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THE EFFECTIVENESS OF PERSONAL SELLING STRATEGIES IN MARKETING OF CAPITAL GOODS

CHAPTER ONE
INTRODUCTION

1.1     BACKGROUND OF THE STUDY

According to L.A. Rogers (1980) personal selling has become one of the vital promotional tools in marketing.  He further buttresed the above proposition by stipulating that after all the theorists, planners must have had their moment and the predicaments associated with production, finance and labour have been resolved, then someone has to go out and knock at someone’s door and sell.

This revelation is apparently acceptable because a product cannot be produced at Enugu and is not available in place like Lagos where such product is highly needed.  This is the significance behind the notion of sales contention that, they should investigate into the needs of consumers as well as filling them with satisfaction and maximize profit objectives.

A critical analysis of the above statement highlights the importance of the effectiveness of personal selling on the marketing of capital goods.  A product may be of extremely high grade bu8t has no utility until it gets to the hands of prospective buyers, and the most appropriate route for passing products from manufacturing arena to the hands of potential buyers happens to be through personal selling.

Personal selling is dynamic, flexible and volatile.  Traditionally, it is mainly associated with commercial transactions which has passed through distinct eras that are characterized as, the eras of the early traders – the American peddlers and the era of the professional sales people.  The early traders exist in most ancient cities.  Some of these earliest states based the primary portion of their nomies on trading with other communities.  Trades typically have the ownership of the goods being sold, manufactured either by themselves or their immediate families.  At times, they perform their marketing functions like, transportation, and storage, in addition to selling obligations.

The American peddlers of the colonial era enable them sell their goods to the then settlers.  Most of these settlers were immigrants who view their respective jobs as one of the available means of getting a fresh start in a new country.  Professional selling started shortly after the World War II.  Under this seen, the economy switched from the previsions situation of sellers’ market to that of buyers’ market in which goods were plentiful in supply.  Due to the industrial revolution of the 17th century which encourage the birth of a number of new companies of which capital goods companies were among.

The companies had varieties of products with moderate qualities. A s at the said era, many industries operated under the philosophy “that the customers will buy any product provided it can be supplied” goods had to be marketed mainly for the facts that consumers now have choices and the selling adopted a radical change to reject this new seen.

MB Anamco is a global and also a franchising company whose head quarter is a Germany with its subsidiary manufacturing plant located at Emene Industrial Layout here in Enugu State.  It started its operation around 1980.  As the company began to experience increase in productivity and sales volumes, it started opening sales branches in different states of the country.  It has been a leading firm in the motor industry with transparent image.

Anambra Motor Company at its inception was not hing but a mere motor assembly plant, but the prevailing situation with the company has changed drastically from a mere assembly plant to a manufacturing company.

The progress and high demanded of the product is a partial brain behind the company’s elevation in product capacity in previous years, and this also created rooms for the absorption of more workers in the divergent department, thus helped to reduce the high rate of social menace that would have associated the situation of mess unemployment.

However, the aforementioned company, which hit her to had attained the peak in the motor manufacturing industry, has started experiencing a divindling ground in its sales volume and market share.  According to an insider, this experience is accounted for by a number of recent, developments. Some of era, the incessant increase in the number of companies currently involved in the manufacturing and sales of different cars, buses, truck, etc, and besides the increase and efficient application of the divergent promotional tools.

Thus, the management of Anamco is not skeptical regarding the wonders of personal selling in the marketing of capital goods and that this promo tool could only justify its wonders in capital goods marketing, only when it is effective to this end, the management is interested in knowing of the sales force is effective or otherwise.  This is the core of the study.

1.2 STATEMENT OF THE PROBLEMS

The reason for the low sales volumes leading to other serious problems like reduced profitability, low market share, and reduction in the rate of promotion as well as that of employemtn is still unknown to the management of the company.  However, the company’s management is seriously questioning the effectiveness of the sales force.

THE SPECIFIC PROBLEMS TO BE ADDRESSED ARE:

-              Is the ratio of sales to sales call high or low?

-              Is the ratio of sales expense to sales volumes high or low?

1.3 OBJECTIVES OF THE STUDY

Whatever the nature and structure of an organization, personal selling has been acknowledge as the bedrock of its success over cutthroat competition.  Thus enabling the company to generate more foods for its operations.

The aforementioned fact is the primary reason behind the huge amount budget on regular bases into the sales departments.  To this end, the objectives of the study are:

-              To verify of the ratio of sales expense to sales volume is high or low to warrant further budget into the activities of the sales force.

-              To see what can be done by management to change a situation of high cost of sales returns

-              To determine whether the ratio of sales calls to sales volume s is high or low.

1.4 FORMULATION OF HYPOTHESIS

This study is meant to verify the effectiveness of personal selling in the marketing of industrial (capital) goods.  To this regards the following hypothesis are formulated:

H01:   The ratio of sales expense to sales volumes is not high

H02:   The ratio of sales calls to sales volumes is high

H03:   There is a low ratio between current and past performance.

1.5 SIGNIFICANCE OF THE STUDY

According to the public relations management of Anamco in Enugu office, the company has been and will continue to demonstrate its corporate and social responsibilities.  This is in justification with Brown’s Contention of (1974).  He said if a company is to continue ensuring its consumers patronage, that it has no other alternative than the maintenance of a clear cut competitive advantage, and managing the marketing mix in a manner that will ensure continuous customers’ satisfaction.  Mercedes Benz Anamco has been and will continue to strive harder in the area of corporate social responsibilities.

TO THIS REGARD, THE SIGNFICANCE OF THIS STUDY IS TO FULFILL THE FOLLOWING

-              Make recommendation to the management of Anamco based on how to overcome the problems of low sales volume as well as that of high sales expenses to sales volume ratios.

-              It is also the primary view of the researcher that both current as well as potential researchers will finds this work of utmost importance with regard to directing and facilitating the bearing and solution to their problems.

-              The study will also be of help to other companies in the same industry with Anamco in their strife’s to surmount low sales volumes and profitability.

1.6 SCOPE OF THE STUDY

The scope of this study is very wide of it has to be carried out in all branches and all the departments in Nigeria.  Thus, the study will cover only members of the sales departments, cost accounting sections as well as some members in the financial sector in Enugu State, which is located in the eastern part of the country.  The findings may not reflect the situation in the whole branches, but by and large, what happens in Anamco Enugu can be said to apply to Lagos branches and others.

1.7 DEFINITION OF TERMS

MARKETING:                Marketing is defined as, a societal process by which individuals and groups obtain what they want and need through creating, offering and freely exchanging products of value with others.

PROMOTIONAL TOOLS:         Promotional tools include all activities or strategies involved in communicating with a target market of audience.  It seeks to inform, educate, persuade and influence the target audience.  These messages could be sent through advertising, personal public relations (the promo tools).

PERSONAL SELLING:   Personal selling is a face to face presentation of sales.  It is a personal contact between the seller and the buyer for the purpose of making a sale.  It is characterized by verbal exchange, gesture which allows for flexibility and adjustment of messages to suit buyers needs, interest and reactions.

CAPITAL (INDUSTRIAL) GOOD:Capital goods are those goods that are technical in nature which is purchased on the basis of specifications for production of other goods or rendering further services.

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