Sales Development and Merchandising - Report Example

Sales Development and Merchandising Stefan Nemski ID Number: Submitted: Gowher Malik Mont Rose Collage of Management and Sciences TABLE OF CONTENT EXECUTIVE SUMMARY 3 INTRODUCTION 4 LO1: UNDERSTAND ELEMENTS OF A PRODUCT IN A BUSINESS AND SERVICE CONTEXT 5 LO1/AC1.1. EVALUATION OF THE KEY COMPONENTS OF THE PRODUCT 5 LO1/AC1.2. ELEMENTS OF A PRODUCT 5 LO1/AC1.3. EFFECT OF MARKET SEGMENTATION ON SALES MAXIMIZATION 9 LO2: UNDERSTAND EXTERNAL SALES DEVELOPMENT TECHNIQUES 9 LO2/AC2.1. FACTORS AFFECTING BUYER BEHAVIOUR 9 LO2/AC 2.2 ASSESMENT OF APPROPRIATE ADVERTISING MEDIA FOR SALES DEVELOPMENT 14 LO2/AC:2.3 THE ROLE OF EXTERNAL MARCHANDISING IN MAXIMIZING CUSTOMER VOLUMES 16 LO3: UNDERSTAND THE TOOLS AND TECHNIQUES OF INTERNAL SALES PROMOTION AND MARCHANDISING 17 LO3/AC: 3.1 THE AFFECT OF DESIGN AND LAYOUT ON CUSTOMER SPEND 17 LO3/AC: 3.2 EVALUATION OF INTERNAL MARCHANDISING MATERIAL 18 LO3/AC: 3.3 EVALUATION OF DIFFERENT PROMOTIONAL ACTIVITIES ACCORDING TO DIFFERENT SCENARIOS 19 LO4: THE ROLE OF STAFF IN SALES 21 LO4/AC: 4.1 EVALUATION OF PERSONALSELLING TECHNIQUES 21 LO4/AC: 4.2 INFLUENCE OF OPERATIONAL DESIGN ON SALES REVENUE 22 LO4/AC: 4.3 KEY PRINCIPALS OF A SALES TRAINING PROGRAM 22 REFERENCES 25 EXECUTIVE SUMMARY The report is a research report describing the elements of a product and its importance in a business. The overall report helps in understanding of external sales development techniques, the importance of internal sales and merchandising, factors affecting buyer’s behavior and buyer’s decision making process, the importance of advertising and promotional activities and the importance of training and its components. The report is written in the context of hospitality industry therefore, the organization that is used to clearly discuss all the above stated features is Charlotte Street hotel North Soho, UK. In this report many real life examples are stated that are taken from Charlotte Street hotel to make the concepts more clear and simple. INTRODUCTION Charlotte Street Hotel is a comparatively young hotel, which was opened on 5th June 2000 and is located at 15 Charlotte Street, North Soho. The hotel was outlined by Kit Kemp, who intentionally needed the configuration of the inn to reflect dynamic contemporary London. The hotel has 52 rooms and the entire hotel and its spacious rooms are outfitted with a 20th century contemporary look and Botero sculpture. The contemporary look and fascinating artwork is reflecting the efforts of popular British artists Roger Fry, Alexander Hollweg, Duncan Grant and Vanessa Bell. Media is in the neighborhood of the hotel, as it is located at just north of Soho. The leafy Sogo Square is located on a walking distance and also theatre district and financial centre are just within its reach. It is encompassed by some best bars, restaurants and cafés of the London. On the ground floor next to the hotel entry, Oscar Restaurant and Bar serving British cuisine are located, which are serving the hotel. Throughout the summer season, the bar remains open onto the local street where most of the media professionals are making their way to the bar. The ground floor also contains two spacious drawing rooms, a screening room that could accommodate 75 people on its smooth Ferrari leather seats for showing films at night, a library, a fitness room and two meeting rooms on the lower ground floor. The hotel has a number of facilities to offer comfort and convenience to their customers during their stay. This is no doubt a perfect hotel for families, couples and friends. Moreover, one can even reserve this place for a wedding ceremony or any other sorts of gatherings. (Charlotte Street Hotel). LO1: UNDERSTAND ELEMENTS OF A PRODUCT IN A BUSINESS AND SERVICE CONTEXT LO1/AC1.1. EVALUATION OF THE KEY COMPONENTS OF THE PRODUCT A product is a tangible item that is manufactured to sell to people on their demand. On the other hand a service is an intangible type of product that is also offered to a client on demand. Products can also be physical, virtual or in cyber form. Each product has a specific price that the client would pay in exchange to particular products. A mix of two, i-e product and service is known as service-good mix. Hotels, restaurants and lodges are the true examples of service-good mix (Lovelock, 1994). For example, in a hotel when a person orders something such as evening tea, you will also get services from the staff of hotel/waiters for serving evening tea. LO1/AC1.2. ELEMENTS OF A PRODUCT Core Product Core product is the main product that is manufactured or designed by a person or company for its clients. Core products are the backbone of a company’s performance and are contributing comparatively high to the financials of a company. Core products are the products that are building core competencies for their company and are creating a competitive edge over its competitors. Core products are the main attraction for a customer to visit a shop or company therefore; companies are usually paying more attention to their core products in comparison