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V. Approach to Selling

This is your opportunity to express your philosophy toward sales. All businesses must sell - be it to other businesses, the government, or the general public. Your philosophy toward service, returns, promotion, and price will markedly affect your sales and, ultimately, your success as a business. Factors typically considered in the selling process are:

1. Overall Strategy and Approach.
   1. Major sales emphasis.
      1. Service.
      2. Price.
      3. Convenience.
      4. Philosophy concerning the customer.
2. Selling Tactics.
   1. Direct.
   2. Executive selling.
   3. Manufacturers' representatives.
   4. Distributors.
   5. Retailers.
      1. National chains.
      2. Regional chains.
      3. Independents.
      4. Mail order.
      5. Telemarketing.
3. Pricing Objectives.
   1. Profit oriented - Maximizes profit (practiced over a long time period). Look at total output rather than single items. Uses return on sales, percentage return on sales to net sales, or sales to net investment.
   2. Sales oriented - Percentage increase over previous periods. Might use a lower price to increase market share or to gain a foothold in the market.
   3. Status Quo - Uses price leadership with the leader stabilizing the price or competitive pricing where the others follow the leader.
   4. Market oriented.
      1. Skimming - Initially high price then lower price according to demand.
      2. Penetration - Lower initial price to gain a market share foothold then, once established, raise prices to meet competition.
      3. Premium - Price above competitive price if firm is able to differentiate its product/service as having higher quality, superior features, etc.
   5. Margin oriented - Cost and profit margins on each item are primary consideration.
4. Sales Terms and Conditions.
   1. Credit.
   2. Bad Debt.
   3. Returned Items.
   4. Complaints.
5. Merchandising - The attractive display of goods and services.
6. Channels of Distribution - Transferring the goods or services from the production location to the location of the final consumer.

Price Planning Template

Price Elasticity Analysis (xls, 166k)

Next Section - Production Process.

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