Study Notes for DECA Competition

Transcription

1 Study Notes for DECA Competition Personal Selling Manufacturer s representative: Salespeople who represent the manufacturer. Prospecting: Process of finding potential customers who could benefit from and buy a product or service Steps in the selling process: o Pre-approach: gather information, get facts, determine customer needs and wants o Approach: the way you confront the customer o Sales presentation: heart of selling process. Bring out the features and benefits of the product, the product features are the facts about the product and the benefits are what the product will do for you. Example feature: automatic focus on a camera, benefit: you don t have to know a lot about camera s to operate, just aim and shoot. Good idea to involve the customer Demonstrate that you are selling Let the customer handle or operate the item Be prepared to handle a customer s objection (questions raised by the customer, usually giving reasons not to buy) Always show empathy (putting yourself in their shoes) when working with the customer o Close: completion of the sale Make the busying decision easy for the customer Narrow the selection by removing items the customer does not want Talk about customer ownership, use the words you and yours so they can picture themselves with the product Use last chance to buy (the sale ends Saturday) Ask the customer to buy (which item would you prefer?) Suggestive selling: selling related or additional items Reassurance: make the customer feel good about their purchase Economics Utility: creates usefulness o Form utility: change in basic material into useful form (a field of cotton is not too useful but once it is made into a sweater it is useful) o Time utility: product available right time of the year or convenient time of the day (back to school sale) o Place utility: product available at a useful location o Possession utility: assists customer in owning the product (other credit or layaway)

2 o Information utility: assists in communicating with the customer (advertising) Value added: describes the advantages that marketing provides for the consumer (value is added to the product when it is properly packaged) Marketing mix: effectively blending the 4 P s: product, price, place and promotion. You must have a proper mix of the 4 P s to effectively sell product that satisfies consumer demand. Characteristics of the free enterprise system o Risk: freedom to go into business and try to earn a profit o Profit: what motivates people to work or start a business (money) o Freedom of ownership: free to own or rent property, free to choose what to buy or not to buy o Competition: free to enter market and compete for the customers dollar Government role: acts as a referee, does not regulate and control unless it is necessary (Gov. would assist in breaking up a monopoly) Supply: quantity of goods available for sale Demand: quantity of goods desired by consumers Price: the amount that needs to be paid to receive the product If supply is low and demand is high, price tends to rise If the supply is high and demand is low, price tends to fall If demand is low and supply is high, price tends to fall If demand is high and supply is low, price tends to rise If the price is high, demand may decrease, thus ample supple will remain If the price is low, demand may increase, thus supply will be short Shortage: when demand exceeds supply. When more people want a product than what is available, price will usually go up. Surplus: when supply exceeds demand. When there is more product available than there is customers to buy, price will usually go down. Equilibrium point: where supply and demand are equal. Usually the buyer and seller are happy. The seller is able to sell all of the goods and make a profit. The buyer is happy because goods are available for purchase at a reasonable price. Breakeven point: money from sales of a product equals total costs and expenses involved in producing and marketing it. Role of profit o Income: money received from customers when you sell them something o Expenses: costs to the business (salaries, rent, mortgage, utilities) o Assets: things the business owns (store fixtures, stock, etc.) o Profit and loss statement Income from sales (money you make from selling goods) -cost of goods sold (how much you had to pay for the goods) =gross profit Gross income (total money coming in before expenses are deducted) -operating expenses (expenses such as salaries, utilities, rent, advertising, etc.)

3 =net profit before taxes -taxes (what you owe Uncle Sam for taxes) =net profit or net loss o If your gross income is more than your operating expenses then you have a net profit (you made money). If your gross income is less than your operating expenses then you have a net loss (you lost money) o Gross pay: amount of money you make at your job o Net pay: amount of money you bring home in your paycheck after union dues, taxes, uniform or meal allowances have been taken out o Types of economic systems The way an economic system answers three basic questions determines the type of economic system they have 1. What should be produced? 2. How it should be produced? 3. How it should be distributed? Free enterprise: the customer is king and influences all business decisions. The three basic questions are answered by the customer. The consumer decides what products will make it and which ones won t. Socialism: government owns and operates a lot, but citizens can go into business and make a profit. Businesses that make a good profit are heavily taxed. Taxes are high, but the government pays for medical, etc. of the people. The government and the people answer the three basic questions. Communism: government owns and operates everything and makes all decisions of the citizens, basically no choices. The government answers all three basic questions. Production Production: refers to creating, growing, procession, etc. Market place: ownership changes hand Marketing: all of the efforts of a business to make money by satisfying customers. All of those activities represent the marketing functions of: o Purchasing o Selling o Risk management o Distribution o Promotion o Marketing information Customer buys and consumer uses Wholesales: buy products in large quantities and sells them in smaller quantities to retailers and others (not the ultimate consumer normally) Channels of distribution four common channels o Manufacturer to consumer o Manufacturer to retailer, consumer o Manufacturer to wholesaler, retailer, consumer

