Impact Of Personal Selling On Sales Volume Of An Organization (Case Study Of Selected Small Scale Shop In Afikpo, Ebonyi State)

Project and Seminar Material for Marketing

Abstract

The study was carried out to assess the impact of personal selling on sales volume of an organization using a case study of selected small scale shop in Afikpo, Ebonyi State. This study made use of a descriptive research design and survey research method. The population of study comprised of owners and workers in small scale shops in Afikpo, Ebonyi State. The research instrument that was used for this study is a questionnaire. The data obtained for this study were analyzed using both descriptive and inferential statistics. The findings in this research work discovered are stated below; a significant relationship exists between personal selling and sales performance of industrial goods this is based on the result of the correlation analysis which presented as r being equals to 0.874 which is greater than 0; The major steps of the personal selling process employed are preparation, prospecting, pre-approach, the approach, sales presentation, handling objections, closing the sales and post-sale follow up; This study asserts further that 62.5% of total variations in the sales performance of industrial goods are explained by the personal selling; This study concludes that personal selling has an effect on the sales performance of industrial goods. In conclusion, it is worthy of note that personal selling amongst other promotional tools is the most appropriate for small scale shops due to the complexity of the goods. Therefore when organizations make use of personal selling it will affect the sales volume of small scale shops. There is a need for organizations to manage their sales force in order to allow for personal selling to make an effect on the sales value of the organization.

Table of Content

Chapter One

1.0 Introduction

1.1 Background to the Study
1.2 Statement of the Problem
1.3 Objectives of the Study
1.4 Research Question
1.5 Research Hypothesis
1.6 Significance of the Study
1.7 Scope of Study
1.8 Limitation of the Study
1.9 Definition of Terms
1.10 Organisation of the Study

Chapter Two

2.0 Literature Review

2.1 Conceptual Framework
2.2 Personal Selling and Sales Performance
2.3 Difference Between Industrial and Consumer Goods
2.4 Procedure and Stages of Personal Selling
2.5 The Role of Personal Selling to Organizations
2.6 Personal Selling and the Marketing Mix
2.6.1 Product
2.6.2 Price
2.6.3 Promotion
2.6.4 Place: (Distribution)
2.7 The Selling Process
2.7.1 Preparation
2.7.2 Prospecting
2.7.3 Pre-Approach
2.7.4 Approach
2.7.5 Sales Presentation
2.7.6 Handling Objections
2.7.7 Closing The Sale
2.7.8 Post-Sale Follow-Up
2.8 Factors Influencing the Effectiveness of Personal Selling on the Sales Performance
2.8.1 Designing Sales Force Strategy And Structure
2.8.2 Recruitment and Selection of the Sales Force
2.8.3 Training the Sales Force
2.8.4 Remunerating and Motivating the Sales Force.
2.8.5 Supervising Salespeople
2.8.6 Evaluating Salespeople
2.9 Theoretical Framework
2.9.1 Aidas Theory
2.9.2 Game Pricing Theory

Chapter Three

3.0 Research Methodology

3.1 Research Design
3.2 Population
3.3 Sample and Sampling Technique
3.4 Instrument for Data Collection
3.5 Validity of the Instrument
3.6 Reliability of the Instrument
3.7 Method of Data Collection
3.8 Data Analysis

Chapter Four

4.0 Results and Discussion

4.1 Result
4.2 Discussion

Chapter Five

5.0 Summary, Conclusion and Recommendation

5.1 Summary
5.2 Conclusion
5.3 Recommendation
References
Appendix

Chapter One

1.0 Introduction

1.1 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).

Personal selling is a presentation by the firms’ sales force for the purpose of matching, sales and building customer relationship (Kotler and Armstrong, 2010). The need for personal selling activities has increased because of stiff competition, widening of market, changes in tastes of customers and technology, increasing customer relationship and sales volume of the firm. Through personal selling, banks representatives explain to their clients/customers how well the services they are selling can satisfy their needs.

They give their clients opportunity to make more enquiries about their services. This assists them to match their needs and the services. Banks representative (marketing officers) informs customers of new products / services and explain to them how best they can use these products. Personal selling equally assists banks to increase their sales and expand the market by identifying new customer, retaining old customers and persuading them to buy the firms product.

Olumoko et al (2012) a product that is well conceived and produced through the combination of most modern technologies and the best of inputs cannot sell itself. There is the need for the existence of such product to be made known to the target market. A good or service should respond favorably to the marketing mix which will result to the full performance of any good or service in the market. However, an important element of the marketing mix is promotion, otherwise known as marketing communication. This is an element that brings the existence of product or service to the awareness of consumers or clients. It further educates both potential and actual buyer of a product on the usage, benefits, availability, price and other features of the particular product.

Several studies agreed that personal selling has influence on sales. For instance, Akinyi (2011) carried out a research and affirmed that personal selling had effect on sales which turned out to be different from the study of Musyoki (2009) who justified there is no significant difference effect on sales. However, the difference may have been caused by geographical difference as Akinyi carried out her research in rural setting while Musyoki carried out research in town setting. Akinyi’s finding was consistent with Kivuva (2003) that, those products which are on personal selling tend to have more demand than those which do not. Due to differences in findings that might be traced to locations and unite of analysis. Thus, researcher needs to find out if personal selling can have influence on sales among distributor outlets in Nigeria context.

1.2 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

The hallmark of every business is to identify, anticipate and satisfy customers (Kings) need; maximize profit, possess competitive advantage; remain relevant in the marketplace. This can only be achieves through the adoption of personal selling in a firm’s operations. Personal selling plays a vital role of creating direct contacts and/ or interactions between customers and sellers/producers as well as enhances a firm’s productivity. Productivity is the act of enhancing customer relationship, customer retention and increase in sales volume of a firm. Personal selling is a process of assisting and persuading a prospective buyer to buy a product in face-to-face situation. It involves direct and personal contact between the seller and his representative with the prospective buyers. Personal selling enhances quick customer response, but it is quite time consuming and most expensive of all the promotional mix elements (Gupta and Khanta, 2003; Donaldson, 1995).

