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Full Project – THE EFFECT OF PERSONAL SELLING ON SALES PERFORMANCE OF INDUSTRIAL GOODS (A CASE STUDY OF FLOUR MILL MIG PLC)

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THE EFFECT OF PERSONAL SELLING ON SALES PERFORMANCE OF INDUSTRIAL GOODS

(A CASE STUDY OF FLOUR MILL MIG PLC)

CHAPTER ONE

INTRODUCTION

BACKGROUND TO THE STUDY

In contrast to advertising and publicity, which use impersonal methods of communication, personal selling makes use of direct personal communications to influence the target customer or organizational buyers. Personal selling is a highly distinctive method of promotion, and makes use of oral presentation in conversation with existing and potential organizational buyers, for the purpose of making a sale. It is one of the oldest methods of business promotion. Marketing’s early development in regards to Personal Selling started from Town economy, Agricultural Middlemen, Bagman, Yankee Peddler, Wagon Peddler, Greeters, Drummers, and Credit Investigators. Falvey, (1945) says that things were different in the 1890’s, but people still bought from people (not from companies) and the salesmen’s ability to produce now business, develop new markets, introduce new products and find new organizational buyers was as necessary then as it is today. The contributions made by personal selling in making the promotion function more effective have earned it the distinction of being the most reliable promotion method. (Greening, 1993)

Though, it is the most expensive method of promotion, yet we see an increasing number of firms making use of it, and a good number of them realize that they cannot, perhaps, live without it. Increasing competition, and the growing sophistication of the buyer and his/her buying process, is making personal selling more or less indispensable. (Sanyaolu, 1999) Thus personal selling has been noted to be the most suitable for the sales of industrial goods which are mostly bought by organizational buyers. Sales promotion is the only method that makes use of incentives to complete the push-pull promotional strategy of motivating the sales force, the dealer and the consumer in transacting a sale. Personal selling is defined as ‘Oral presentation in a conversation with or more prospective purchasers for the purpose of making sales’. Personal selling, as the name implies, is an individual selling. It, therefore, carries the distinctive advantage of flexibility in terms of tailoring the sales presentation to the needs of the buyer. Another unique advantage comes from its two-way communication and human interaction, thereby providing instant feedback. These two unique advantages make personal selling the most result-oriented promotion method.

Generally speaking, the nature of goods marketed, as well as the distribution system adopted; determine the role of personal selling in a firm. Personal selling is used extensively in the case of industrial goods, where the salesperson performs functions such as assisting the customer in designing the product specifications, product installation, product commissioning, solving technical problems through providing service after sales and helping the customer to have optimal utilization of the product. (Davies, 1995)

In the case of consumer goods, on the other hand, the role of personal selling gets usually restricted to the dealer level. The scope of the tasks performed include obtaining periodic orders, ensuring supplies, offering tips to dealers on product display and attaining desired levels of stock movement. Similarly, the role played by personal selling is more in a firm, which uses the door-to-door selling method through its sale force than in the firm, which sells through large stockiest, distributors or sole-selling agents.

The economic realities of Nigeria over the years have exposed the marketers to serious problems. It is an open fact that industrial products represent the source of other products, most especially the consumer products. It is also indisputable that although advertising, sales promotions and publicity play an important role in the industrial promotional mix, but personal selling serves as the main selling instrument. It is no gainsaying therefore, that the level of success of an industrial market depends largely on how effective the selling efforts are. This prominent position occupied by personal selling can be easily understood since while the other marketing communication elements such as advertising, sales promotion, and publicity create awareness and knowledge for a company’s product, the onus is on personal selling to convince the potential consumer through person to person interaction to develop a lone for its product in preference to other competing ones and see to it that the consumer parts with his money for the company’s product. (Martins, 1996) This research work examines the impact of personal selling on the sales performance of industrial goods selecting Flourmill Plc among other manufacturers of industrial products as a case study.

STATEMENT OF THE PROBLEM

Personal selling is the interpersonal arm of the promotion mix. Sales people represent the company to the organizational buyer and act as an intermediary linking the organizational buyer to the company. The bulk of the selling activities of any industrial products rest comparatively on the company’s sales force much more than is the case with consumer products. This is so because with the latter the consumer has already realized the need for such a product and all the needs for the product may not have been known to him. It may therefore require skilled sales personnel as well as sophisticated equipment for visual displays and practical demonstration to convince the potential organizational buyers the need for the product.

Due to the fact that manufacturers of industrial goods are not efficiently practicing the elements of personal selling and following the selling process affected the level of sales, sales objectives and the sales forecast of manufacturers. This study investigates the effects of personal selling on sales performance of industrial goods

OBJECTIVES OF THE STUDY

The broad objective of this study is to examine the effect of personal selling on the sales performance of industrial goods. The specific objectives of this study are centered on the following:

To determine the relationship between personal selling and sales performance of industrial goods.
To examine the effect of personal selling on the sales performance of industrial goods.
To identify factors that can contribute to personal selling as it relates to the sales performance of industrial goods.

RESEARCH QUESTIONS

The following are questions that will be used as basis for analyzing the marketing impact of personal selling on the sales performance of industrial goods.

What is the existing relationship between personal selling and sales performance of industrial goods?
What is the significant effect of personal selling on the sales performance of industrial goods?
What are the factors that can contribute to personal selling as it relates to the sales performance of industrial goods?

SIGNIFICANCE OF THE STUDY

It is expressed that at the completion of this study, it will be of significance and will prove to be of immense benefit to sales managers, production managers of the industrial products in general and especially the industrial flour, which normally should be interested in the suggestions towards improved efficiency of its sale force and consequently greater sales results. Since that industrial goods are the major items needed to produce any other type of product or service then a research of this sort is relevant towards examining the success of the sales performance of industrial goods.

The finding and recommendations of this research work will emerge from our study on the effect of personal selling on the sales performance of industrial products.

JUSTIFICATION OF THE STUDY

Personal Selling is extremely important as it helps in increasing sales. But there are other features as well which make it important. The rationalization of a study of this magnitude is related to the importance of personal selling from the point of view of manufactures as well as consumers. From manufacturer’s point of view it creates demand for products both new as well as existing ones. It leads to product improvement. While selling personally the seller gets acquainted with the choice and demands of organizational buyers and makes suggestions accordingly to the manufacturer. From organizational buyer’s point of view Personal selling provides an opportunity to the consumers to know about new products introduced in the market. Thus, it informs and educates the consumers about new products. It is because of personal selling that organizational buyers come to know about the use of new products.

SCOPE OF STUDY

This focus of the study is the impact of personal selling on the sales performance of industrial goods. A case study of Flour Mills Nigeria Plc, Lagos.

DEFINITION OF TERMS

Personal selling: this involves oral conversations, either by telephone or face-to-face, between salespersons and prospective customers.
Sales performance: this is used to determine the ability of sales person to close the deal with the organizational buyer and meet set performance goals as outlined by the company.
Industrial goods: These are raw materials, equipment, or product components that are required by a manufacturer for the production or distribution of finished goods or services.
Organizational buyers’ behaviour: The total manner of response displayed by organizational buyers in the process of acquiring goods and services for consumption.

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