4 o Manufacturer to agent/broker, wholesaler, retailer, consumer Standard of living: how well people live. Measured by what people have Outlet store: usually operated by a manufacturer selling discounted items, etc. Variety store: wide assortment of goods in a low price range Limited-line store: sells only one kind of merchandise or several closely related lines (greeting cards wide selection within a specialty) Department store: employs at least 25 and has sales of apparel and household lines amounting to 20% or more Discount department store: sell limited assortments of merchandise at reduced price (Target) Specialty store: few types of merchandise Convenience store: located to make it easy to stop in, open when other stores are closed. Limited number of products that can be purchased quickly. Buying Motives Physical: based on physical needs of food, clothing, shelter Psychological: based on affection, love, prestige and/or recognition Rational and emotional: rational logical choice based on facts and figures, emotional based on feelings and gut reactions Product: choose a particular product (you grew up with a certain product or your friends all use it) Patronage: choose a particular store because you know the owner, like the salespeople, the place to shop AIDA Formula for selling and advertising o A- attention (attract attention of the customer to the product) o I Interest (build interest of the customer in the product) o D desire (makes the customer desire the product) o A action (makes the customer want to take action and buy the product) Sometimes you will find a C between the D and the last A. the C stands for conviction which makes the customer convicted to buy. Impulse buying: unplanned purchases, you run into a store to buy something and grab several other things while you are there. Cognitive dissonance: doubt about your purchase. After you buy something you think, oh I hope I really like it or I hope I don t find it cheaper somewhere else Types of goods o Unsought goods: life insurance, cemetery plots o Convenience goods: buy product anyplace that is convenient (toothpaste, milk, food) o Shopping goods: compare before you buy. Have to shop around a bit for the product before you decide to buy. o Specialty goods: unique items and highly preferred. May have to go out of your way to purchase these items, available in specialty stores (antique items, international foods, etc.)

5 Marketing Research The gathering, recording, and analyzing of all facts about problems relating to a business or product. Used to find out what customers want to remain competitive to get your business out of a slump, to continually improve your business. Market: looks at the characteristics of the market and determines how well a product is likely to sell Sales: looks at sales data Product: looks at consumer reaction to a product Advertising: looks at effectiveness of advertising Data: information, facts, figures Primary data: data gathered originally by researcher. Obtain the information first hand. Secondary data: data already collected for another purpose, but can be used to assist you in your research Ways to gather primary data o Survey method: most widely used method, mail, telephone, personal interview o Observation: watching actions of people without interviewing them. Can be done by a person or mechanically o Experimentation: test marketing, scale down in size and test it out (pizza at McDonalds) Steps to follow in marketing research o Identify the problem (what are you trying to find out) o Plan the research (how are you going to do it) o Collect the data (gather information needed) o Prepare and analyze information (tabulate the results of information collected and figure out what you found out from the study) o Draw conclusions and make recommendations (based on the results what conclusions can you make and what recommendations do you think should be brought out in order for decision to be made) The Product Product item: specific product Product line: a group of similar types of product items that are closely related (carrying numerous brands or models of jackets at a sports store) Product mix: the total of all product items and product lines offered for sale by a company Product life cycle o Introduction: introduce new product o Growth: sales rising, consumer is learning about the product and the product is becoming familiar o Maturity: sales level off, peak of sales, product is well known and selling well o Decline: sales are falling, try to extend sales gradually phase out product or replace it

6 Prototype: model of a new produce, first form of the product that the company makes to take a look at it. Product elimination: drop the product Product extension: add a new product to the line or change Product mix: this does not change the product item Product modification: planned change in a product or its packaging Branding Brand mark: distinctive symbol used along with a brand name on a product Trademark: past of a brand that has been legally registered with U.S. patent office. Used to identify and distinguish them. National brand: branded product of a manufacturer Private brand: carries the label of the middleman UPC: standard labeling language which can be read by electronic cash register Math Extensions totals (quantity x unit price) (52 cases of soda bought at $5.25 per case, what would the extension on the invoice be: 52 x 5.25 = extension) Quantity Description Unit Price Extension 2 scarfs gloves ear muffs stocking caps TOTAL Unit price: price of one item $.60 for one dozen eggs and you want three dozen. What will it cost? 3 x.60 = Calculating percentages o 5% sales tax: change to a fraction.05 then you need the five over the 100 th spot. Remember 10, 100, 1000 so you have to put a 0 in from of it to get the 5 over the 100 th spot. Just move the decimal point two places to the right. o 33% would be.33 o 54% would be.54 o 2% would be.02 (remember you hold the first spot with a zero) o 4.5% would be.045 (.04 for the full number and then add on the 5) Convert a fraction to a percent: o 2/3 =66 over 100=.66 or 66% o 3/4 =75 over 100=.75 or 75%

