8 mm thickness (merchandise feature), so that the floor can be heavily used by your daughter for playing and jumping without suffering any damage (customer benefit). The elasticity of the lining (merchandise feature) allows it to maintain its shape (advantage) and even if your daughter carelessly drops toys, it will remain intact (customer benefit). In addition to its durability (merchandise feature), cork is extremely quiet (advantage). Cork absorbs footfall sounds (merchandise feature), walking sounds are reduced (advantage), and it ultimately is easy on your nerves and the nerves of your neighbours (customer benefit). Due to the smooth surface (product feature), the cork is easy to clean (advantage). You need only go over the surface with a vacuum cleaner or a damp cloth, and it comes clean right away (cus-tomer benefit). It will relax your daughter’s spine (customer benefit) and contains no toxic additives (product feature). Constant checks prove this. Thus, this flooring is suitable for allergy sufferers (customer benefit)

In the construction of a persuasion strategy, three aspects must be considered:

the knowledge of the customer the receptiveness and expertise of the customer the needs, interests and motives of the customer

Formulate customer-oriented selling points, that is make them expert, understand-able, positive, clear and credible.

Argue knowledgeably, but understandably. Honest, expert advice helps the cus-tomer in making a decision about how to solve his problem. In addition, the seller gains the confidence of the customer by using expert but understandable arguments. A mere assemblage of technical terms doesn’t give the customer a feeling of being involved in the problem solution. Formulations that everyone can understand, even non-professionals, can on the other hand encourage customers to actively participate in the sales conversation. This makes customers much more likely to feel that they are able to make their own decisions and not be taken by surprise.

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Example

Salesperson: ‘This laminate floor with the Quick-Snap-Silent IQ system is ideal for heavy use in the home.’

Salesperson: ‘This laminate flooring is ideal for the home, because walking noise will be reduced by sound insulation in the subflooring. You can lay the flooring quickly and neatly because the individual parts are simply clicked into each other’.

Argue in a positive way because positive information feels pleasant for the customer and thus enhances the desire to make a purchase. On the other hand, negative statements lead to unpleasant feelings for the customer and reduce the impulse to make a purchase.

Example

Salesperson: ‘Thanks to the ergonomic handle of this chain saw, even with prolonged work you will not have cramps or tendon problems’.

Salesperson: ‘Thanks to the ergonomic handle of this chain saw, your wrists will feel unstrained and flexible even if you work for long periods’.

Argue descriptively because clear, concise definitions foster visualisation in the cus-tomer and help him with his purchase decision. General words such as lovely, nice, good, pretty tend to be meaningless; the customer can’t see any personal benefit here.

Example

Salesperson: ‘These tiles look very nice’.

Salesperson: ‘Because of their colour and decorations, these tiles will give your entire terrace a Mediterranean flair’.

Argue credibly because convincing arguments objectively put forward are more convincing than exaggerated superlatives such as high-class, super good, great, ex-cellent. The credibility of the argument is also reinforced by the authenticity of the salesperson (he can identify with the problem solution) and underscored and ampli-fied by giving proof and citing facts (numbers, statistics, test results).

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Example

Salesperson: ‘This pot is made from an excellent material. It saves a lot of time cooking’.

Salesperson: ‘This pot has a base made of multi-layer stainless steel that con-ducts heat quite well. So the cooking time is reduced by a third’.

Argue personally. When presenting customer benefits, always speak directly to the customer using ‘you’. Thus, a direct connection between the customer and the product is produced.

Example

Salesperson: ‘This cork flooring is easy to clean because of its smooth sur-face’.

Salesperson: Because of its smooth surface, you can clean this cork flooring quite easily’.

A persuasion strategy must be constructed beginning with the goal. The key question is: what do I want to accomplish with my arguments? If the goal is clear, then indi-vidual arguments can be assembled. The next key question should be: what circum-stances, statements, facts, data are appropriate for supporting the goal. A final key question should be: how will the argument to affect the customer?

Once you have you assembled your arguments, and sorted them according to their effect, they need to be put in a logical order for the customer.

This means:

remove negative arguments organise positively arguments so that you can go from more convincing argu-

ments to less convincing ones. put the arguments in order so that they form a logical chain, that is, so that they

are free of contradiction and build on one another where possible check the number of arguments.

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In a persuasion strategy, not all arguments should be ‘closed’. For items in your product line, you can also create an list of arguments. An argument list is a loose collection of arguments that starts off unstructured. It is important to update this col-lection again and again. The purpose is to support your own needs to get ready for possible objections from the customer or someone else.

Here is a summary of the hints for the sales persuasion strategy:

structure of the persuasion strategy: name merchandise features demonstrate advantages, show customer benefits

argue knowledgeably, but understandably argue positively argue clearly argue credibly argue personally create an argument list

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Ways to handle objections

Customer objections may be made about the merchandise or features of the mer-chandise. This criticism can be very useful for the rest of the sales conversation. These are called ‘real objections’. They can refer to specific characteristics of the merchandise, such as colour, size, quality, features, price or to the transaction or the product line as a whole. Relatively infrequently, real objections relate to the cus-tomer's staff. Lack of training, lack of experience, low advisory skills then become the focus of criticisms.

‘Spurious customer objections’ are customer objections the customer makes only in order to end the sale early. With these usually inappropriately framed spurious ob-jections, treatment or recovery is not required. Say goodbye to the customer in a friendly way so that he has pleasant memories of the store.

Example

Customer: ‘I think that's not for me. I need to think it over’.Salesperson: ‘Of course, I understand. Have a nice day’.

Real customer objections can be countered using a variety of methods:

Yes-but-methodFirst, you agree to the customer’s objection. Then you refute his argument with a counter-argument:

ExampleCustomer: ‘But this is an older model, right?’Salesperson: ‘Yes, you're right, it is an older model, but the price is reduced consid-erably and this technology has proven itself over many years.’

