Chapter 9   Sales
Chapter 9   and
Chapter 9   marketing

The vast majority of people who are setting out to start a new business can usually tell you about how their goods or services will be made or provided, what basic resources are needed and roughly what each item will cost, but their most common deficiency is a lack of marketing knowledge and sales skills. Unless they have worked in a marketing environment, they will often not know how to research their market and how to prepare a marketing plan. Similarly, without having worked in a sales capacity they are likely to be unaware of the skills needed to identify potential customers, to investigate and match their needs and to close the sale. In fact there are many who do not even realize that sales and marketing are two fundamentally different disciplines. Marketing is concerned with identifying the level of demand for the goods or services, where potential customers might be found, the competition which exists, and creating a mixture of product features and means of delivery that will ensure the goods or services will be desirable. Sales is about actually persuading the customer to buy the goods, to pay the right price for them and then to come back to you for more at a later date. It is quite possible to make excellent goods for which there is a potentially high demand in a readymade market, but without the sales skills to actually make the customer buy them they will just sit on the shelves.

The objective of this chapter is, first, to describe the processes of market research, identifying suitable market segments, and then designing a marketing plan. Second, we will examine some basic sales skills and techniques that should assist the reader, and show how these can be implemented to meet the objectives of the marketing plan.

For the NVQ Level 3 Business Planning students, the chapter corresponds with Unit A5, ‘Develop a strategy for marketing and sales’, which is concerned with market research, preparing marketing and sales plans, and in identifying ways in which the effectiveness of these can be assessed. In that respect it follows the same four stages described above.

Stokes (1998: 239–44) describes small business marketing as something of a paradox. On the one hand small firms regard marketing as being an activity for larger organizations, and yet their very flexibility and responsiveness to customer needs is the epitome of good marketing practice. Certainly by the very nature of their limited size, turnover and profit, small firms are much less able to commit such large percentages of their gross profit to marketing activities as their larger counterparts. Many owner-managers lack marketing skills, apart from those they may have picked up empirically and, then, often through making mistakes along the way, or as a result of following ‘gut instinct’. Others do not go beyond basic essential sales activities, having to focus on day-to-day survival, with little time or inclination for long-term strategic planning. So, what are they missing?

Market research

Market research is an ongoing process that seeks the answers to a range of questions in the ever changing market environment:

   How large is the market for my goods or services?

   Is the market growing, static or shrinking?

   What proportion of the market do I command?

   What potential proportion could I achieve?

   What would I need to do to achieve that?

   Are there any barriers to entering the market or to expanding within it?

   What resources will I need, and over what timescale?

   What problems can I anticipate?

   Is the effort worthwhile, or should I consider an alternative?

   Who are my competitors and what are they offering?

   Are their goods or services as good as mine?

   What are the key features my customers are looking for, and can I meet these?

   What are the prevailing prices, and can I meet or beat these and make a profit?

It seems hardly surprising when faced with this package of questions that many owner-managers decide to take the simplest option of reacting to demand rather than forecasting and planning ahead to meet it. Unfortunately, little research has been carried out into the relative survival and growth rates of those who do employ market research techniques as part of their business planning, compared with the numbers of those who do not. Nevertheless, simple common sense tells us that the more we know about our customers and our markets, then the more chance there is of maximizing opportunities and minimizing risks, which has got to improve the chances of survival and growth of any business.

If we summarize the main aspects which are covered by the range of questions above, we are looking at four main areas: the size and nature of the market itself, the proportion which we hope to gain, our competitors and their offerings, and the prospects for our own goods or services within the market. We need to examine these in more detail.

The size and nature of the market

The first question we must consider is the scale of the market. Is it an international market or part of one, such as the oil or motor vehicle industries? There may be little hope of competing directly with Ford or Toyota, but there still may be an opportunity to supply them with specialist components. Is it a national industry like the market for Cheddar cheese or English sausages? Here there may be a good chance of overcoming any barriers to entry, such as high levels of competition, by targeting a special niche in the market. Is it a local market, such as a therapeutic service provided within a small geographical area? Here you would need to be even more aware of the importance of identifying and targeting the needs of the customer, rather than simply promoting the quality of the product or the service.

There is usually plenty of research data and findings about specific markets, available at international and national levels, through trade journals and associations, economic reports and analyses, national and regional statistics, etc. Not only can the overall size and growth potential of the market be established, but the respective share of key players can usually be realistically estimated by someone who knows the market well. The NVQ performance criteria for Element A5.1 require the use of valid and reliable information from published sources. However, at local level it is much harder to find the necessary direct information, and even at regional level the information may be aggregated with that of other markets within economic development reports, rendering it too general to be of much use to a new small firm. If, therefore, the published sources are inadequate or irrelevant, this should be pointed out within the business plan, along with details of alternative sources used and the reasons why these are suitable.