with other product categories. For example, the core product of the Charlotte Street hotel is its rooms, as they have established the hotel to offer accommodation services to their customers. Although, accommodation is not the only service/product that it is being offered but the backbone of Charlotte hotel is its rooms. Through its accommodation services, Charlotte Street hotel is generating most of its revenue. (Bianes & Lightfoot, 2013). Facilitating Products Facilitating products are intangible products that are designed to provide assistance to the customers in consuming the core product. Without the presence of the facilitating products a customer cannot use core products. As Charlotte Street Hotel’s core product is accommodation/rooms therefore, its facilitating products will be online reservation services, affordable/reasonable price, visually enhanced, spacious and comfortable atmosphere, additional facilities like dining, customer support and quick room service. Supporting Products As the name shows, supporting products are the products (tangible or intangible) that are offered or designed to grab the attention of the customer while gaining competitive edge over its competitors. Supporting products are necessary for a business to survive in the market however, they are not as important as facilitating products for the customer. A customer can consume the core product without having supporting products. Charlotte Street hotel’s supporting products includes room facilities like Wi-Fi, access to newspaper and magazines, 24/7 room service, breakfast, iPod docking station, screening room, library, event management and concierge services. (Rutherford, 2002). Augmented Products Augmented product is a blend of products and services that in other words can be called service-good mix. Augmented products are actually a sort of additional benefit that is offered to increase the value of the core product. Charlottes Street Hotel’s augmented products include Special packages, event management, luxurious rooms, contemporary and artistic décor, exterior design, class leading food and cuisine and decent and soothing hotel atmosphere. In hospitality industry, the augmented products have a great value because customers of this industry are more sensitive about the presentation and delivery of a product or in other words hospitality industry needs customer coproduction of services. To fascinate customers, Charlotte Street hotel has managed the key elements of their products such as clean and fresh rooms, soothing screening room, bed sheets and electronics. (Bianes & Lightfoot, 2013). USP of Charlotte Street Hotel USP or unique selling proposition is the essence of a business that makes it unique as compare to its competitors. USP is something that value customers of a business and for which customer prefer to revisit a shop or hotel/restaurant. USP of a hotel can only be identified after getting the feedback of customers. (Cone, 2005). Charlotte Street Hotel’s USP is its location and comfort. Charlotte Street hotel is located in the neighborhood of media whereas the popular Leafy Soho Square and theatre district are just on walking distance from this hotel. Financial centre and metro station are also within easy access to the guests of the hotel as well as it is surrounded by some of the London’s best bars, restaurants, cafés and other places that surely grab the attention of its customers. (Charlotte Street Hotel). Comfort is also a USP of charlotte Street hotel as its rooms are spacious, lavishly furnished, have access to modern technology, room service and a unique dynamic contemporary London and Botero Sculpture. For the comfort of customers, Charlotte Street hotel have different rooms such as Standard, luxury, deluxe, junior suite, suite, penthouse and superior room. Product Mix of Charlotte Street Hotel Product mix can be defined as a range of products offered by a company to its customers. Product mix can be of a same nature or can be different in nature and purpose. (Cone, 2005). Charlotte Street hotel’s product mix is based on its core products plus peripheral services, supporting and augmented products. In this regard the product mix of Charlotte Street hotel is composed of accommodation, room services including beauty services, private events and meetings, screening room, food and beverages, special packages and excellent friendly services. Contribution to Sales and Profit of the Product Mix Charlotte Street hotel is enjoying excellent financial condition and is getting benefits from its product mix. Almost all the products have a good contribution to the sales and profit of the hotel however, its core product is on the top of the list. As Charlotte Street hotel’s core product is accommodation therefore, most of their products are offered to their guest, so that they will prefer to stay in their rooms. An estimated insight of the contribution of the product mix is given in the table. Product Mix Contribution to Sales/Profit Accommodation+ Services 62% Food and Beverages 11% Screening Room 7% Private event and Wedding 8% Families (without