Boomerang methodUse the objection of the customer itself as a powerful argument in favour of buying the item. There are advantages that perhaps even the customer has not seen yet.

ExampleCustomer: ‘These pruning shears are pretty heavy’.Salesperson: ‘Yes, this model is slightly heavier. But because of that, these shears are easier to hold than lighter models. They also have an integrated telescopic arm. So with this model you don’t need a ladder for cutting your shrubbery’.

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Inquiry method

Making an inquiry about a customer's objection gives you some more time to think about how to use the information provided to think of arguments to counter the objec-tions of the customer.

ExampleCustomer: ‘But this is a small sink’.Salesperson: ‘Where will the sink be installed?"Customer: ‘In the powder room’.Salesperson: ‘Well, if it’s for the powder room, this size is big enough so that you and your guests can wash their hands. Then you will have more room in the small space.

Advantage-disadvantage method

For justified customer objections, you should be open to showing the customer some understanding and admitting that he is right. After that, you should offset the disad-vantages described by showing some benefits deriving from them.

ExampleCustomer: ‘That's a petrol lawn mower, so I always need to think about refuelling it’.

Salesperson: ‘That's right, without fuel you can’t mow the lawn with this model’. For large fields of 250 m² or more, you need big engines and the ability to move wire-lessly. The average width of a petrol lawnmower varies slightly, but the average cut-ting width is 50 cm. You can actually handle large areas quite easily in a short time. That gives you plenty of time to refuel. The advantages of a petrol lawnmower for a large garden are easy to see because you don’t have to be bothered with a cable as is the case with an electric mower. This gives you full freedom of movement and you can work anywhere in the garden with the lawnmower. Also, power failure won’t mat-ter because a petrol mower uses petrol and not electricity’.

Regardless of the chosen method of handling objections, show the customer that you take his criticism seriously, but then point out the ‘other side of the coin’.

Here is a summary of the hints for the stage of handling objections:

distinction between real and spurious customer objections yes-but-method boomerang method inquiry method advantage-disadvantage method

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Integration of the price

The ‘bare’ price alone gives the customer no information about the price-performance ratio of a product. Without knowledge of the merchandise features, the quality, the advantages and benefits of the product, he will probably think the item is too expens-ive if he only knows the price. A clever sales conversation can change the customer's perspective because he now recognises the advantages and benefits of the product which the salesperson has told him about. He can now place the quality and useful-ness in relationship to the price. There are several ways to tell the customer the price without information about the merchandise. These include the delay method, the sandwich method and the comparison method

In the delay method, the customer receives a clear answer to his question about the price, and yet almost simultaneously he receives information about the price-perform-ance ratio of the merchandise.

ExampleCustomer: ‘What’s the cost per square meter of cork flooring2?Salesperson: ‘Do you mean this natural cork flooring with hard wax oil, the click sys-tem and an 8 mm thickness? This is a very durable, robust, flooring but it is also very easy to install. It costs a little more than the thinner models, namely € 28.30 per sqm’.

In the sandwich Method the mention of the price is packaged in the sales conversa-tion. Before the seller quotes the price, he specifically discusses the benefits of the product and then, after mentioning the price, proceeds with a summary of advant-ages.

ExampleCustomer: ‘What is the cost per square meter of cork flooring?’Salesperson: ‘This is a very durable and robust natural cork flooring with a hard wax oil seal. It costs € 28.30 per sqm and so it is a little more than the other surfaces be-cause it has a thickness of 8 mm for intensive use and is very easy to install’.

In the comparison method customer objections to what the customer thinks is a high price are answered with an emphasis on the advantages of the merchandise as compared to cheaper items.

ExampleCustomer: ‘For cork flooring, € 28.30 per sqm is really very expensive’. Salesperson: ‘At first glance, the price sounds a bit high, but this 8 mm thick cork click-ready parquet is much more durable than flooring with a 4 mm or 6 mm thick-ness. This parquet will look like new for a much longer time even with heavy use. In the long term, buying this high quality flooring will certainly pay off.’

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The adjectives ‘expensive’ and ‘cheap’ should be avoided in sale conversations. Clients often associate the term ‘expensive’ with something that costs a lot. But the adjective ‘cheap’ in the mind of the customer often applies to the quality of the mer-chandise.

For the term ‘expensive’, alternative adjectives such as high quality, exclusive, costly, precious, elegant, premium, selected, choice, etc. can be used. Terms to be used instead of ‘cheap’ are reasonable, affordable, reduced, not too expens-ive, good value for the money, especially carefully priced.

The snob effect arises whenever the consumers only give consideration to mer-chandise above a certain price (snob-value). Because of its low price, a specific item is not considered as high quality or exclusive enough. Another reason is that the con-sumer takes the price to be a benchmark for quality. Ideas such as ‘the quality is still there even if the price is forgotten’ or expressions like ‘you only get what you pay for’ are firmly embedded in our shopping behaviour. When comparing two items, it is assumed, therefore, that the more expensive one is at the same time of higher-quality. But on the other hand, if one looks at discount stores with good or very good test res-ults for a variety of affordable products, then it becomes clear that the more expens-ive product does not always prove to be of higher quality.

Accordingly, the price says very little about the quality and usefulness of merchand-ise. The salesperson must therefore justify the price of an item. He must explain to the customer that the price is directly related to customer benefits.