The need for the adoption of personal selling in the operations / activities of the banking industry cannot be underestimated. Personal selling remains a vital method to contact the prospective buyers personally and to persuade them to purchase a firm’s offerings. Banks can equally use personal selling to convenience customer about the quality of their services and the benefits thereof.Through personal selling, firm representatives explain to their clients/customers how well the services they are selling can satisfy their needs. They give their clients opportunity to make more enquiries about their services. This assists them to match their needs and the services. Banks representative (marketing officers) informs customers of new products / services and explain to them how best they can use these products. Personal selling equally assist banks to increase their sales and expand the market by identifying new customer, retaining old customers and persuading them to buy the firm’s product.

Personal selling is a presentation by the firm’s sales force for the purpose of matching, sales and building customer relationship (Kotler and Armstrong, 2010). The need for personal selling activities has increased because of stiff competition, widening of market, changes in tastes of customers and technology, increasing customer relationship and sales volume of the firm.

1.3 Objectives of the Study

The aim of this study is to assess the impact of personal selling on sales volume of an organization using a case study of selected small scale shop in Afikpo, Ebonyi State. Specifically, the objectives of the study include to;

To determine the relationship between personal selling and sales performance of small scale shop in Afikpo, Ebonyi State.
To examine the effect of personal selling on the sales volume of small scale shop in Afikpo, Ebonyi State.
To identify factors that can contribute to personal selling as it relates to the sales volume of small scale shop in Afikpo, Ebonyi State.

1.4 Research Question

The following research questions are formulated to guide this research:

What is the relationship between personal selling and sales performance of small scale shop in Afikpo, Ebonyi State?
What is the effect of personal selling on the sales volume of small scale shop in Afikpo, Ebonyi State?
What are factors that can contribute to personal selling as it relates to the sales volume of small scale shop in Afikpo, Ebonyi State?

1.5 Research Hypothesis

HO1 There is no significant relationship between personal selling and sales volume of small scale shop in Afikpo, Ebonyi State
HA1 There is a significant relationship between personal selling and sales volume of small scale shop in Afikpo, Ebonyi State

1.6 Significance 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 organizations as well as consumers. From firms’ 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.

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, 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 impact of personal selling on sales volume of an organization.

1.7 Scope of Study

This focus of the study is the impact of personal selling on sales volume of an organization. A case study of selected small scale shop in Afikpo, Ebonyi State.

1.8 Limitation of the Study

In the course of this study, the researcher encountered some limitations. There was unwillingness of respondents to fill the questionnaires. Some of the copies questionnaires were also reported missing and it was severally replaced and this affected the researcher negatively finance wise. Also, the researcher faced time constraints and had to combine the research with other academic activities and coursework.

1.9 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.

Buyers’ Behaviour:

The total manner of response displayed by organizational buyers in the process of acquiring goods and services for consumption.

1.10 Organisation of the Study

This study is organized into five chapters. Chapter one included the background of the study, research problem, research objectives and questions as well as limitation of the study. Chapter two contains the literature review. Chapter three includes the methodology and study area. Chapter Four contains the results and discussion of key findings of the study. Chapter Five finally looks at the summary, conclusions, and recommendations based on the findings.

Chapter Five

5.0 Summary, Conclusion And Recommendation

5.1 Summary

The study was carried out to assess the impact of personal selling on sales volume of an organization using a case study of selected small scale shop in Afikpo, Ebonyi State. The findings in this research work discovered are stated below;

A significant relationship exists between personal selling and sales performance of industrial goods this is based on the result of the correlation analysis which presented as r being equals to 0.874 which is greater than 0.
The major steps of the personal selling process employed are preparation, prospecting, pre-approach, the approach, sales presentation, handling objections, closing the sales and post-sale follow up.
This study asserts further that 62.5% of total variations in the sales performance of industrial goods are explained by the personal selling.
This study concludes that personal selling has an effect on the sales performance of industrial goods.

5.2 Conclusion

This study examines that the effect of personal selling on the sales volume of small scale shops. It is worthy of note that personal selling amongst other promotional tools is the most appropriate for small scale shops due to the complexity of the goods. Therefore when organizations make use of personal selling it will affect the sales volume of small scale shops. With the aid of literature that have been reviewed, empirical and statistical evidences, it is proven that personal selling relates and at the same time has a significant effect on sales performance of industrial goods.

Personal selling is an essential marketing tool in enhancing customer relationship, customer retention and increasing sales volume of a firm. Personal selling to a large extent creates awareness about a firm’s offering; stimulate demand of a firm’s offerings. Personal selling assist to identify, anticipate and satisfy their needs. It handles customers’ compliant and takes care of customers’ need. Personal selling educates and guides consumers so that they can make informed choice of the products/services which will best satisfy needs. Personal selling resolve/change negative attitudes of customer to positive ones. To a large extent personal selling persuade customers to purchase a firm’s products/services. Through personal selling customers making favourable decisions about a firm’s offerings.

5.3 Recommendation

Based on the findings of this study, the following are recommended;

Organizations should make use of personal selling in order to affect the sales volume of goods.
The sales of industrial goods appreciate when personal selling is employed by organizations.
There is a need for organizations to manage their sales force in order to allow for personal selling to make an effect on the sales value of the organization.
Organizations should endeavor to strictly follow the personal selling process so as to ensure that prospective industrial buyers are convinced and properly served in order for them to make purchase.

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