The target market share

If the level of supply within the particular market has not reached full capacity, then the target market share may well be determined by the capacity to produce and supply for that market. But if there is already a good deal of competition within it, then the target may need to be more modest as, without heavy investment, it may prove hard to break into a new market let alone subsequently to sustain and expand market share. Almost certainly the competitors will have something to say about a new entrant to the market and may vigorously compete to keep the newcomer out. Actually determining the target market share usually requires some specialist knowledge of the market sector to ensure that the targets are reasonable and realistic. It also implies some knowledge of the type of sales and promotional activities that would be required in order to penetrate the market to the required extent.

The nature of the competition

At international and national level the key players within an industry or service sector are usually well known to each other, and in many areas have regular contact with each other on matters of mutual interest (e.g. credit control, lobbying against new legislation etc.). Where formal links do not exist at company level between rival organizations, there are still nearly always informal links existing at a personal level. These may be between former work colleagues who have changed companies, or who may have trained together in the past, or who may even have met at trade exhibitions or conferences. Having worked in the licensed trade, computing and horticultural industries, I can vouch for the fact that even the most serious business rivalry usually breaks down after a few drinks. What is important is the amount of business that is transacted via informal contacts, and the marketing knowledge that can be gleaned and shared.

Where goods and services are concerned, anyone who is not a total newcomer to the market will normally have a good idea of who the competitors are and what they have to offer. More detailed technical information or price lists can usually be obtained by telephone request or by posing as a potential customer. Do not feel guilty or apprehensive about this approach, it happens all of the time and sooner or later someone will do it to you. Other information can be obtained from local trade directories, Yellow Pages, Thomson Local etc., and very often your own bank manager or Local Enterprise Agency may be able to help. Remember though, you are not just interested in finding out who your competitors are, but what goods or services they offer, at what price and with what unique or special selling features.

Comparing your own goods or services

Having examined the competition and their offerings, you now need to turn to your own goods and services to determine how they match up both to the competitors and to the nature of demand within the market as a whole. Is the price right or is it too high or too low? If I pitch my prices lower than those of my competitors, will I sell more? Is the quality right? Should I sell my products on the basis of quality rather than price? Does the market want a solid but cheap belt-and-braces product, or would a more refined and expensive alternative sell better? Perhaps there is a place for both types of product amongst different customers.

Another aspect of market research into goods or services is that of product testing, wherein the products are test marketed to establish consumer reactions and response. Depending on the product this may also have to involve some advertising or promotion as might be expected to accompany a product launch. A good example of this is the consumer testing of specific goods in discrete television franchise areas before they are launched on a national basis. Other products or services may be tested by market research surveys in supermarkets, town centres or door to door, where quality can be evaluated against price bands, using questions about how much people would be prepared to pay for the product, and their reactions to the presentation and packaging, etc.

At this point we also need to examine the relative costs and profitability. Which products will provide you with the best contribution to your overheads and profit? What proportion of less profitable goods or services can you afford to sell without adversely affecting your chances of survival? In Chapter 6 under ‘The break-even analysis’, we looked at an example where a higher sales volume at a slightly lower level of contribution caused a drop in overall sales revenue and subsequent profit. This is where it is important to link the marketing aspects of the business to the financial planning process, as they are essentially interdependent. The expectancy from this part of your market research is that it will help you to decide the position of your goods or services in the marketplace, and your pricing policy for them. Invariably you may find that you have a combination of products or prices appropriate to different sectors of the marketplace. This leads us conveniently into the next section which is concerned with the different segments which occur within an overall market.

Market segmentation

Market segmentation is best described as the process of analysing the demand for particular goods or services, breaking them down into distinctive segments and then identifying the characteristics of each segment to produce a marketing plan for that particular segment. In more simple terms, we are trying to identify the various groups or types of customers that share similar patterns of demand, to which we will be attempting to sell our goods or services, and then to target our sales effort towards those groups. This process is most easily illustrated by the following case study.