Here is a summary of the hints for the stage of price integration:

delay method sandwich method comparison method avoid the terms ‘expensive’ and ‘cheap’, use alternative terms justification of the price by the salesperson

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Closing techniques for support in making a decision

The stage in the sales conversation that determines the success or failure of closing the sale is the purchasing decision stage. If despite your efforts the customer leaves the store without the merchandise, this does not necessarily mean that you have had a poor sales consultation. Professional advice often pays off only in the long term, namely when the customer comes back to make a purchase at exactly the place where he received good advice. However, it may also be that the customer is indeed confident about the product but still can’t in the end make up his mind. Here the salesperson comes into play. He must provide the customer with a decision aid, but the customer should be not ma-nipulated or persuaded. Rather, his fears and any concerns should be eliminated.

Here are some considerations or questions that customers who cannot make a de-cision might have:

What will my friends say about it, my partner, my relatives? Do I really need this? Will I like this item in the future? Isn’t there something else, something better? What colour, what style should I choose? Do I really want to spend that much money?

Such concerns arise only if the customer is dealing with a purchasing decision, but generally speaking is ready to make a purchase. It is the responsibility of the salesperson to be aware of the customer’s physical and verbal signals of the gen-eral willingness to buy and to then offer active support for the decision. For this purpose, careful observation, active listening and analysis of customer reac-tions are necessary. The buying signals can be sent at any time during the conver-sation. Verbal buying signals can be given by affirmative statements, by repeat-ing sales arguments, by further questions about the merchandise, other refer-ences or payment terms. Physical buying signals may be sent by appreciating the merchandise with the five senses of the customer (desire to have it), by asking for agreement or by positive facial expressions.

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Example

Verbal signals of the customer’s general willingness to make a purchase

Affirmative statement ‘Well I really like that’Repeating sales arguments ‘Is this swing really available as a three-

seater in pink with a velour covering?’Questions about merchandise, other ref-erences or payment terms

‘If the colour of the end strips doesn’t ac-tually match my flooring, can I exchange them? ‘And the laminate was really used in a shopping arcade, where it has much more wear and tear than at home?’‘Can I pay for the swing in instalments?"

Example

Verbal signals of the customer’s general willingness to make a purchase

Appreciating the merchandise with all five senses

the customer feels the surface of the tool box

Signalling approval the customer nods agreement when the salesperson explains something

Asking for approval the customer smiles and looks at his companion with a raised eyebrow to ask their support for his good feeling

Positive facial expressions the customer has positive facial expres-sions

Simulation of ownership the customer twists and turns in a sum-mer dress in front of mirror

If you have you observed from these signals that the customer is in the process of decision-making but is still undecided, you should provide him with support in making a decision. For this purpose, different closing techniques are available to get ready for a positive purchasing decision without making it obvious.

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Yes questions as a closing techniqueThe seller asks the customer questions about what he wants from the products that he can all answer with ‘yes’ because the merchandise offered meets all these re-quirements.

ExampleSalesperson: ‘So you want to but a chainsaw for professional use in the forest, right?’Customer: ‘Yes, that's right.’Salesperson: ‘And should the model handle well, but not be too heavy and have a long life?’Customer: ‘Yes, that's important to me’.Salesperson: ‘Then the XT 2000 is just the right chainsaw for you!’

Alternative question as a closing techniqueIf the sales conversation offers two alternatives, you can narrow the selection or de-cision to these two articles.

ExampleSalesperson: ‘Do you prefer the swing with the red cover or the black cover?’

Summary Statements as a closing techniqueThe salesperson give another summary of the sales arguments that the customer has agreed with during the sales conversation. Then he can use the strongest argu-ments at the end. The customer is again clear that his ideas will be satisfied with this solution for his problem.

ExampleSalesperson: ‘The petrol lawnmower X 200 is a very good choice, especially if you have to take care of a very large garden and need to work in all the nooks and cran-nies of the garden. Because of its huge cutting width, you can also save time’.

Silence of the salesperson as a closing techniqueIn certain situations, it makes sense to give the customer time to think things over. A pause in the conversation can either lead directly to a decision to purchase or an op-portunity for the customer to express his concerns. A lull in the conversation can take place with a short silence while the customer is examining the merchandise or by the salesperson saying that he needs to take care of something else for a moment and will be right back with the customer. In this case, the salesperson should not be gone too long and shouldn’t be out of sight of the customer.

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Recommendation as a closing techniqueSome customers are so insecure that they would like to leave the responsibility to the salesperson for their purchasing decisions. Here caution should be used. A recom-mendation must be given from the customer's point of view. But this requires em-pathy (sensitivity to feelings). The salesperson must be able to empathise with the customer and his complex of needs and make a recommendation from the perspect-ive of the customer, especially if he wants to keep the risk of later complaints to a minimum.

ExampleSalesperson: ‘If I were you, I would go for the larger model. You are strong enough to use it with no problems over a long period of time!’

Limiting the choice as a closing techniqueDuring the conversation, items that are not options, must be set aside. This draws at-tention to the relevant goods.

Direct solicitation as a closing techniqueIf you are quite certain about the willingness of the customer to make a purchase, then you can ask the client directly to make a decision.

ExampleSalesperson: ‘Shall I wrap up the picture as a gift?’ Or ‘Should I take these sawn boards directly to the cashier?’

The application of closing techniques requires proper timing. If methods for helping make a decision are applied too soon, when the customer has not yet signalled his willingness to make a purchase, then the customer feels overwhelmed and forced to make the purchase. If the techniques are used too late, then it can easily happen that the customer will leave the store without making a purchase because he has not yet come to a decision.

Closing techniques include not only recognising the general willingness to purchase based on signals of a willingness to purchase and the application of methods and techniques for decision support but also reaffirming the purchase decision Imme-diately after making a purchase, many customers have a ‘purchase hangover’. They regret their decision and may possibly even be plagued by a bad conscience. In addi-tion, they have often fear a negative response to their purchase from their peers. By reaffirming his purchasing decision, you confirm the customer’s self-esteem and can even give him a positive buying experience.

