Night Riders

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1 Ƞ!ǥĦȶ Ʀ!Ɗ€ƦƧ Marketing Management -Neeraj Vashishth Class Notes for the Fighters of that One Night before Exam. 2016 6th New Edition

Transcript of Night Riders

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Ƞ!ǥĦȶ Ʀ!Ɗ€ƦƧ Marketing Management

-Neeraj Vashishth Class Notes for the Fighters of that One Night before Exam.

2016

6th

New Edition

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#1. PROLOGUE: arketing is all about of identifying and meeting human and social needs. According to American Marketing Association, “Marketing is an organizational function and a set of process for creating, communicating and delivering value to customers and managing

customer relationships in ways that benefit the organization and its stakeholders”. According to Philip Kotler, “Marketing is a societal process by which individuals and groups obtain what they need and want through creating, offering and freely exchange of products and services of value with others”. Marketing Management is the art and science of choosing target markets and getting, keeping and growing customers through creating, delivering and communicating superior customer value. #2. CORE MARKETING CONCEPS:

1. Needs, Wants and Demands: Needs are basic human requirements. Need become wants when they are directed to specific objects that might satisfy the needs. Demands are wants that are backed by an ability to pay.

2. Target Markets, Positioning, and Segmentation: A marketer can rarely satisfy everyone in a market. So, marketers start by dividing up the market into segments. They identify and profile distinct groups of buyers having distinct preferences. The marketer then decides which segments present greatest opportunity-which are its target markets. For each chosen target market, the firm develops a market offering. The offering is positioned in the minds of the target buyers, as delivering some central benefit(s).

3. Offering and Brands: An offering is a combination of products, services, information and experience. A brand is an offering from a known source.

4. Value and Satisfaction: Value is the sum of perceive tangible and intangible benefits and costs to the customers. It is primarily a combination of quality, service & price (QSP) called the customer value triod. Satisfaction is a perceived judgement of a product’s perceived performance in relation to expectations.

5. Marketing Channels: It is comprises of communication channel, distribution channel and service channel. Communication channels deliver and receive messages from target customers and buyers and include newspapers, magazines, radio, television, telephone, mail, posters, fliers, CDs, audio tapes, and internet. Distribution Channels are used to display, sell or deliver the physical product or service to the buyer or user. They include distributer, wholesaler, retailer, middleman and agents. Service channels are used to carry out transactions with potential buyers. They include: banking, insurance, transportation, warehousing that facilitates transactions.

6. Supply Chain, Competition, Marketing environment: #3. COMPANY ORIENTATION TOWARDS MARKET PLACE:

1. The Production Concept is one of the oldest concepts in business. It holds that consumers will prefer products that are widely available and that are inexpensive. Production oriented business concentrate on achieving high production efficiency, low cost and mass distribution at high level.

2. The Product Concept proposes that consumers favor products that offer the most quality, performance or innovative features. These organizations focus on making superior products and improving them overtime. Managers are sometime caught up in a love affair with their products.

3. The Selling Concept holds that consumers and businesses, if left alone won’t buy enough of the organization’s products. The organization must undertake an aggressive selling and promotion efforts.

4. The Marketing Concept emerged in mid 1950s. Instead of a product centered, “Make and Sell” philosophy business shifted to a customer centered “Sense and Respond” philosophy. The marketing concept holds that the key to achieving organizational goals is being more effective than competitors in creating, delivering and communicating superior customer value to their chosen target market.

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5. The Holistic Marketing Concept is based on the development, design and implementation of marketing programs, processes and activities that recognizes their breadth and interdependencies. It originates the relationship marketing, viral or network marketing.

#4. MARKETING MIX: McCarthy classified marketing activities into four broad groups, which he called the four Ps of marketing: product, price, place and promotion. Robert Lauterborn suggested that the sellers’ four Ps correspond to the customers’ four Cs.

Four Ps P- Product, P- Price, P- Place, and P- Promotion.

Four Cs Customer solution, Customer cost, Convenience, and Communication.

(Figure- #4. Marketing Mix or 4Ps of Marketing)

#5. MARKETING ENVIRONMENT: Those surroundings in which marketing activities take place, is known as marketing environment. Marketing environment is of two types:

1. Micro Environment or Internal Environment or Controllable Environment. To learn, just remind 2C2SM.

2. Macro Environment or External Environment or Un-controllable Environment. To learn, just remind DENTPC.

(Figure- #5. Marketing Environment)

D- The Demographic Environment

PRODUCT

• Product Variety• Product Quality• Product Design• Product

Features• Brand name• Packaging• Sizes• Services• Warranty• Return

PRICE

• List Price• Discount• Allowances• Payment Period• Credit Terms

PLACE

• Channels• Coverage• Assortments• Locations• Inventory• Transport

PROMOTION

• Sales Promotion• Sales Force• Advertisement• Public Relation• Direct

Marketing

Micro Environment

• Customers

• Competitors

• Suppliers

• Share Holders

• Marketing Intermediaries

Macro Environment

• Demograhic Environment

• Economic Environment

• Natural Environment

• Technological Environment

• Political & Legal Environment

• Cultural & Social Environment

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MICRO MARKETING

Mass Marketing

Segment Marketing

Niche Marketing

Local marketing

Individual

Marketing

(Customerization)

