THE EFFECTIVENESS OF PERSONAL SELLING IN THE MARKETING OF CAPITAL GOODS
(A CASE STUDY OF ANAMBRA MOTOR MANUFACTURING COMPANY ANAMMCO)
This study focus on the effectiveness of personal selling in the marketing capital goods. It goes on to explain some processes involved in personal selling and how it can be combined to achieve efficiency. Anambra Motor Manufacturing Company was the company used in this study, its staff were studied as well as their Business consumers in other to determine the effectiveness of personal selling in the marketing of their products. The main purpose was to find out among other things the following.
- Effectiveness of personal selling in the creation of awareness.
- The impact of personal selling on repeat purchase
- How ANAMMCO product demonstration awakens the customer’s interest.
- To know if ANAMMCO’S customer’s patronage is high or low in relation to personal selling.
- To know if ANANNCO’S ratio of sales expenses to sales volume is high on low
- To study the performances of ANAMMCO sales persons and how their performance affects the company’s profit.
The population of the study were from the management/staff of ANAMMCO and their Business consumer in Enugu metropolis.
Topman’s formular was used to determine the sample size since it was not possible to study the entire population in Enugu metropolis.
Questionnaire was used to collect data from respondents. These data were carefully analyzed and interpreted using tables while Chi- Square statistics were used to test the four hypothesis formulated.
Based on the analysis, the following findings were made.
- That ANAMMCO salespersons are performing well in creating awareness for their products
- That the sales persons are also not lagging behind in getting the interest of the prospects.
- That the company is operating at a good profit margin but has not actually measured up to the expected level.
- That the customer’s patronage level needs to be improved.
- Inadequate motivation of salesforce.
Based on these findings the researcher recommended ways with which to solve some of the problems encountered by this company. Such as mapping out the followings strategies to improve customers patronage.
- Provide additional product information and suggestions for product care and maintenance though brochures or advertising.
- Ensure good service and immediate follow upon complaints to provide post purchase support.
- Follow up after the purchase with direct contacts to make sure the customers understands how to use the product and to ensure satisfaction.
- Increase the level of consumer involvement with their brand by increasing the importance of a product attribute.
- Improving the salesforce motivation.
It is strongly believed that if the above measures are taken, the company will be placed on the track of efficiency.
TABLE OF CONTENTS
Table of Contents
CHAPTER ONE: INTRODUCTION
1.1 Background to the study
1.2 Statement of the problem
1.3 Objectives of the study
1.4 Formulation of Hypothesis
1.5 Significance of the study
1.6 Scope of the study
1.7 Definition of terms
2.1 An Overview of Personal Selling
2.2 An Overview of Personal Selling Process
2.3 Objectives of Personal Selling
2.4 Types of Personal Selling
2.5 Evaluation of Personal Selling
2.6 An overview of Capital Goods
2.7 The effectiveness of Personal Selling in the Marketing of Capital Goods
2.8 The Effectiveness of Personal Selling in the Marketing of ANAMMCO Products.
3.1 Sources of data
3.2 Population of the study
3.3 Sample size
3.4 Sample Techniques
3.5 Method of data collection
3.6 Method of Distributing Questionnaires
3.7 Structuring the Instruments
3.8 Method of data Analysis interpretation
3.9 Limitation of study
4.1 Data Analysis and Interpretation
4.2 Testing of Hypothesis
5.1 Summary of Findings
For over a decade and half now, Anambra Motor Company (ANAMMCO) which specializes in the products like: Cars, Trucks Buses and social Benz vehicles such as tippers, Lorries, Tankers, Jeeps and a lost of others has for a number of years been keeping the nation on a regular speed in the area of technological development.
Utilizing considerable local components these vehicles are built as nothing but replica of excellence and durability.
At its inception, MB AMAMMCO was nothing but a mere Motor assembling plant which was initially planned to produce trucks for the Nigerian Market. But today, the prevailing situation with the company has changed drastically from a mere assembling plant to a manufacturing company. The plant has diversified its product range to include the full range of Mercedes – Benz commercial vehicles for the rapid industrialization of the country. It not only produces trucks such as L800, L1418 and ACTROS, but has gone a step further in design, fabrication manufacturing, production and sales of buses and other utility vehicles. Part of its product range include MBO 800, MBO 1418, MBO 1721, MBO 400 Marcopolo/Busscar, fire fighting vehicles, Ambulances, Mobile Clinics, Refuse collectors and other various specialized types of vehicles.
Unstressed by the evergreen availability of genuine spare parts and efficiency of their sales service which is a major trait of any personal selling effort, MB ANAMMCO has not only been keeping the nation in Motion but has also been a baron with regard to the incessant strife towards developing the path to establishing an indigenous auto industry.
The company is a joint venture between the Federal Government of Nigeria and Daimler Chrysler AG. It is a franchising one which was commissioned on July 8, 1980 and started its officials production in January 1981 having been mandated by the original owner of the Mercedes Benz Trade Mark.
At its preamble, Mercedes Benz ANAMMCO was established with its cooperate headquarters at Emene industrial Layout headquarter at Emene Industrial Layout P.M.B 2523 in Enugu State.