Case Study

Ivor Mop is in the process of setting up a contract cleaning business. He has identified four basic types of client who will provide the bulk of his business (Figure 9.1) and the specific characteristics of these clients in terms of their types of service, quality and price motivation, relative profit margins and percentages of the total expected business. As a result of this process he has established a combination of client-types which give him a balanced combination of regular high-value but low-profit contracts as his ‘bread and butter’ business, tempered with less regular but very profitable special work. His marketing plan can be set up to target the needs of each of these four segments. He knows that for large local authorities and school contracts he must be competitive on price whilst meeting prescribed standards of cleanliness. For office-based private companies price is still relevant, but reliability and quality of service are most important. Private individuals are willing to pay more for quality service coupled with flexibility, but they still expect value for money. Special deep-clean contracts are the most profitable, often resulting from pressure by local environmental health officers (EHOs), needing rapid response at inconvenient times. It would be hard to concentrate on this type of work as the core business because it is not sufficiently regular, but when it does arise it makes a very healthy contribution to profit margins and complements the less profitable but more regular core business that forms the bulk of Ivor's sales turnover.

The process of identifying market segments allows you to select those that are worthy of the most effort and investment, based on the potential returns that they offer. Each segment will require a different approach in terms of the marketing mix, as described in the case study. Segmentation can be based on a number of differing factors including customer needs, location, potential contribution or profit, age, sex or social status, buying habits, or simple points of common interest. These can be prioritized in various ways, in terms of the number of customers in each segment, the relative profitability of each segment, their location or accessibility or the amount of time and investment required to generate business. Once the factors have been prioritized, we can then start to formulate our marketing mixes to target the individual segments, to address those priorities.

Image

Figure 9.1 Market segmentation example

The marketing plan

The marketing plan for any product or service is concerned with formulating the right mixture of characteristics of the product and the way in which it is supplied and presented, so as to maximize its value and interest to the target groups of customers which have been identified within the market research process. To explain this more simply, let us take the Ivor Mop case study from the previous section. Ivor has identified catering kitchens as a potential market segment for his services. His marketing mix for that service will involve specifying the type of service (deep-cleaning of kitchens in preparation for, or in response to, environmental health inspections), the way in which it is delivered (response at short notice, working overnight and at weekends) and the key selling points (minimum disruption to working activities), which justify the premium price and high profit margin. His promotional activities will involve the direct targeting of customers by trade journal adverts, mail shots and by sales appointments with local potential clients, and the EHOs who inspect them.

Traditional marketing theory expounds the four key elements of the marketing mix as being Product, Price, Promotion and Place, although it has been argued (Broome and Bitner, 1981) that for service industries People, Process and Physical aspects should also be considered. The idea is that for each product or service being offered, there is an appropriate combination of these factors that will optimize the sales potential to the respective market segments. Where a product or service is relevant to more than one segment, then the components of the marketing mix will be modified accordingly to match the needs of the respective segments. In reality, it is a commonsense problem-solving process applied to the needs of marketing, the value of which is acknowledged by the fact that it has been in use without challenge or major modification, for many years.

Product

The product element of the marketing mix is essentially concerned with the customers’ perceptions and expectations of the goods or services, and covers a broad variety of aspects. There is the basic quality of the product, its durability and whether or not it will be fit for the purpose for which it was acquired. Linked to this are the aspects of warranty and after sales service in the event of there being faults or problems with the quality. The product may be of a very satisfactory or high quality, but there is also the question of its perception by the customer as giving value for money, i.e. does the quality correspond to the cost. If the quality is seen as being low compared with the cost, it will constitute poor value for money; but if it is perceived as being high in relation to cost, it will be good value for money. This aspect becomes particularly significant at times when money is tight, at the lower or utility end of the market, and when there is an abundance of competitors’ products around. Also related to value for money are the range of applications or uses of the product, i.e. the uniqueness or relative usefulness of the goods or services. A good illustration of this is the range of gadgets or extras that is offered with goods such as food processors and electric drills to make them appear more versatile than competitors’ tools.

The product part of the marketing mix is not just concerned with the quality and utility of the goods or services, it must also consider aspects of style and appearance as perceived by the potential customer. In particular the packaging and presentation, the brand name and the image it creates, and again the uniqueness of the product. This is especially true in premium markets where the image and uniqueness, often coupled with restricted outlets or supply, can attract status value to the product, with commensurately higher prices and profit margins. This is precisely why you cannot buy Versace clothes in the local Co-op or Gucci handbags in Woolworths.

