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CHAPTER 6
SALES KNOWLEDGE: CUSTOMERS, PRODUCTS, TECHNOLOGIES
COMMENTS ON CHAPTER 6 SALES APPLICATION QUESTIONS
1. The student's answer should demonstrate a basic understanding of why the salesperson should know
2. Formal training programs and experience (on-the-job training) provide salespeople with knowledge
3. Knowledge of the customer's past and present operations aids the salesperson in suggesting what to
4. A salesperson should become an "expert" on the economy's influence on his industry. This helps set
5. Shelf-positioning -- where the product is located; shelf-facing -- number of products side-by-side on
6. Premiums are used to increase sales. Three major categories of premiums are; (A) contests and
7. A manufacturer might use five basic types of advertising: national, retail, trade, industrial, and
8. A good way to convince a buyer to purchase a new, untried product is to show him the results of its
9. Cooperative advertising usually requires the manufacturer to pay for some percentage or all of the
advertising of its product conducted by the retailer. The steps are: 1) agree on the size of the order,
10. Companies advertise to: 1) increase overall and specific product sales, 2) aid salespeople by building
product recognition, 3) give salespeople additional selling information, 4) develop leads for
11. A. Coupons on or inside packages--Consumer
B. Free Installations--Trade
C. Displays--Trade
Example: displays are often "Thrown-in" with purchases of a new product. An
D. Sales contracts--Trade
E. Drawing for gifts--Either
Example: consumer--retail store often conduct drawings;
F. Demonstrations--Consumer
Example: test-driving a car.
G. Samples--Usually Consumer
nibbles of his product.
H. Special pricing--Consumer or Trade
Example: consumer--buy three shock absorbers, get the fourth free; trade--for every three
12. Netiquette is the use of etiquette on the Internet. The need for it in sales mostly arises when
using E-mail.
13. There are numerous things that a salesperson can do to make sure that their phone is not a
important person to talk to.
a. Use text messaging if you are expecting important information while in public.
CHAPTER 6 APPENDIX
SALES ARITHMETIC AND PRICING
COMMENTS ON CHAPTER 6 APPENDIX SALES APPLICATION QUESTIONS
1. Discounts represent a reduction in price from the list price. The main types of discounts are:
3. Manufacturer Wholesaler Retailer
Percentage markup $ 4.00 $ 2.00 $12.00
Percentage markup $4.00 $ 2.00 $12.00
4. .25 .50 $1.00
5. A manufacturer might use five basic types of advertising: national, retail, trade, industrial, and direct
been advertised.
6. List price – standard price charged to customers.
Net price – price after allowance for discounts.
7. A. Noncumulative discount is being offered.
2/10 net 30 is:
150 @ 10 = $1500 $5000
If the Storage Bin does not pay until the 25th day it will receive no discount and the total cost
C. You are offering a cumulative discount. The total cost will be reduced by five percent.
10 @ $3000 = $30,000
Discount x .95
$78,375
D. Both offers represent types of noncumulative discounts.
Buy 11--Get 1 Free 10% Off
8. EC 600 Generator.
Less than 10 10 - 20 More than 20 Present
Generators
Purchase price $70,000 $65,000 $58,000 $65,000
Yearly oper. Expense $3,000 $3,000 $3,000 $5,000
Note: The higher annual operating expense and shorter life of
1. A value analysis determines the best product for the money. It is the "business proposition" in
COMMENTS ON CASES
Case 6A-1: Claire Cosmetics
1. The "key" is that Jane should do her homework well in advance of the meeting. She should hint at
some of the upcoming promotions on this product to her customers, although being careful not to
2. By discussing the program, however vaguely, with her customers, Jane may begin to get a feel for
what they really expect to get from a new promotion. She may uncover areas that are really
Case 6A-2: McBath Women's Apparel
1. Lynn should not approach Ms. Bruce with an all or nothing proposition because she has proved in the
past that she will say no. She should stress the benefits which Federale will receive from carrying a
2. Quantity discount - $10 off-invoice for each display purchased.
Cash discount - 2/10 net 30.
The trade discount may be the most effective because if offers a substantial advantage over the other
3. Sales and profits cause people to buy and thus price is extremely important. These discounts will be
Case 6A-3: Electric Generator Corporation
1. Thorough background of company, its operation, present generators used, and its buying policies are
2. The value analysis will be the main selling tool Sandy will use in her presentation. It must show how
Case 6A-4: Frank's Drilling Service
1. A value analysis
Competitor's Frank's
Drilling costs .90x10,000 ft = $9,000 $1x10,000 ft = $10,000
Personnel cost
Total personnel $28,000x16 days = $460,800 $28,800x12days = $345,600
costs
Savings for 12 wells = $1,370,400.
*Assumes drilling 24 hours each day.
Case 6A-5: FruitFresh Inc.
1. There are three issues that should be covered in this discussion: unscrupulous competitors,
2. Perry could advertise that FruitFresh is the first company to make its juice carton out of 50%
recycled materials. Perry might also work through FruitFresh's legal department to report Cainer's
CHAPTER 6: “Advertising Will Close the Deal”
What is the most ethical action to take?
A. Tell the customer that you currently have a small amount of TV
advertising but that you are thinking of looking into expanding into
magazines and radio. Technically, you would not be lying – it might
never actually happen, but you can “look into” it.
B. Tell the customer what he wants to hear. A little exaggeration won’t
hurt and you will gain profit for your company.
C. Tell the customer that because you are a small company, you don’t
really have the resources to do a lot of advertising. Let him know
that you do a small amount on TV and none in radio or magazines.
Let the customer decide what he would like to do based on this
information.