However, the aforementioned company having attained the peak in the field of manufacturing as well as the provision of after sales services in the motor industry, had decided to spread its sales offices over almost all states in Nigeria. Primarily as a result of increase in the demand for its products and this positive experience is due mainly to the dissemination of words of mouths to others who have not defected the wonders in the company’s products especially in the areas of efficiency, durability, prestige, comfort and a host of others.
This words of mouth confession being made by both current as well as previous patronizes of the firms product is a partial brain behind the company’s elevation in production 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 mass unemployment. Thus certain individuals particularly the enlightened have been thanking ANAMMCO for its laudable act in the continued improvement into our economy through its previous but high productive attainment in the previous.
However, the senior assistant manager in charge of franchise and marketing development has not failed to give credence to the various promotional techniques in ensuring the previous attainment. According to him, the use of promotional tools are indispensable in the marketing of capital (industrial) goods. This is apparent as users of such products are seeking both current information as well as the provision of after sales services and those terms related to the purchase and application of industrial (capital) goods.
However, the aforementioned company which either had attained the peak in the motor manufacturing industry has stated experiencing a dwindling ground in its sales volume and market share. This current situation has thrown the management of the aforementioned company into chaos as a reliable percentage of their market share have been captured by other competitors in the same industry.
According to an insider, this nauseating experience is accounted for by a number of recent developments. Some of these developments are:
The incessant increase in the number of companies currently involved in the manufacturing and sales of different cars, trucks etc. and besides the increase and efficient application of the divergent promotional tools.
In accordance with his contention, previously, there were relatively few firms in the Motor industry and this tends to reduce the level of competition among the few producers; he further stipulated that under such situation, a particular firm will generate a reliable volume with a minimum promotional efforts and this was the position of ANAMMCO as at the said era.
He buttressed his points by revealing that increase in the number of companies constituting a particular industry is synomous to increase in technological developments and innovations as well as extreme competitions coupled with efficient utilization of the promotional strategies.
Before this experience of relegated sales volume and profitability, the management of the company had been adopting both advertising, publicity, sales promotion and personal selling in relating as well as persuading both current and potential customers to indulge in the constant application of the company’s products.
However, the management of ANAMMCO is not skeptical regarding the wonders of personal selling in the marketing of capital goods and that thus 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 if its sales force is effective or otherwise. This is the core of this study.
1.1 BACKGROUND TO THE STUDY
Selling has been a standard business activity for thousands of years. The earliest peddlers were traders who had some type of ownership interest in the goods they sold after manufacturing or importing them. In many cases, these people viewed selling as a secondary activity.
Selling later became a separate business function. The peddlers of the 18th century sold to the farmers and settlers of the vast North American continent. In the 19th century, salespeople called drummers sold to both consumers and marketing intermediaries. These early sellers sometimes used questionable ales practices and techniques, and they caned undesirable reputations for themselves and their firms.
But selling is far different from what it was in it’s early years. Far from the fast- talking, joke- telling, back- slapping caricatures in some novels and comic strips, today’s salesperson is usually a professional.
Professors Ingram and Lafoge (1995:108) defined sales professionalism as, “a customer –oriented approach that employs truthful, non manipulative tactics to satisfy the log- term needs of both the customer and the selling firm”. Professional sales people are problem solvers, focusing on satisfying the needs of customers before, during and after the sale. They are armed with knowledge about their firm’s goods or services, those of competitions and their customers businesses.
Personal selling today is a vital, vibrant, dynamic process. It is an interpersonal persuasion process designed to influence certain person’s decisions. It is an important ordering as well as getting ingredient available to the executive responsible for determizing the promotional mix. It involves face-to-face experience between the seller on his/her representative and the prospective customer as the case may be. The effectiveness of personal selling as a major promotional tool in the industrial (capital) goods industry cannot be over emphasized. Sales forces accomplish this objective in a number of ways.
According to Rogers (1992:401) sales Management, personal selling has become one of the vital promotional tools in marketing. He further buttressed the above proposition by stipulating that after all the theorists planners must have had their moment and the predicaments associated with production, finances 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 a place like Lagos where such product is highly needed. This is the significance behind the notion of sales contention that, the sales people must not relent in their effort for prospecting, they should investigate into the needs of consumers as well as filling them with satisfaction and optimize profit objective.
A critical analysis of the aforementioned statement highlights the importance of the effectiveness of personal selling on the marketing of capital goods. A product may be of extremely high grade but 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. It is pertinent to recognize at this moment that personal selling is nothing but a Herculean task. This is so as the salesperson has little or no time for rest primarily because he/she indulges at home works and at certain time involves himself in some sales calls that may never result into sales.
A sales philosopher called “stake holders alignment” says that people attempts to become partners with their customers. He continued by saying that mentality and contemplates more on the customer profit needs.
How someone sell is an off-spring of what is being sold. To this regards, good sales person should be able to identify correctly the persuasive message that is precise in a given sales situation.