accommodation) 8% Others 3% LO1/AC1.3. EFFECT OF MARKET SEGMENTATION ON SALES MAXIMIZATION Market segmentation is a process in which companies’ breakdown their large heterogeneous markets in small segments on the basis of customer needs and their response towards a marketing action. The purpose of segmentation is to increase accessibility to different types of customers by understanding their unique needs and demands. (Cone, 2005). Charlotte Street hotel has used psychographic segmentation to make its target customer accessible. The method divides buyers into different groups based on social class, personality traits or lifestyle and other internal drivers that can affect the decision making of a buyer. The reason behind such segmentation is that not all elite class or high income people prefer to stay in a luxurious hotel as well as it is hard to target a particular age, race and religion group for a hotel business. The biggest drive in choosing a hotel for a stay or any other purpose is based on one’s lifestyle and social status. Market segmentation has greatly contributed in the sales of the Charlotte Street hotel. The hotel management is marketing its products and services with the ease of a segmented market to a particular group of people with common needs and social status and as a result 70% of their customers are repeat customers due to high customer satisfaction. LO2: UNDERSTAND EXTERNAL SALES DEVELOPMENT TECHNIQUES LO2/AC2.1. FACTORS AFFECTING BUYER BEHAVIOUR Buyers of a similar product have some very unique traits and characteristics such as social status, education, income, age, taste, product value and many other things. When it comes to purchasing a product all these factors are there to affect the decision making process. An effective and smart marketing management is responsible to understand all the factors that could affect a buyer’s decision making process. The Buyer’s decision making process starts with need recognition or in other words, when buyers sense the need for purchasing a particular product or service and ends with the purchase of a certain product. Figure 1 shows the Buyer’s decision making process. A consumer decision making process is heavily affected by the behavior of the consumer. The list of factors is very vats that have potential to affect the buying behavior of a customer. The factors are divided into four broad categories including Culture (subculture within culture), Direct reference group (occupation, religion and family), indirect reference group (individual’s life cycle stages) and viral influencers (Opinion leaders). (Kotler, Bowen & Makens, 2009). A better overview of these factors and its effect can be seen in the consumer behavior model below in Figure 2. For the marketing management of the hospitality industry the most interested part is social class because people from one class have almost same characteristics. For example, the target group of the Charlotte Street hotel is psychographic in which most of the people have the same lifestyle and buying behavior. Many customers of this hotel liked its décor, customer service and well furnished rooms. People from one social class have the same choices and preferences because a person’s behavior can be influenced by his/her peers and life style. In a social class, there are demographics whose response towards things may change with the passage of time, but towards some specific things like food, music and entertainment, etc…. However, a customer’s behavior towards comfort and convenience remain almost same in different age groups. In this regard, market Stimuli of Charlotte are its superior quality of their products that set it apart from its competitors and is affecting the behavior of their customers. LO2/AC 2.2 ASSESMENT OF APPROPRIATE ADVERTISING MEDIA FOR SALES DEVELOPMENT Advertising is a type of communication which is usually non-personal, persuasive and paid for by an identified sponsor, and disseminated through various media channels to promote products, services, ideas or persons. (Bovee, 1992). There are a number of channels or media choices through which a business can communicate their services and goods to target customers. Some common channels, the list of popular media channels includes Press (national and regional newspapers), Television (National and private TV channels), Radio, Cinema, Internet, web advertisement, Signboards, yellow pages, outdoor, direct advertisement through flyers, and mobile advertisement through network operators. Each type of advertising method has its own advantages and disadvantages and before choosing a media channel for the advertisement of a product or service, the management of a business needs to understand its advantages and disadvantages as well as its potential to attract people. For example, Television is one of the common advertising channels with its advantage of accessibility to a wide geographic coverage, broad range of audience and has a proven success record for promoting goods and services. On the other hand it has some disadvantages such as a rapid decline in its audience