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The reaffirmation of the purchasing decision can be made by:

a reference to the reason for the purchase (‘with this jigsaw your son will cer-tainly enjoy his shop lessons’),

mention the possibility of exchanges (if you or your husband don’t like the black cover, then of course you can exchange it for the red one) or

emphasis on quality (‘with this chainsaw you really have purchased a high quality chainsaw that will serve you faithfully for many years’),

hints for use or care (‘please fertilize the plants regularly to make sure they will grow abundantly’.).

Here is a summary of the hints for the stage of closing techniques as aids in making a decision:

watch verbal and physical purchasing signals yes questions as a closing technique alternative question as a closing technique summary Statements as a closing technique silence of the salesperson as a closing technique recommendation as a closing technique limiting the choice as a closing technique direct solicitation as a closing technique affirming the decision by reference to the buying motive affirming the decision by emphasising the quality affirming the decision by mentioning availability of exchanges

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Presenting supplementary offers

Necessary supplements (complementary products) are products without which a main product will not function. Thus, for example, for printing, one needs not only a printer, but also paper. For coffee, you need coffee along with the coffee maker. For example, a light bulb for a lamp, a battery for a Gameboy or a paintbrush for paint are necessary complementary products that you should definitely suggest to your customers when they purchase the main product.

Useful additional products are not absolutely necessary for the functioning of the main item, but they can expand, simplify, beautify or improve the utility or the useful-ness of the main article. Thus a tripod is not absolutely necessary for using a camera when photographing sports shots or when shooting at night, but it can be quite help-ful because the image quality can be improved by the motion-free use of the camera. Even if you don’t need shoe polish to help with walking in shoes, taking care of the shoes with shoe polish will increase the service life of the shoes. Other ways to com-plement (complete) products are extension, enhancement, embellishment, improve-ment or expansion. Thus, a tool of the same brand or a storage case for screws and nails can be a useful addition to offer the customer. Whether offering edgings for the new flooring to the customer is a necessary or desirable complementary offer may be an open question. However, there is the probability that any failure by the salesperson to suggest this additional product will bring the disgruntled customer back to the store again because he has discovered when laying his new flooring that he doesn’t have the edgings.

Don’t be afraid to suggest additional products because it might seem pushy. Of course, a salesperson wants to increase his sales by offering additional products. However, this is also in the best interest of the customer.With a necessary or useful complementary product you can show your customer that you are thinking about him and possibly saving him unnecessary steps, time and money.

In addition to necessary and useful supplementary deals, their use is closely linked with the main item. The price should therefore be below the price of the main item. The percentage surcharge calculation is, however, often over the surcharge for the main item.

There are also supplementary products which are not connected with the actual main purchase, but do solve a problem that the customer mentioned during the sales con-versation. Such detected supplementary products can become apparent through active listening. If you have identified a problem, then you should offer appropriate solutions, provided that your have appropriate solutions (items) in your product range.

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ExampleYou have a sales conversation with a potential customer about beer glasses. In the course of the conversation, you discover that the customer is planning to have a bar-becue for twelve people where the new glasses will be used. After the customer has decided on the new beer glasses, you can draw his attention to a new grill that can cook large quantities of meat or vegetables at the same time.

In general, you should only promote supplementary products to the customer if he has already opted for the main product. However, the supplementary product offer must be made to the customer before he checks out, otherwise the opportunity is missed because the customer will have already completed his purchasing decisions and the amount he is now willing to spend is already set. After paying for the main item, most customers are unwilling to take out their wallet again. Nevertheless, exceptions prove the rule. In some cases, the offer of a supplementary product during the presentation stage can make sense and be successful, namely when the additional product adds enhancement to the item.

ExampleWith a merchandise presentation of a stove, the salesperson adds a fireplace tool set with fine brass handles.

Here is a summary of the most important hints for the stage of the ‘offer of supple-mentary products’:

think of necessary and useful supplementary products try to find other supplementary products during the sales conversation make supplementary product offers usually right after closing the purchase of

the main product, but before the customer goes to the checkout if the supplementary item enhances the main product, it can be suggested

when the merchandise is first presented

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Services

Services play an important role in achieving an additional benefit (extended product) for consumer goods.

‘Service’ means the totality of services that the customer expects for the product or the basic service in relation to the price, the image and reputation of a company. Customer loyalty can only be realised through such services, if the customer's ex-pectations are exceeded.

Services can be provided before, during and after the purchase.For example, a customer expects a demonstration of the car, the possibility of a test drive and a personal welcome before buying a BMW. During the actual purchase, the customer expects to hear about financing plans and the disposition of the used vehicle. After the purchase, he expects the most minor of repairs to be made speedily.

In addition to the classification of services by period of inception, a division according to the item serviced can be made.

Service features directed toward the customer should enhance or facilitate the purchase. In addition to childcare, help with packing, drinking water dispensers, mag-nifying glasses on the shelves or shopping cart, other examples might be modern hy-gienic restrooms and changing facilities, seating areas and free parking. The rental of tools is also a service feature directed toward the customer.

Product-related services can be offered for merchandise, especially gift wrapping, assistance with installation and construction or repair and alteration services.

Information services can be offered in the form of a good directions, professional advice, accepting orders via phone or the Internet, free catalogues and brochures, access maps, etc.

Providing credit in the form of instalment purchases, credit card payments or deferred payments are services that are directed to payments,

Finally, transport service can be offered for deliveries or the collection and dis-posal of old equipment.

Services may be used by the salesperson during the sales call as selling points. Once you are aware of the needs and problems of the customer and have explained the features, advantages and benefits of each problem solution, then the mention of a service can be a decisive stimulus for the purchasing decision.