MB ANAMMCO is a global and also a franchising company whose headquarter is in Germany with its subsidiary manufacturing plant located at Emene industrial layout here in Enugu State. As the company began to experience increase in productivity and sales volume it started opening sales branches in different state of the country. It has been a leading firm in the Motor industry with transparent image.
However, in recent times, the company started experiencing a reduction in its market share and this is nothing but a problem and if not taking care of will affect the companies past glory.
1.2 STATEMENT OF THE PROBLEMS
Anambra Motor Manufacturing Company has started experiencing a reduction in its sales volumes in recent times. This low sales volume is as a result of a keen competition that exists in the industry.
This situation is a direct opposite of what the company used to witness in the previous years.
The reason for the low sales volumes leading to other serious problems like reduced profitability, low market share, reduction in the rate of promotion as well as that of employment is still unknown to the management of the company. However, the company’s management is seriously questioning the effectiveness of the salesforce with other problems like:
- Is the ratio of sales expense to sales volume high or low?
- Is the ratio of sales to sales calls high or low?
- Does the company not budget enough for sales- reps these and other issues will form the task of this research work.
1.3 OBJECTIVES OF THE STUDY
Whatever the nature and structure of an organization is personal selling activities needs to be inculcated. Personal selling has over the years been seen as the bedrock of a company’s success which helps to generate more funds for company’s operation.
It is therefore the aim of the research in this study which was conducted in Anambra Motor Manufacturing Company ANAMMCO Enugu to focus on the following activities.
i. To know the effectiveness of personal selling in the creation of awareness.
ii. To know the impact of personal selling on repeat purchase.
iii. To study how ANAMMCO product demonstration awakens the customer’s interest.
iv. To know if the customers patronage is high or low in relation to personal selling activities of ANAMMCO.
v. To know if the ratio of the company’s sales expenses to sales volume is high or low.
vi. To study the performance of ANAMMCO sales persons and how their performance affects the company’s profit.
1.4 FORMULATION OF HYPOTHESIS
This study is meant to know the effectiveness of personal selling in the marketing of capital goods of Anambra Motor Manufacturing Company ANAMMCO. The following Hypothesis are therefore formed for this study.
Ho: Personal selling activities of ANAMMCO do not
Create awareness of their products.
Hi: Personal selling activities of ANAMMCO creates awareness for their products.
Ho2: Personal selling activities adopted I the marketing of ANAMMCO products do not awaken the customer Interest.
H2: Personal selling activities adopted in the marketing of ANAMMCO products awaken the customer’s interest.
Ho3: Personal selling activities of ANAMMCO does not lead to increased customers patronage of their goods.
H3: Personal selling activities of ANAMMCO leads to increased customer’s patronage of their goods.
Ho4: Personal selling activities of ANAMMCO impacts negatively on the profit of the organization.
H4: Personal selling activities of ANAMMCO does not impacts negatively on the profit of the Organization.
1.5 SIGNIFICANCE OF THE STUDY
According to Brown S (1991: 169) “if a company is to continue answering its consumers patronage, than it has no other alternative than the maintenance of a clean cut competitive advantage and managing the marketing mix in a manner that will ensure continuous customers satisfaction”.
Mercedes Benz ANAMMCO has been and will continue to strive harder in the area of co-operate and social responsibilities says the public relation manager MB ANAMMCO Enugu.
To this end the significance of this study are as follows:
i. To help the MB AMAMMCO Management to overcome the problems of low sales volume as well as make use of the recommendations to tackle often problems.
ii. It is also the primary view of the researcher that both current and potential researchers will find this work relevant with regard to directing and facilitating the bearing and solution of their problem in relation to this study.
iii. The study will also be paramount importance to other companies in the same industry with ANAMMCO in their strife to surmount low sales volumes and low profitability.
iv. This study will help the researcher to gain more experience to be a field sales person.
1.6 SCOPE OF THE STUDY
The study ought to have taken a wider dimension to make it more elaborate. However, because the researcher of this study is a student and do not have enough time and resources, to study the whole ANAMMCO branches and customers in the country, the scope was restricted to the findings in Enugu metropolis.
1.7 DEFINITION OF TERMS
ANAMMCO: Anambra Motor Manufacturing company
M.B: Mercedes Benz
Capital/Industrial Goods: Goods/products intended to be used for further production. (Odoh 2003:2)
Promo tools: All short term services utilized in boosting sales (Adirika, Ebue, Nnolim 1996: 143).
Sales force Size: Number of sales representatives in a company (Adirika, Ebue, Nnolim 1996: 165)
Trade INS: Allowance given for a used item when a customer purchases a new item. (Boone $ Kurtz 1995:721).
Cognitive Dissonance: Post- purchase anxiety that results when an imbalance exists among an individuals cognitions (knowledge, beliefs and attitudes).
(Boone & Kurtz 1995:272)
Push Strategy: Promotional effort by a seller to member of the distribution channel to stimulate personal selling of the goods and services, thereby pushing it through the marketing channel (Boone & Kurtz 1995:582).
Sales quota: Level of expected sales on profits for a territory, product, customer, or sales person against when actual results are compared. (Boone & Kurtz 1995:663).