Price

In practical terms, price is concerned with finding out how much we can charge for the goods or services to maximize profit margins without reducing the level of sales volume. Again this is a matter of customer perception, as we need to consider the price level in terms of value for money, and the price level in terms of competitors’ products and prices. We may be able to charge a higher price than our competitors if the customers perceive the quality and value for money of our products to be substantially better than the competition. But the lower the differential between the products, then the lower the price difference must be. We may in fact choose to undercut the competition to buy market share through increased sales. However, such a move can also adversely affect sales, in that a substantially lower price may encourage the customers to infer that the products are in some way inferior to those supplied by competitors.

When formulating the pricing policy of the product we must also consider aspects of discounts, credit terms and payment terms, particularly if we are distributing via a wholesale and/or retailer network. If favourable, the terms and discounts can act as substantial incentives to stock or promote our products. Conversely, if poor, the terms and discounts may be a disincentive to sell the product, or result in the vendor selling it at an unfavourable price compared with competitors’ goods. After all, the wholesalers and retailers are as much concerned with their profit margins as we are with our own.

Place

The place aspect of the marketing mix is not just concerned with establishing where the customers can obtain the goods or services. It is important to define the geographical areas in which the business will operate and, within those areas, outlets and their locations can be specified. Place is also about establishing and defining distribution channels, e.g. via wholesaler or retailer networks, by direct supply and delivery, by mail order etc. The choice of distribution channels will also have implications for the availability of the products, in terms of transport and supply lines, stock levels and inventories etc., which raises a number of further questions. Will you be supplying retailers through regular weekly deliveries, enabling them to hold relatively low stocks, or perhaps monthly where stock-holding will need to be higher, with consequential implications for the payment terms of your distributors? Will you choose to operate on a reduced profit margin to enable you to use wholesalers who will hold regional stocks for the retailers, thus reducing your own distribution costs? Will you be allocating exclusive sales areas to your distributors, or will they be competing against each other?

Promotion

Promotion encompasses the whole range of sales and advertising activities that could be employed. You may decide to employ a sales force to carry out direct personal selling to your potential customers. Alternatively, this work could be carried out by sales agents, or by sales staff employed by your distributors. The latter may be cheaper for you, but will it be as effective, as those same sales people may also be selling competitors’ products.

The promotion part of the marketing mix also involves identifying the appropriate forms of advertising your goods or services, whether it be through national television, local radio, newspapers and magazines, specialist trade journals, mail shots, advertising hoardings, tethered balloons, Yellow Pages, exhibitions, trade fairs, county shows, telesales calls, sealed tenders for contracts or a stall in the local market. Not only must you identify the most suitable forms of advertising, you must also select those which are the most affordable and which are likely to give you the best return on your investment. Word of mouth recommendation is a very cheap and superb form of promotion, but it is both slow and outside your control, and so cannot be relied upon to produce results. In contrast, trade fairs and exhibitions are expensive and time-consuming, but if chosen carefully, they can offer a captive audience with a potentially high level of interest in your products, and a good chance of achieving immediate orders.

Another aspect linked to advertising is the use of special offers or sales promotions to generate interest in your products and to persuade potential customers to try them. We see this used frequently in supermarkets where new products are launched on the basis of ‘buy one and get one free’ bargains, or tasting sessions for food items accompanied by money-off vouchers. Obviously, these methods are not appropriate to every form of goods or services, so the promotional activity must be designed to match the product. Beauty and therapy treatments are often offered on a ‘five for the cost of four treatments’ basis. Gyms and fitness clubs offer discounts for annual membership to encourage regular patronage, magazines offer discounts for prepaid subscriptions, etc. Breweries offer publicans large discounts for bulk purchases in advance of the busy Christmas period, to ease delivery problems. Effective promotion is all about finding out what appeals to your particular customers and then using a little imagination to trigger their interest in your product.

People

Where services as opposed to physical goods are being supplied, then people become a more important element, particularly in terms of the image that they project to the prospective customers. This is not just a question of the impressions created by dress or physical appearance; it applies to knowledge and behavioural aspects of the interaction with customers. We are talking about technical knowledge of products and services which can create (or, if absent, can destroy) customer confidence. It is also about the attitude shown to customers in terms of behaviour, e.g. friendliness of reception staff, helpfulness of sales staff, a positive interest shown in solving customer problems, etc., and in building long-term customer-client relationships, which together reflect the overall culture of the business.

Physical

The physical aspects include the sales environment and, in particular, the impression created by the parts of the premises seen by the customers. Is the reception area clean and tidy, and tastefully decorated, or are the furnishings tatty and the space cluttered? Does the organization project an image of being well organized and professional? If you are in doubt about your premises, ask yourself the question, ‘How would I feel about walking into this environment if it belonged to one of my suppliers? Would I feel comfortable, embarrassed or downright disgusted?’