Here is a summary of the most important hints for the stage of the ‘mention of ser-vices’:

services may relate to the customer, merchandise, information, payments or transport

use services as an additional selling points

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8.2.9 Alternative products

Although retail sales aligns and designs its product range to the wants and needs of customers, it will always come about that individual products requested by the cus-tomer are not in your product range. If this is the case, as the salesperson, you must offer your customer reasonable al-ternatives. If you provide reasonable alternatives, you should take care that your al-ternative offering does not appear inferior in value.

Example

Salesperson: ‘Unfortunately, we only have Gardena brand gardening tools.’

Salesperson: ‘However, these tools are also quite good.’

Salesperson: ‘I can’t offer you anything better than Gardena brand tools’.

Talk as little as possible about the missing items, but rather about the benefits of your alternative offer. Talking about merchandise features of the item you don’t carry can help you to find a suitable alternative offer.

Example

Customer: ‘I'm looking for the new Wolf fine-haired Multi Star garden broom’.Salesperson: ‘We don’t carry Wolf, but if I understood you correctly, you are looking for a broom with a high-quality horsehair mixture that is particularly suitable and versatile for yards, gardens, balconies and terraces. I can recom-mend this model from Gardena. It has all these features and is also a better buy’.

Here is a summary of the most important hints for the stage of the ‘presentation of al-ternative products:

speak as little as possible about the missing items, but rather about the bene-fits of your alternative product

avoid formulations that make your alternative product appear inferior asking about the merchandise features, can help you to find a appropriate al-

ternative product

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Saying goodbye

Certainly, the first impression is always a very important and decisive impression. Nevertheless, a positive first impression can be ruined by a bad final impression. The sales conversation does not end until after you have said goodbye, regardless of whether the customer has decided to make a purchase or not. Basically, parting words should be polite. Besides the actual parting words, you should also express thanks for the visit. For the actual parting words, you should use expressions that suit both the situation and the person.

ExampleSituational goodbyeSalesperson: ‘Thank you for your visit and have a nice day’.

ExamplePersonal goodbyeSalesperson: ‘Thank you for your visit and have fun at your barbecue’.

Here are some hints for the stage of saying goodbye:

polite, friendly parting words along with the actual parting words, you should express thanks for the visit personal or situational goodbye avoid negative or pompous expressions if they need it, help customers in leaving the store if you know the name of the customer, say goodbye by name

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Work assignment for Market volume – Market share

The franchisor of Heimwerker-Max GmbH has done market research and now published the results of each hardware stores compared to the market size of the federal territory.

a) Describe the pattern of turnover of the laminate flooring in Heimwerker-Max GmbH on the basis of time series graphs shown.

b) Compare the pattern of sales figures for Heimwerker-Max GmbH with the pat-tern of sales figures in the Rhine Main region.

c) Calculate the market share of Heimwerker-Max GmbH in fiscal year 2011.

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Work assignment in Excel for commissions for representatives

Initial situation in the companyYou are an employee at the Airport One AG and entrusted with the settlement of the agents' commissions.

Work instruction

Create an Excel file for settlement of sales commissions by using the If-Then func-tion.

Following data is available:

Settlement of commissions for representatives in May 2014       Sales representative Turnover Commission in % Commission in €Becker, Gerd € 200,000.00    Farro, Gianfranco € 312,600.14    Krzyzanowski, Arne € 220,000.00Lenz, Helmut € 66,210.00    Meister, Manfred € 198,000.00    Michel, Markus € 112,600.34    Müller, Bernhard € 186,000.00Schott, Heike € 256,400.17Stark, Andreas Peter € 94,280.67Uhlig, Jürgen € 122,321.00Sum of commissions for representative      

If the turnover is greater than € 200,000.00, commission to be paid is 10% of sales.

If the turnover is greater than € 100,000.00, commission to be paid is 8% from.

If the turnover is less than € 100,000.00, commission to be paid is 6%.

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Work assignment in Excel concerning Field service employees

Start the Excel application.

Save the folder with the name ‘Number of field staff’.Do not forget to cache the data.

The font should be Arial and the font size 12, unless a different font and a different font size is required in the task.

Initial situation in the company

You are an employee of ComTec GmbH and you are supposed to compile statistics about the number of sales representatives by province for your superiors.

Instructions

1. Rename the worksheets "Table 1" to "Number of field staff”. The worksheet should include:

2. In cell A1 should be the text "Sales Representative 2008".In row 3 and columns A-C should be the text "Federal states", "Number of em-ployees" and "Percentage".

3. In the column A and in row 4 to 20, the individual states should be mentioned:

Bavaria, Hesse, Baden-Württemberg, Hamburg, North Rhine-Westphalia, Schleswig-Holstein, Rhineland-Palatinate, Lower Saxony, Saarland, Bremen, Berlin, band, Saxony, Thuringia, Mecklenburg-Vorpommern and Saxony-An-halt. Cell A 21 should contain the term "Sum".

4. The title in row 1 should be centred horizontally and vertically on the columns of A-C. As background, choose bright green. As typeface, choose "bold" and the font size 14. The row height should be 25. Select the font Tahoma. The headings in row 3 should be bold and italic and centred vertically. The font size should be 12.

5. In the column B and in rows 4 to 20 should be the number of employees: 4 employees, 12 employees, 8 employees, 7 employees, 4 employees, 2 em-ployees, 1 employee, 15 employees, 3 employees, 2 employees, 2 employ-ees, 1 employee, 1 employee, 4 employees, 5 employees, 6 employees. In row 21 / column B should be the total number of employees. The cells should be custom formatted. The font size should be 12 points. The font is also Tahoma. In cell B 20 the sum of all field staff should be formed and a custom format "Employee".

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6. In column C row 4 to 19, the percentage of the number of sales representat-ives in a federal state should be determined based on total sales representat-ives in Germany. The percentage should be expressed with two decimal places. In cell C20, the sum of the percentage of shares is to be formed.