share, people skip commercials because of recording their favorite shows on DVR’s, high CPM and production costs etc… (Diamond, 2011). Prior to selecting an appropriate advertising medium, the marketing management should consider its pros and cons, target segment, accessibility, cost per thousand, a frequency which means in a specific time how many times a person would be exposed to the message and the most important thing is audience selectivity, i-e which media channel is accessed by more people on a daily basis. (Rutherford, 2002). The Charlotte Street hotel is currently using direct advertising to their customers by increasing their satisfaction through their services. Though, this is a good approach but the problem is that the Charlotte Street hotel has a high number of repeat customers and low number of new customers. To increase their sales by attracting new customers it should consider a few other media channels. The most appropriate media channel for the Charlotte Street hotel can be internet/web advertising. Today, millions of people are using internet to find a solution for anything such as finding an appropriate place for spending vacation with family, best airline for traveling, best hotel/resort to stay at and many other things. Charlotte Street hotel management should design a smart and visually attractive website for their hotel and should update it on a regular basis for the convenience of customers. They should offer customer assistance online to update their repeat customers about new packages and to guide new customers to enjoy their services by visiting the hotel. LO2/AC:2.3 THE ROLE OF EXTERNAL MARCHANDISING IN MAXIMIZING CUSTOMER VOLUMES Merchandising is a practice of offering goods and services to a retail customer. Merchandising is a practice in which the available products in a retail store are presented in a way to fascinate buyers by stimulating their interest in a particular product. The various aspects of external merchandising that can affect the buying decision of a potential buyer includes the selection of location, ease of access, surrounding stores that are offering the same products, exterior building design and attraction, parking facilities and display windows. The external merchandising has a very strong effect on the sales maximization of a business. For example, if a merchandiser use a very crowded location/street where no other big store is available to display its products to retail customers while choosing an attractive building with a few display windows and parking facilities. People will definitely visit the store to explore what the store is about and what is its internal environment and products. In other words, the external aspects of merchandising would act as stimuli to grab the attention of people visiting the street or location for their other needs. (Rutherford, 2002). The Charlotte Street hotel has very nice and central location in Soho and has a very attractive exterior of its building, however, to attract customers who are visiting the area for other purposes, they need to take some actions to compel them to visit the restaurant of this hotel. The Charlotte Street hotel should offer coffee and some snacks as a refreshment to the regular visitors of the area at a discounted price. This will maximize customer volume to the hotel and will also increase the number of new customers to reserve a room with them. The Charlotte Street hotel should offer some art pieces outside their hotel to grab the attention of people. The parking lot of the hotel is not very spacious which can create issues for their customers and can reduce their satisfaction level. They should also consider this issue to improve customer satisfaction. LO3: UNDERSTAND THE TOOLS AND TECHNIQUES OF INTERNAL SALES PROMOTION AND MARCHANDISING LO3/AC: 3.1 THE AFFECT OF DESIGN AND LAYOUT ON CUSTOMER SPEND Design and layout of a store have a great effect on the buying behavior of a consumer. The category can be divided in two: Customer Ergonomics: Customer ergonomics includes ease of access to the product and point of sale. It has been observed that the customer prefers to visit those stores that are located close to them and if they are first time buyers they buy products on availability. It has been observed that almost all the big stores are located in a crowded area such as big shopping malls, busy streets and accessible venues, attractive store entrance and parking lots. On such location, the point of sale increases because people need no extra browsing for searching a store. Environment/Ambience: Customers buying behavior can also get affected from the environment and the attraction of a store. For example, if in a store there is poor lighting, no relevance with external merchandising and poor color and scent, the customer will never purchase anything, no matter how superior quality products they have. Therefore, to compel a customer to make a purchase in a store, the store must have a proper environment and atmosphere. There should be proper lighting, refreshing scent, proper arrangements of products, relevance with