7 Shipping and Dating Terms Purchase order: contract between buyer and supplier. When you order something you usually send them a purchase order which describes how much of what items you want to purchase. Invoice: shipped with the goods itemizing what you ordered and what was shipped. The invoice is the bill that you must pay When a retailer buys goods from a manufacturer they usually are given special deals to attract them to buy. Listed below is an example of what a manufacturer may offer a retailer to get them to buy and pay their bill in a timely manner o Ordinary dating o Terms: 2/10. Net 30. This means you will receive a 2% discount if you pay the bill within 10 days. If not paid within 10 days the full amount of the invoice is due in 30 days. o Terms: 3/15. Net 45. This means you will receive a 3% discount if you pay the bill within 15 days. If not paid within 15 days, the full amount of the invoice is due in 45 days. Advance dating: credit period based on date later than date of invoice. To encourage buying early. Extra dating: allowing extra number of days before credit terms begin to apply. Discounts: deduction from list price Quantity discounts: large quantities. The more you buy the better the price. Seasonal discounts: for purchasing well in advance of season Promotional discounts: discounts or allowances to defray part of advertising cost Transportation Terms FOB: free on board. Buyer wants manufacturer to absorb as much of the shipping coast as possible FOB shipping point: the manufacturer owns the goods until they are delivered to the transportation firm. Then title/ownership passes to the buyer and he pays to transport the goods to his store. FOB store: manufacturer pays entire cost of transporting goods. Saves the buyer cost of transportation and insurance (highly desirable for retailer) Consignment sales: title remains with vendor and buyer may return unsold goods (no risk, but has responsibility) Memorandum sales: buyer purchases good and assumes ownership, but retailer has the right to return unsold goods to the vendor up to a certain date. Promotion Promotion: communication between buyer and seller Elements of promotion o Advertising: paid sponsor for a TV, radio, etc. o Sales promotion: coupons, contests, supplements advertising efforts o Visual merchandising: displays special effects such as lighting o Public relations: building goodwill o Publicity: free information o Personal selling: direct, on-on-one contact

8 Advertising media: channels used to send advertising messages National advertising: Coca-Cola, Levi, usually in newspaper or on radio Local advertising: usually in newspaper or radio, local to the specific area Cooperative advertising: combines national and local advertising Promotional (product) advertising: promotes a specific product Institutional advertising: promotes a specific product Print media: newspaper, magazines, billboards (printed things) Broadcast media: radio and TV Industrial advertisers: promotes goods to industrial market trade advertising (trade journals) Business-directed advertising: appeals in publications meant for manufacturer of consumer or industrial goods used by industries in the manufacturing of goods or in the operation of their business Professional advertising: advertising addressed to lawyers or doctors, etc. Prime time: 7:00pm 10:00pm (Central time) costs more to advertise on prime time network. Mostly national ads are found during prime time Cost of media: money for advertising should be spent on the media that will reach the largest number of possible customers at the lowest cost per person Direct mail: advertising sent to prospective buyers by mail. Mailed 3 rd class rate and you can target your audience Outdoor advertising: signs, posters, billboards, needs to be highly localized Transit advertising: buses, subways, airline terminals, taxi cabs Specialty advertising: matchbooks, pens, calendars Premiums: something given without substantial charge with purchase of a product o Coupons o Factory pack: free gift in package o Self-liquidating: t-shirt, backpacks, etc. that carry manufacturer name. The price of these items just covers the cost manufacturer paid. This adds incentive to buy and carries the name of manufacturer around o Direct sales: buy this product and get this extra something to go with it o Sales lead: reward offered for name of prospective customer o Product samples: sample size free o Exhibits: have exhibits and shows at conferences o Container: package is reusable container with purchase o Price oriented promotion: offers a special price reduction to buyer Point of purchase: advertising and display material in and around retail store. Displayed near the items for sale or at cast register stands.