EFFECTIVENESS OF PERSONAL SELLING ON THE MARKETING OF CAPITAL GOODS; USING ANAMMCO AS A CASE STUDY.

CHAPTER ONE

INTRODUCTION

Personal selling can be defined as an inter-personal persuasion process designed to influence certain person’s decision. It is also seen as a direct communication between a sales representative and one or more prospective buyers for the purpose of making a sale. Personal selling is done through person-to-person contact. Sales people can accomplish this purpose by communicating face to face during a personal sales call; by selling over the telephone (telemarketing).

The sales function is a major tactical area in marketing and it is more important in the area of offering goods and services and things of value to the customers or prospective customers. Personal selling plays an important role in companies where the bulk of their presentational effort is carried out by a sale force. It provides a detailed explanation or demonstration of the product. This capability needed for complex goods or industrial goods.

The sales people must be trained, they must have more of business mentality and contemplate more on the customer’s profit needs, they should also know what they intend to do with the shelf space and what their potential plans this way, the company’s sales volume will increase, the customer will be satisfied and will want to do business with them whenever the need arises. The product to be sold has a lot to do with the strategy to be used in selling such goods. This is so because some sales approach that are used in a particular sale’s situation may not be effective when it comes to certain other sales situation. This therefore means that good sales personal should be able to identify correctly the persuasive message that is precise in a given sales situation.

Personal selling is dynamic, flexible and volatile. It changes as the product to be sold and the market changes. The approach used in marketing or presenting the product to a civil servant may not be the same approach used in presenting the same product to a businessmen.

Personal selling has a lot to do in the marketing of the products of this company (MB ANAMMCO) since the bulk of their presentational effort is carried out by the sales force. This is because they deal on capital goods like, trucks, tippers, lorries, tankers, jeep, cars and a host of other products. These products need personal presentation, the salesman and the prospective customer need to have personal contact so that more information on the product can be passed to the prospective customer, and the prospective customer in turn will have the opportunity to give response to the sales representative.

Therefore it is necessary to note that the importance of personal selling to the company cannot be overemphasized.

1.1   BACKGROUND OF STUDY

MB ANAMMCO is a global and franchising company with its headquarters in Germany and its subsidiary manufacturing plant located at EMENE industrial layout / Enugu State. The company started operation in 1980, having been mandated by the original owner of the Mercedes Ben/trademark.

For over a decade and half, Anambra company has been keeping the nation on a regular speed in the area of technological development. The company specializes in the production of quality Mercedes Benz products like; cars, trucks, buses and special Benz vehicles such as strucks, tankers, tippers, lorries, jeeps and so many other products.

Despite the fact that they utilize a considerable amount of local components, these vehicles are built as nothing but a replica of the household Mercedes Benz. They have the tradition of excellence and durability.

Though the company was a more assembly plant at it’s inception, it has struggled so much to remain in business and most especially improve from a mere assembly plant to a manufacturing company.

As a result of constant availability of genuine spare parts, and the use of efficient sales force and after sale services, which happens to be a major trait of personal selling effort, ANAMMCO has not only been keeping the nation going as regards technological development but has also been a baron with regards to the establishment of an indigenous auto-industry. The company has been a leading form in the motor industry.

According to an insider, the increase in the level of competition and also the application of divergent promotional tools, has cause a lot of setback for the company, the company which has attained the peak in the motor manufacturing industry has started experiencing a dividing ground in its market share and sales volume. This has posed a great problem for the management of the company because a large portion of their market share has been captured by competing companies. This can be seen as a trade off on it’s past glory.

However, the management of ANAMMCO is not oblivious of the advantages of using personal selling in the marketing of capital goods. Though they use other promotional tools like advertising, sales promotion and publicity, their large sales volume and market share has been achieved mainly by the use of personal selling. With personal selling, they are able to meet their prospective customers and know what their problems are, it also give them the opportunity to give vital information to these prospective customers.