7. Now create a graph showing the number of sales representatives by federal states, in the form of a clustered bar chart in a separate worksheet with the name "Chart sales representatives". The diagram should include the following details:

Chart title: Number of field staffTitle of value axis: NumberTitle of the category axis: Federal statesLegend: none

The main interval of scaling of the value axis should be 2.The bars of the chart should be dark green.

Font and font size of the chart title: Tahoma 10Font and font size of the title of the category axis and value axis:Tahoma 14.

8. Now create another chart showing the percentage of sales representatives by federal states, in the form of a pie chart in a separate worksheet with the name "Pie chart". The diagram should include the following details:

Chart title: Percentage of field staffLegend: Federal states

Font and font size of the chart title: Tahoma 14

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Work assignments for Communication policy

Initial situation in the company (Communication policy Visual Merchandising)

A furniture manufacturer operates 14 sales offices in the form of specialist markets. The offices are located mostly on the city outskirts. At the point of sale, measures should be taken now to facilitate, improve and beautify the buying experience for the customer.

Work assignment 1. Make six suggestions for visual merchandising, customer management and

services that facilitate and improve shopping for the citizens.

2. In addition, sales promotion activities should support in some markets the sale of office chairs. Make two suggestions that could stimulate the sales of office chairs.

Initial situation in the company (Communication policy Public Relations)

An automobile manufacturer who operates 6 manufacturing plants and 300 sales of-fices around the world suffered loss of image due to misleading public statements by the managing director concerning environmental impact by vehicles. In order to steer the manufacturer’s image back in the direction of the expected image PR activities are to be launched.

Work assignmenta) Name five target groups of public relations in the case of the automobile man-

ufacturer.b) Make the three suggestions to the managing director for measures in the area

of public relations activities and justify them.

Initial situation in the company (Communication policy Sales promotion)

KraftFlax AG is a manufacturer of pet food and distributes the products through de-partment stores and specialty shops and wants to stimulate through sales promo-tional measures (sales promotion) sales on site and in stores.

Work assignmentName the functions of sales promotion and suggest each a promotional measure for

a) the sales organization/ employeesb) the customers of the zoo shop and specialist markets

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Initial situation in the company (Communication policy for advertising)A manufacturer of knitwear and textiles wishes to plan and execute introductory ad-vertising for his new product line "tear-proof hemp jackets".

Work assignment

a) What must be included in principle in an advertising campaign? Name 5 points that need to be clarified in an advertising campaign.

b) Name four criteria that should be considered in the choice of media type (ad-vertising material and advertising media).

c) Decide on a suitable medium and justify your decision.

d) Determine two target groups which could be considered for this advertising.

Initial situation in the company (Distribution policy E-Commerce)

A manufacturer of gardening tools, who markets his products to resellers as well as to end users, would like to distribute his products on the Internet for the first time. As an employee in marketing you have to present arguments for the new sales channel for the company's management.

Work assignment

Work out in small groups the possibilities of e-commerce. Describe the benefits that are associated with the new sales channel for the manufacturer.

Present your results.

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Role plays for Sales talk

Initial situation in the company

You are employed as a consultant at a Do-it-yourself market. A potential customer is looking for a floor covering for his living room, his bedroom, the hallway and a chil-dren’s room.

Work instructions

It is now your job to collect through a technical discussion first the necessary informa-tion about the customer and his needs, then, to advise him according to his needs, in terms of the different types of flooring.

Read in a first step the script "Digression of questioning techniques to obtain informa-tion in sales talks". Try your hand also about to be clear what information needs to be collected. Then make small groups of two people each, to simulate the sales talk. The small groups consist of a counsellor and a client, respectively. Also make a role change, so that each participant plays once the customer and once the consultant. The simulated sales talks are filmed and then evaluated.

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Role plays (Receiving complaints)

You are employed as a consultant at a hardware store in the Do-it-Yourself market and responsible, in addition to performing sales talks, also for receiving complaints. The business policy is that under certain circumstances even without apparent de-fects and without a case of warranty goods can be exchanged or repaired for reas-ons of image building. For goodwill behaviour, the company management has given the expert advisers the following rule of conduct:

If the goods were purchased within the last two weeks, a conversion or exchange shall be made even when there is no defect. However, this does not apply if the goods have been damaged or destroyed by improper use after handing over (transfer of risk).

If the goods were purchased and handed over more than two weeks ago, in case of "not pleased" pay attention to the value of goods. Up to € 100 value of goods, return of building materials is accepted even without defects (exchange of articles with the same value of goods or conversion of the contract with return of money where an ex-change for an item of equivalent value is to be carried out).

For value of goods from € 100 per unit, the department head shall be consulted. Price reductions always require consultation with the superior.

Tasks

Simulate acceptance of complaints in groups of two as follows:

Case A:A "cheeky" customer brings back a packet of tiles. Some of the tiles are broken. Whether the tiles are broken before or after handing over is difficult to determine. The customer had bought twenty of these packages four weeks ago. The value of goods of a packet is € 48.00.

Case B:A "visibly annoyed customer" brings back a Hollywood swing. The hinges are bent, which makes assembling the swing impossible. The swing was picked up at the hard-ware store by the customer a month ago. The item value of the swing is € 280.00. The nature of the defect seems to have been present from the time of production be-fore the handover.

Case C:An angry customer brings back a tool set acquired yesterday. Firstly, the paint would reportedly peel off from the screwdriver handle and, secondly, the set is claimed to be available with the competition for half the price. The set costs € 14.80 gross. The customer wants his money back and never to buy at Obi.