Process

The process part of the marketing mix is related to the general provision of quality products and customer service. It involves ensuring that company policies and procedures are conducive to meeting the customers’ needs and to providing smooth provision of service to consistent standards. It can relate, for example, to the discretion given to employees to apply flexibility or to modify procedures in order to assist customers, or it can relate to involving customers in product development, or in seeking ways to improve the standards of service.

The sales plan

Sales activities

The promotion section of the marketing mix should provide the basic structure for determining the methods of sales activity which will be employed according to which are the most appropriate for reaching the customer target groups. Typically this would include a combination of several of the following:

   Cold-calling by telephone. This is basically a numbers game, with large numbers of contacts, at relatively low unit cost, but usually resulting in quite a low rate of positive interest or response, even when the targeted calls have been carefully selected. The normal approach is to try to identify categories of businesses that might possibly be interested in the product (often from Yellow Pages or Thomson Local), and then to make telephone contact to find the appropriate person or decision-maker within those organizations. In recent years the double glazing industry has given this type of sales activity a bad name and, of course, the results largely depend on the skills of the individuals who are making the calls being both competent at doing the job and being able to talk convincingly about the product if they get through to the right person. To achieve positive indications of interest from 5–10 per cent of those called upon would generally be regarded as very good, and typically to convert 10 per cent of those into an actual sale would also be very good.

   Mail shots, like cold telephone calls, have seriously declined in value in recent years, simply due to the sheer proliferation of junk mail that falls through our letterboxes just about every day of the year. Personally speaking, I just throw circulars and all junk mail straight in the bin with no more than a cursory glance, and any obvious circular remains unopened in the envelope. Circulars containing personalized letters are read to the bottom of the first paragraph at least (unless they bear insurance company logos) to determine any relevance or usefulness, before being discarded. Sadly though, the amount of money uselessly wasted every day on postage and printing is vast, and all too often occurs because business owners are too lazy to take a more proactive attitude towards other methods of sales or promotion.

   Cold-call visits are much more time-consuming and costly, and therefore need to be carefully planned to avoid wasted effort by calling on the wrong type of customer. They also need to be well organized to minimize the cost of travelling between calls and to optimize the use of the sales person's time. For this reason a good sales person will often use calls for information gathering, for future reference. For example, Mr Dai Appy is a salesman employed to sell farming products in rural Wales, where distances between customers are long. If he has two positive sales appointments in a particular area, then he will use the rest of the day to make a number of cold calls on other local farmers. This serves three purposes by maintaining the profile of his company through regular contact, seeking information about future possible needs which will lead to subsequent sales, and making new contacts which can be followed up at a later date. Cold-calling, then, is more of a longer-term sales activity best used to complement other sales effort. It is not the easiest thing to do, and takes time and practice and quite a bit of nerve to do well, which is why many people dislike doing it. However, as a long-term process it can produce positive results.

   Planned sales activity involves a combination of the previous methods, and constitutes a much more professional approach, resulting in better use of time and a higher proportion of positive results. For example, a cold telephone call might be used to do no more than find the name of the key person or decision-maker in an organization. This is followed by a short and concise personal letter of no more than one page which outlines the products or services offered, and tells the key person that they will be contacted within a few days to request an appointment for the sales person to meet them. After that it is down to the skill of the sales person and the quality of goods or services on offer.

   National or regional television or local radio advertising is relatively expensive but does guarantee coverage of a wider audience. National television is excellent for consumer products, but highly expensive. Local radio stations are cheaper, but with less coverage, although they always seem to do quite well in promoting regional events.

   The national press is again expensive and often too broad to be of value to many businesses, although the travel industry seems to find it productive. Local papers are good for local products and particularly local services, and are more reasonably priced. Most specialist products or services are advertised in trade journals or magazines where the cost is justified by the readership which will have been identified as a potential customer group.

Sales skills

For a new or aspiring owner-manager with no previous sales experience the most daunting prospect is that of having to sell their goods or services. Selling is a skill that has to be learnt and practised if it is to achieve good results on a regular basis. The biggest mistake that most new sales people make is to try to push and sell the range of products in their portfolio, whereas someone with more experience will listen carefully to clients, and probe to identify their specific problems and needs. Only then are the products revealed, and in such a way that they offer potential solutions to the customer's needs. A Dexion salesman once told me: ‘I sell solutions to problems, not storage and materials handling systems.’ It is important to sell on quality and benefits rather than on lowest price. If nothing else, there is then still scope to negotiate on price at a later stage, but if a competitor beats you on both price and quality, you are out of the running.

