CHAPTER 5
SALES KNOWLEDGE: CUSTOMERS, PRODUCTS, TECHNOLOGIES
COMMENTS ON CHAPTER 5 SALES APPLICATION QUESTIONS
1. The student‘s answer should demonstrate a basic understanding of why the salesperson should know
this information, plus how it would be used in the presentation.
2. Formal training programs and experience (on-the-job training) provide salespeople with knowledge
of their job.
3. Knowledge of the customer‘s past and present operations aid the salesperson in suggesting what to
buy, how much, and how to promote or use the product. Knowledge of promotional activities of the
firm can also aid the salesperson in persuading a customer to buy.
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
7. A manufacturer might use five basic types of advertising: national, retail, trade, industrial, and direct-
mail. It is a good idea to point out that your firm does carry on an active advertising campaign 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,
2) have retailer sign advertising agreement, 3) leave him a copy of the agreement, 4) on your next
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
Example: found in many grocer products.
B. Free Installations—Trade
Example: purchase a new machine and it will be installed at no extra charge.
C. Displays—Trade
Example: displays are often “Thrown-in” with purchases of a new product. An
example would be a display of Legg‘s pantyhose.
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
distraction. The ones listed in the book are:
A. Use the Caller ID feature to screen your calls because the person you are with is the
most important person to talk to.
B. Use text messaging if you are expecting important information while in public.
CHAPTER 5 APPENDIX
SALES ARITHMETIC AND PRICING
COMMENTS ON CHAPTER 5 APPENDIX SALES APPLICATION QUESTIONS
1. Discounts represent a reduction in price from the list price. The main types of discounts are:
quantity, cash, trade, and consumer discounts. Quantity discounts are offered when buyers purchase
large quantities of a product. Cash discounts are allowed for prompt payment. A trade discount is
2. The salesperson should mention the discount in the middle of the presentation. If he/she waits too
long to present this selling bonus the customer may lose interest.
3. Manufacturer Wholesaler Retailer
Percentage markup $ 4.00 $ 2.00 $12.00
on Selling Price $10.00 = 40% $12.00 = 17% $24.00=50%
4. .25 .50 $1.00
5. Since you are aware of the situation of customer not paying on time yet at the same time they are
your largest customer, you can either gain their attention by offering One-time reduction in prices
6. List price – standard price charged to customers.
Net price – price after allowance for discounts.
7. A. Noncumulative discount is being offered.
$45,000/50 = $900/unit; cost has been reduced 10% per unit.
B. You are offering a cash discount which will reduce the cost by 2%. Total cost under terms of
2/10 net 30 is:
150 @ 10 = $1500 $5000
x.98 x.95
C. You are offering a cumulative discount. The total cost will be reduced by five percent.
10 @ $3000 = $30,000
15 @ $3500 = $52,000
D. Both offers represent types of noncumulative discounts.
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
Expected Life
10 years
10 years
10 years
7 years
$10,000
$9,500
$8,800
$14,285
COMMENTS ON CASES
Case 5-1: 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
“spill the beans” before the campaign is actually underway. She may see that her customers will, in
fact, be receptive to a new promotional offer, and this in itself may help to reduce her nervousness.
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 5-2: 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 new line. She should tell Ms. Bruce about the great sales increases other stores have experienced,
and that the display will be small and will make shopping easier, not more confusing, for her
customers. Also, tell of the advertising campaign, and special promotions planned which should
further help sales.
2. Quantity discount – $10 off-invoice for each display purchased.
Cash discount – 2/10 net 30.
Trade discount – 20% off to retailers.
3. Sales and profits cause people to buy and thus price is extremely important. These discounts will be
a major “reason to buy.”
Case 5-3: Electric Generator Corporation
2. The value analysis will be the main selling tool Sandy will use in her presentation. It must show how
the reduced maintenance costs of her generator will quickly off-set their higher price.
Case 5-4: 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
$1,200x24
hrs*=$28,800
2. Fast and efficient service (features) which save time (advantage) and money (benefit).
*Assumes drilling 24 hours each day.
Case 5-5: 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 out of 50% recycled
materials Perry might work through FruitFresh’s legal department to report Cainer‘s