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Work assignment for Sales Talks

You are entrusted in the market with the customer service.

a) Name two ways of approach by which you can detect whether the customer needs counselling.

b) What technique of questioning is possible to determining the requirements of the customer? Decide on a questioning technique and justify your decision.

c) Name three aspects which must be followed when goods are shown (product presentation).

d) Which approach is recommendable for the sales pitch? Discuss the structure of a chain of reasoning and clarify your statement with an example you have selec-ted.

e) Name three possibilities that customer objections may refer to.

f) Name two techniques of handling customer objections and describe them.

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Mixed tasks for the topic of Distribution and Customer Loyalty

Task 1Arrange the functions in the sales division of a company in the correct order:

Check the creditworthiness Monitoring payment deadline Prepare the delivery note Create the outgoing invoice Check the creditworthiness Prepare confirmation of order Picking the goods Dispatch the goods Create a quotation

Task 2Discuss the following terms:

Market potentialMarket volumeMarket share

Task 3Name the stages in a sales talk and describe them in a few sentences.

Task 4The Managing Director of Comtec GmbH is considering whether he should appoint a travelling sales representative for the distribution of his products for a set salary of € 4000.00 and 3% sales commission or appoint an independent sales representative with a sales commission of 10%. The expected turnover is € 74,000.00.What would you advise the manager when no benefits would be paid to the travelling sales representative and if his knowledge of the market is on the same lines of the commercial agent?

Task 5What is the purpose publicity? Describe the goal of the public relations and name three measures.

Task 6What is the purpose of sales promotion? Describe the purpose of sales promotion and name three measures.

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Task 7

Fruit seller Schmidt GmbH buys 150 cartons of lychees. The list purchase price is € 14.00 per carton.The supplier gives a 6% discount.In addition to the incidental procurement cost (acquisition cost) amounting to € 84.00 for the whole package, 32% of business costs, 12% profit and 10% customer dis-count should be taken into account.

a) How much in € is the procurement price for 150 cartons?b) How much in € is the list sale price for 150 cartons?c) How much in € is the cash sale for 1 carton?d) How much in € is the gross price for 1 kg lychees, if one carton contains 2.5 kg and includes 7% sales tax?

Task 8Assign the instrument to various measures

Instruments

a) Product policyb) Price policyc) Communication policyd) Distribution policy

Measures

Organization of trade fairsSweepstakesPortfolio analysisDifferentiationVariationDistribution of samplesSponsoringNew distribution channels on the InternetCommissioning of a commercial agentDetermining the dispersion time and the dispersion region

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Task 9Which of the following statements regarding the commercial scene of helpers (inter-mediaries) is correct?

a) The broker is constantly tasked to broker business for another entrepreneurb) The agent acts in the name and for the account of othersc) The commission agent acts in his own name and for its own accountd) The commission agent has no lien to secure his claimse) Depending on the amount of business, we distinguish district and travelling

agentsf) The obligations of a broker include obligation to effort, obligation to abstain

from competition and obligation to notify

Correct statement No.:_____

Task 10

Which of the following does not belong to the choice of media category (advertising material / advertising media)?

a) Single contact / multi-contactb) Cost of the mediumc) Range of dispersiond) Individual advertising / collective advertisinge) Accuracy of target group selectionf) Intensity of efficacy of advertising

Answer No.:__________

Task 11

Which of the following statements regarding the commercial scene of helpers (inter-mediaries) is correct?

a) The broker is constantly tasked to broker business for another entrepreneur.

b) The agent acts in the name and for the account of others

c) The commission agent acts in his own name and for its own account

d) The commission agent has no lien to secure his claims

e) Depending on the amount of business, we distinguish district and travelling agents

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Task 12 How should you formulate your value proposition? Name four aspects in the formula-tion of sales arguments and demonstrate your aspects in the formulation based on an example you have selected.

Task 2 What is meant by complementary products? Describe what it means and clarify your description with an example.

Task 3 Describe three closing techniques in sales talk.

Task 7 What is franchising? Describe what it means and name two benefits for the fran-chisor and two advantages for the franchisee.

Task 8 (Sales promotion)The management wants to increase sales of laminate floors and thinking about use-ful sales promotion measures for this article. In addition, measures are to be imple-mented that could facilitate or embellish the customers’ shopping experience in your market. Also on the extension of the service offer is being considered.

a) Name three sales promotion measures that could increase sales of laminate flooring.

b) Name three actions that could facilitate or embellish the customers’ shopping ex-perience in your market.

c) Name three services that could offer its customers in addition to the hardware store.

Task 9 (Customer loyalty)Name three measures of customer loyalty and describe them

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Task 10 (Marketing/Distribution/Sales)Assign the individual measures of the communication policy to the respective instru-ments

Instruments

a) Advertisingb) Sales promotionc) Public relations exercised) Face to Face selling

Measures

ConsultationOpen DayPromotional GiftsSweepstakes and contestsRebates in the form of free goodsCinema advertisingOrganization of trade fairsProduct demonstrationsSamplesOffering complementary products

Task 11 List five services that can offer its customers a hardware store.

Task 12 What is the difference between master data and transaction data? Describe the dif-ference.

Task 13 a) What are the functions that a merchandise management system fulfils? Name

three functions of a merchandise management system.

b) What functions does a point of sale system have? Name three functions of a POS system.

Task 14 The market for a product is in the federal territory of Hesse in the calendar year 2011, an amount of € 2,800,000.00. The Gartencenter Frauke GmbH enterprise generated during the same period for this product in the federal territory of Hesse sales of € 96,000.00. What is the market share of Gartencenter Frauke GmbH?

Task 15The Gartencenter Frauke GmbH enterprise intends to stimulate the sale of their kettle grills.Describe six suitable measures of sales promotion.Also list five measures, such as Gartencenter Frauke GmbH can facilitate their cus-tomers to shop in their supermarket.

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Task 16What does the distribution policy? What solutions does it provide for issues?

Task 17Name the options of direct selling.

Task 18Name the wholesale forms and functions of the wholesale.