It is also important to be open and honest with the client, to retain both credibility and the opportunity of returning at a later date. Do not promise what you cannot deliver, and do not be afraid to say if you cannot meet the client's requirements on this occasion. Buyers are as much professionals as sales people, and they not only appreciate an honest answer which saves their valuable time, but they will usually be receptive to a later approach when your product might be the real answer to their problem.

Many people who are new to sales find it hard or embarrassing to close the deal, or to actually ask the client for an order. In fact some buyers will make a point of waiting to be asked before committing themselves, particularly with young or new sales people. If you are uncomfortable about asking outright ‘Can I take your order today?’, then try ‘When can I expect to receive your order?’ or When would you like us to deliver?’ Another approach is to ask the question ‘Can you see any reason why our products will not meet your needs?’ If a reason is given then you have an open opportunity to answer and overcome it. If the client has no objections then you have a direct lead into ask for the order.

Finally remember that not all business is good business, so do not be afraid to walk away from a contract or a sale if you are not happy about the terms of trade or your potential profit margins. You deserve to make a reasonable profit just as much as do the people to whom you are selling, and most professional buyers appreciate this fact. The sale should be treated as a potential starting point for a longer-term customer–supplier relationship, and as such needs to be established on equitable terms, so do not sell yourself or your business short.

Setting targets and measuring achievement

The sales plan is about defining the range and combination of promotional activities that will be employed to persuade customers to buy the products. The hardest part however, is actually setting targets for sales volumes and revenues. If the market research has been done properly, then there should be some positive indications as to the overall size of the market and the potential volume that can be achieved within that market. The next problem is to try and identify how much of that potential volume could realistically be achieved. This may be influenced not just by sales capacity, but by restrictions imposed by the capacity of production and/or distribution facilities, or the time available for the provision of a service. For example, a consultancy firm employing three staff may be able to offer up to 120 hours of service per month per member of staff, an overall total of 4320 hours per annum, but it could not meet a contract requiring 2500 hours of work in just a three month period.

Element A5.4 of the NVQ Level 3 Business Planning is concerned with specifying how the success of the marketing and sales plans will be assessed, and there are a number of ways in which this can be achieved, providing some very useful and usable results and information:

   In preparing the budgetary plan for the business, certain sales volumes will have to have been identified and formulated. These in effect constitute targets against which actual performance can be monitored on a month by month basis.

   The budgetary plan itself constitutes a summary of sales revenue targets which, again, can be monitored on a monthly basis.

   The budget will also include forecasts of expenditure for advertising and promotion. How does the actual expenditure compare with those forecasts? When expenditure has occurred, has it resulted in the expected increases in sales that it was designed to generate?

   What sort of response rates are you receiving from sales activities, e.g. in terms of the numbers of enquiries generated by each advertisement and the numbers of those that were converted in actual sales. Similarly, you can measure the response rates and achievement rates for cold telephone calls, cold sales calls, planned sales visits, mail shots, etc. If you had actually set targets for these beforehand you may well want to compare the targets and the outcomes, probably using the results to set more realistic targets for the coming year. If not, then you will now have the data to enable you to set targets for the future.

   From your expenditure figures, you can calculate the relative costs of different sales activities, cold calls, telesales, mail shots and various forms of advertising. The figures showing response rates and rates of conversion into sales can then be applied to these various activities to identify, for example, the cost per enquiry for each advertisement or the cost of each sale resulting from cold calling.

   Finally, the relative costs of the various sales activities can be compared with the revenues generated, to determine the most cost-effective methods, which will then feed into your marketing and sales plans for the forthcoming year.

References

Broome, B. H. and Bitner, M. J. (1981). Marketing Strategies and Organizational Structures for Service Firms. In Donnolly, J. and George, W. R. (eds). Marketing of Services. American Marketing Association.

Stokes, D. (1998). Small Business Management: A Case Study Approach. Letts.

Further reading

Institute of Management (1995). Preparing a Marketing Plan. IoM.

Lancaster, G. and Reynolds, P. (1995). Marketing. IoM and Butterworth-Heinemann.

Macdonald, M. H. B. (1995). Marketing Plans: How to Prepare Them and How to Use Them. Butterworth-Heinemann.

Robinson, T. (1999). You and your Business: Marketing. SFEDI.

Sowter, C. V. (1995). Marketing for the Non-Marketing Manager. McGraw Hill.

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