external merchandise, color scheme, heating/cooling, wall texture, flooring, décor, store cleanliness, seating equipment, trial room, internal signage and proper and friendly staff. In such an environment a customer feel relaxed and can shop more things to stay in a refreshing and relaxed environment for a while more. It has been observed that people in a comfortable and refreshing atmosphere usually made certain unnecessary purchases. In a friendly environment, buyers do not feel rushed, impulse or unpleasant. On the other hand, such a store has some disadvantages such as difficulty in controlling inventory, difficulty in assisting customers, require more staff, high display costs and possible customer confusion. (Diamond, 2011). LO3/AC: 3.2 EVALUATION OF INTERNAL MARCHANDISING MATERIAL Internal merchandising includes proper displays, internal signage, price tags on each product, sales aids on bigger items usually on electronic sales and proper sales materials. Sales materials include printed pieces that perform a careful and well thought-out job of showcasing its products and services. Sales materials include catalogs, pamphlets, newsletters, brochures, letterhead, business cards, special event brochures, discount coupons, manual and posters. Effective sales materials have a great impact on the maximization of sales of a particular good or product. With the presence of proper internal merchandising material and sales material the work load on the sales staff reduces and the customer satisfaction increases. With the help of these materials customers can purchase products through self-assessment. By offering discounts on products or offering sales aids on bigger items or electronic items a store or sales management team could increase customer volume. In the hospitality industry, where there are no display windows, packed products and price tags, but the staff can design effective sales materials to assist and attract customers. With such measures, a business can ensure speedy service delivery to customers, high customer satisfaction, high customer retention or loyalty and a low cost. As internal merchandising does not need to change every hour or every day, therefore, the chances of errors are automatically getting down. LO3/AC: 3.3 EVALUATION OF DIFFERENT PROMOTIONAL ACTIVITIES ACCORDING TO DIFFERENT SCENARIOS Sales Promotions refer to short-term activities designed to boost up the sales for a short period of time. Promotional activities are usually done on a special occasion to attract more customers to generate high sales. For sales promotion or promotional activities a number of tools and techniques are used to stimulate market or to get a stronger response from the customer. Sales promotions have a particular sales message and product positioning. Businesses and organizations are using a number of consumer tools to grab the attention of customers such as free samples, discounted coupons, premiums, point of purchase displays, games, contests and sweepstakes. The purpose behind sales promotions is different for different organizations. Figure 3 shows Objectives of a retailer-consumer sales promotion. Common objectives behind promotional activities include synthesizing product awareness, providing information, selling seasonal products, creating interest, stimulating demand, increase customer volume to a store, increase store traffic and reinforcing the brand. (Diamond, 2011). In a hospitality industry, the purpose of promotional activities is to create awareness about hotel/product/service, to increase customer loyalty, to increase the numbers of repeat customers, building brand recognition and to give a chance to more people to visit the hotel. Discounts, promotional flyers and brochures and special discounts for repeat customers are common ways to use in sales promotion. The Charlotte Street hotel is using promotional activities in vacations because this is the time when most of the people want to enjoy their time with their family and kids. They are using flyers and brochures that they are offering to their guests and visitors to compel them to come back. On flyers and brochures Charlotte Street hotel’s management has added some beautiful and eye-catching photographs of their hotel, special packages, details of their services, products and facilities and they also have highlighted the presence of some professional media persons to increase the interest of their customers. LO4: THE ROLE OF STAFF IN SALES LO4/AC: 4.1 EVALUATION OF PERSONALSELLING TECHNIQUES Every organization or business has their own very unique selling techniques that they use to sell their products and sometimes such techniques are their competitive edge over their competitors. Personal selling techniques are the unique set of interpersonal interaction with customers to make sales while building strong and long term customer relationship. It is the most important part of the promotional mix and is usually consist of one-to-one communication, telephone communication, communication via email and communication through video or web conferencing. Compared to traditional