1.2   STATEMENT OF PROBLEMS

Due to increase in the level of competition which exist in the auto Industry, ANAMMCO motor company has started experiencing tremendous reduction in sales volume and this brought about so much problems for the company such as decrease in profitability due to loss of customers patronage, loss of a substantial portion of their market share, it has also affected the prompt payment of staff salary surplus supply over demand and so many other things. This research seeks to find out how efficient the sales force of the company can be in the marketing of the goods of the company. It is necessary to evaluate the performance of each sales representative. This is to find out if there is need to train them.

The problems specifically are;

1. To know the ratio of sales volume to sales expenses, whether it is high or low.
2. To also find out the ratio of sales calls to actual sales, whether it is high or low.

1.3   PURPOSE OF STUDY

The nature and structure of an organization notwithstanding, it has been seen that personal selling is a bedrock to the success of such company even during serious competition. This enables the company to generate more funds for its operations. This is why the company budgets a huge sum of money on a regular basis into the sales department.

This research intends to find a lasting solution to the decline in sales volume and profitability. The objective of the study is as follows:

1. To find out if the ratio of sales expenses to sale volumes is high or low.
2. To determine whether the ratio of sales calls to sales volume is equally high or low.

iii.    To verify the true ratio between present and past sales and see if the current performance offset it’s cost.

1. To see what management can do to rectify these negative experience and thus increase profitability.

1.4   SIGNIFICANCE OF THE STUDY

According to the public relations officer of MB branch office, the company has been and will continue to demonstrate it’s corporate and social responsibilities. This is in justification with Brown’s contention of 1974. He said “If a company is to continue ensuring it’s customer’s patronage, then it has no other alternative than the maintenance of marketing Mix in a manner that will ensure continuous customer satisfaction.

Mercedes Benz ANAMMCO has been and will continue to strive harder in the area of corporate social responsibilities.

1. To this end, the significance of this study are as follows;
2. To make recommendations to the management of NNMB ANAMMCO Led on this study on how to overcome the problem of low sales volume as well as that of high sales expenses and low profitability.

iii.    It is the intention of the research that subsequent researchers will find this work beneficial for further research problems and solutions.

1. This study will also be of immense benefit to other companies in the same industry with Anammco in their strive to surmount low sales volumes and profitability.

1.5   RESEARCH QUESTION

1. In what ways does personal selling strategy affects the marketing of industrial products?
2. How could personal selling influence the increase in sales and not profit of industrial product?
3. What are the benefits of sales representative in the marketing of industrial product?
4. What are the problems encountered by sales representative in their personal selling efforts?
5. In what ways does your organization organize training of sales representative?
6. What types of motivation are giving to industrial salesmen?

1.6   HYPOTHESIS

I propose the following hypothesis which will be tested empirically in the course of this study.

Ho:   The ratio of sales expenses to sales volume is not high

Hi:    Ho:   The ratio of sales expenses to sales volume is high

Ho2: There is a high ratio between current and past performance.

Ho:   There is a low ratio between current and past performance.

1.7   SCOPE OF THE STUDY

These study ought to have take a wider dimension to make it more elaborate. However, because the researcher of this study is a student and do not have enough time and resources, to study the whole Anammco branches and customers in the country. The scope was restricted to findings in Enugu metropolis.

1.8   DEFINITION OF TERMS

1. ANAMMCO: Anambra motor manufacturing company
2. M.B: Mercedes Benz.
3. CAPITAL INDUSTRIAL GOODS: Goods products intended to be used for further production (Odoh 2003:2)
4. PROMO TOOLS: All short term device utilized in boosting sales (Adirika, Ebue, Nnolin 1996:143).
5. SALES FORCE SIZE: Number sales representative in a company (Adirika, Ebue, Nnolin 1996:143).
6. TRADE INS: Allowance given for use item when a customer purchase an new item (Boone & Kuntz: 1995:721).
7. COGNITION DISSONANCE: Post purchase anxiety that results when an in balance exist among an individuals cognitions (Knowledge beliefs, and attitudes (Boone & Kuntz: 1995:272).
8. PUSH STRATEGY: Promotional effort by a seller to member of the distribution channel goods and service thereby pushing it through the marketing channel (Boone & Kuntz: 1995:582).
9. SALES QUOTE: Level expected sales on profit for a territory product, customer or sales person against which actual results are compared (Boone & Kuntz: 1995:663).

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