Task 19What is the difference between dealers and dealers unbound?

Task 20What is a rack jobber in retail?

Task 21List and describe the possibilities of e-Commerce.

Task 22Name four ways of direct and indirect sales of the four-way

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Tasks for calculation of quotations

1. The first list purchase price for an ATX tower case is € 42.00. Our supplier gives us a rebate of 10% and a discount of 3%. As acquisition cost € 4.00 are incurred per piece. The internal business costs are 20%. A profit margin of 16% should be added. Which list sale price is obtained if we give our custom-ers a 5% discount and 2% customer discount?

2. The price of a commodity is € 2430.00 free home delivery. The handling charges are 30%, the profit mark-up is 20%. The customer discount is set at 3%, the customer rebate at 10%. For the distribution of the goods also 7% agent's commission must be taken into account.Calculate the list sale price and the calculation surcharge.

3. We are offered a TFT screen hp L1720 for € 719.20. The supplier grants us a discount of 12%. As acquisition cost incurred are € 12.00 for shipping and € 2.00 per piece insurance. The packaging is free. The internal overhead costs amount to 20%. The profit is calculated at 40%, 10% customer rebate and 3% customer discount. What is the list sale price per unit?

4. We obtain 1024 kg Italian grapes for € 560.00 net. The supplier rebate is 10%. As acquisition cost incurred are € 60.00 for the whole consignment. Which list sale price per kg is obtained if we calculate with 25% handling charge and 16% profit?

5. The list purchase price of a product is € 28.00 per piece. The supplier rebate is 10%, the supplier discount 3%. Since the prices are ex factory prices, addi-tionally € 2.00 as shipping cost per item is added. As handling charges are 20% and 40% profit. What is the list sale price for 70 pieces, when calculated at 3% of customers account?

6. The net sale prices for the following three items are to be calculated based on the rules.

  Article A Article B Article CPurchase price € 480.00 € 520.00 € 640.00Profit margin 30% 25% 20%Customer discount 3% 3% 3%Customer rebate 25% 25% 25%

M. Hug 89

7. The list purchase price of a product is € 5,100.00. The supplier gives us a re-bate of 6% and a discount of 3%. The transport and shipping packaging costs are € 2,200. The handling charges are calculated at 36%, the profit at 15%. What gross offer price (including 19% VAT.) is the result when the customer discount is 3% and the customer rebate 10%?

8. The list purchase price of a commodity is € 14,100.00. The supplier gives us a rebate of 6% and a discount of 3%. The acquisition cost amounts to € 1,200. The handling charges are calculated at 40%, the profit at 16%. Which gross offer price (including 19% VAT.) is the result when the customer discount is 2% and the customer rebate 8%?

9. The market volume for a product in the federal state of Hesse in the calendar year 2011 amounts € 1,400,000.00. The Wiegand GmbH enterprise generated during the same period for this product in the federal state of Hesse sales yielding € 88,000.00. What is the market share of Wiegand GmbH?

10.The list purchase price for a product is € 6,200.00. The supplier gives us a re-bate of 8% and a discount of 2%. The transport and shipping packaging costs are € 700.00. The handling charges are calculated at 38%, the profit at 18%. Which gross offer price (including 19% VAT.) is the result when the customer discount is 3% and the customer rebate 6%?

11.The list purchase price of a commodity is € 12,100.00. The supplier grants us a rebate of 8% and a discount of 3%. The acquisition cost is € 420.00. The handling charges are calculated at 30%, the profit at 16%. Which gross offer price (including 19% VAT.) is the result when the customer discount is 2% and the customer rebate 10%?

12.The purchase price is € 2360.00. The list sale price is € 3260.00. What is the calculation surcharge?

13.The target retail price is € 380.00. The list sale price is € 410.00. What is the percentage of discount?

14.The invoice amount is denominated in EUR 2827.00. What is the net amount? How much is the sales tax?

15.The list purchase price for a product is € 2,500.00. The supplier gives us a re-bate of 8% and a discount of 2%. The acquisition cost is € 400.00. The hand-ling charges are calculated at 76%, the profit at 18%.

a) What is the gross offer price (including 19% VAT.) when the customer dis-count is 3% and the customer rebate is 10%?

b) What is the percentage of calculation surcharge?

M. Hug 90

Tasks for Difference calculation

Task 1A wholesaler is offering a retailer a product at a price of € 1,140.00 (net). He gives the customer 2% discount. The wholesaler buys the product prepaid at list price of € 640.00. The manufacturer gives him a 10% rebate and 2.5% discount; the acquisition cost for the main freight and cartage from receiving station to the factory is € 30.00 per piece. What is the profit in Euros and in percentage for the wholesaler if his hand-ling charges are 16%?

Task 2The market price for an item is € 240.00 without VAT. A dealer can acquire this item for € 80.00 list purchase price from his supplier. His supplier gives him a rebate of 10%. For procurement of the goods still € 20.00 would accrue per piece. The dealer calculates at 20% handling charge. What is the profit in Euros and in percentage for the dealer before deduction of taxes if he gives his customers a 5% rebate?

Task 3The cost price is € 240.00. The cash price is € 280. What percentage is the profit?

Task 4The gross price for a product is € 1450.00. The purchase price for this product is € 400.00. How much profit can be achieved if the business costs are 20% and the cus-tomers are given 2% discount and a 10% rebate.

Task 5a) b) c)

List purchase price € 1500.00 € 210.00 € 1200.00Supplier rebate 12% 10% --Supplier discount 2% 3% --Acquisition cost 80,-- 12 € 120.00Handling charges 20% 40% 35%Profit/Loss € ? € ? € ?

Customer discount3% -- --

Customer rebate 10% -- --List sale price € 2400.00 € 620.00 € 1780.00

M. Hug 91