advertising, personal sales techniques are more effective and result oriented way to attract customers while providing them certain useful information. In the hospitality industry, personal sales techniques are very common and are frequently used by hotel management. The Charlotte Street hotels strategy is to build strong and friendly relationship throughout their stay at the hotel or restaurant. They prefer face-to-face and telephone communication and are using a customer-oriented approach where they are not only providing certain useful information to their customers but are also trying to get feedback from them. The overall staff of the Charlotte Street hotel is acting as salespeople and they all are working efficiently to build mutually beneficial relations with their clients. LO4/AC: 4.2 INFLUENCE OF OPERATIONAL DESIGN ON SALES REVENUE Operational design is the most important thing to influence sales revenue or to get influence by marketing strategies. Therefore, operational design of a business, especially in a hospitality business must be flexible. The operational design of a hotel must be in relevance to its theme, image and core values. It is important to understand the importance and role of operations. Before designing operations, the management should consider its customers because these are the most important people who will get the effect of operational activities, suppliers of a business, shareholders, employees and society. If an operational design has the flexibility and sensibility, it will definitely increase the sales revenue or if it has a poor design it will lower down sales revenue. Charlotte Street hotel has a well balanced and effective operational design which is not only healthy and beneficial for customers and its staff but is also effective for the society. They have a good reputation in the market because their operational design is aligned with ethical and cultural values. They have a clean, safe and healthy atmosphere and they have all the required licenses and other documents to perform business by satisfying legal needs. Operation design includes Marketing function (communicating), Product/service development function (creating) and Operations function (fulfilling the needs). (Weissinger, 2000). LO4/AC: 4.3 KEY PRINCIPALS OF A SALES TRAINING PROGRAM Training is a process of acquiring information, abilities, and skills that are installed in people to perform effectively and efficiently in their workplace. For training it is important to have proper arrangements as well as the consent of the people who will attend the training session. If a person is not ready to attend a training session one cannot force him/her to learn anything. There are a number of training methods that are used by organizations and businesses to improve the performance and efficiency of their workforce. Common training methods that are popular because of their effectiveness and proven results include lectures from experienced mentors, films to offer a demonstration that how a particular task can be performed, role playing training in which a skilled person perform a learned skill, case studies for the development of analytical skills, in-field training providing real life tasks to employees to learn skills and E-learning allow organizations to conduct training sessions without physical presence or the limit of distance. A effectiveness of a training program can be judged by the component it keeps. The key components of an effective training program are shown in the figure number 4. The training program for the Charlotte Street hotel must contain the company’s objectives, policies and organization so that the employees of the hotel have a better understanding of the purpose for which the hotel is established. It should also contain techniques of learning effective relation management because the overall success of their business is dependent on the degree of relationship between the hotel staff and its customers. Selling procedure and techniques will help Charlotte Street hotel’s staff to sell their products and services in a right manner to generate more sales revenues. They must have information about the importance of their product mix because only then they will be able to target their customers and will explore different means to increase product sale. REFERENCES  Baines, T. and Lightfoot, H. (2013). Made to Serve. 1st ed. New York: Wiley, pp. 51-119. Bovée, C. and Thill, J. (1992). Business communication today. 1st ed. New York: McGraw-Hill, pp. 45-97. Cone, S. (2005). Steal these ideas!. 1st ed. New York: Bloomberg Press. Diamond, J. (2011). Retail Advertising and Promotion. 1st ed. Online: Paperback, pp.3-359. Lovelock, C. (1994). Product plus. 1st ed. New York: McGraw-Hill, pp. 18-75. Rutherford, D. (2002). Hotel management and operations. 1st ed. New York: Wiley, pp. 291-412. Kotler, P., Bowen, J. and Makens, J. (2009). Marketing for hospitality and tourism. 5th ed. Upper Saddle River, NJ: Pearson Prentice Hall. Weissinger, S. (2000). Hotel/motel operations. 1st ed. Africa: Delmar/Thomson Learning, pp. 78-176 Read More