World-wide population growth Population age mix

E- The Economic Environment Income distribution Gross domestic product

N- The Natural Environment T- The Technological Environment

Accelerating pace of change Unlimited opportunities for innovation Varying R&D budgets Increased regulations of technological change

P- The Political & Legal Environment Political stability Increase in business legislation

C- The Cultural Environment #6. Marketing Information System (MIS): MIS consists of people, equipment, and procedures to gather, sort, analyze, evaluate and distribute needed, timely and accurate information to marketing decision makers. Components of MIS: Marketing Information System relies upon-

1. Internal Company Records o The order-to–payment cycle o Sales information system o Databases, data warehousing and data mining

2. Marketing Intelligence System is a set of procedures and sources managers use to obtain everyday information about developments in the marketing environment.

3. Marketing Research is defined as the systematic design, collection, analysis, and reporting of data and findings relevant to a specific marketing situations facing the company. The process of marketing research is shown in figure #6.

#7. SEGMENTATION, TARGETING and POSITIONING (STP) MARKET SEGMENTATION: A market segment consists of a group of customers who share a similar set of needs and wants. Rather than creating the segment, the marketers identify them and decide which one(s) to target. Segment marketing offers key benefits over mass marketing. Niche Marketing: A niche is a more narrowly defined customer group seeking a distinctive mix of benefits. Marketers usually identify niches by dividing a segment into sub-segments. Local Marketing: Local marketing reflects a growing trend called grass root marketing. Marketing activities concentrate on getting as close and personally relevant individually customers as possible. Individual Marketing (Customerization): The ultimate level of segmentation leads to “segments of one,” “customized marketing,” or “one-to-one marketing.” For centuries, consumers were served as individuals: The tailor made the suit and the cobbler designed shoes for the individual. BASIS FOR SEGMENTATION: To learn, just remind GDPB. G- Geographical Segmentation: It means division of markets into different geographical units such as nations, states, regions, cities, etc. means according to locations.

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D- Demographic Segmentation: In demographic segmentation, we divide the market into groups on the basis of variables such as age, family size, family life-cycle, gender, income, occupation, education, religion, race, generation, nationality and social class. P- Psychographic Segmentation: Psychography is the science of using psychology and demographics to better understand consumers. In psychographic segmentation, buyers are divided into groups on the basis of psychological/personality traits, life-cycle or values. B- Behavioral Segmentation: In behavioral segmentation, marketers divide buyers into groups on the basis of their knowledge of, attitude towards, use of, or response to a product. MARKET TARGETING: Market targeting is the selection of particular segment, comprised of specific characteristics that are to be concentrated by the managers. PATTERNS OF TARGET MARKET SELECTION

POSITIONING: Positioning is the art of designing the company’s offering and image to occupy a distinctive place in the minds of the target market. A good brand positioning helps guide marketing strategies by clarifying the brand essence, what goals it help the consumer achieve, and how it does so in a unique way. The result of positioning is the successful creation of a customer focused value proposition. In short, positioning means crafting the image of the brand or a product in the mind of the customers. Points-of-Difference (PODs): PODs are attributes or benefits consumers strongly associate with a brand, positively evaluate and believe they could not find to the same extent with a competitive brand, e.g., Apple (Design), Nike (Performance), and Lexus (Quality). Points-of-Parity (POPs): POPs are associations that are not necessarily unique to the brand but may in fact be shared with other brands. These types of associations come in two basic forms: categories, and competitive. #8. CONSUMER BEHAVIOR: Consumer behavior is the study of how individuals, groups, and organizations select, buy, use, and dispose of goods, services, ideas or experiences to satisfy their needs and wants. A consumer’s buying behavior can be influenced by- Cultural Factors:

Culture Sub-culture Social class

Social Factors: Reference groups

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Family Roles and status

Personal Factors: Age and stage in life-cycle Occupation and economic circumstances Personality and self-concept Life style and values

The Buying Decision Process: See figure #8. #9. PRODUCT: Product is anything that can be offered to a market to satisfy a want or need, including physical goods, services, experiences, events, persons, places, properties, organization, information and ideas. Product Levels-The Customer Value Hierarchy: There are five product levels each level adds more customer value and the five constitute a customer value hierarchy.

1. Core Benefit: The fundamental level is the Core Benefit. The service or benefit the customer is really buying. A hotel guest is buying ‘rest and sleep’.

2. Basic Product: At the second level, the marketer must turn the core benefit into a basic product. Thus, a hotel room includes a bed, bathroom, towels, desk, dresser and closet.

3. Expected Product: At the third level, the marketer prepares an expected product, a set of attributes and conditioned buyers normally expect when they purchase this product. Hotel guest expects a clean bed, fresh towels, working lamps and a relative degree of quite.

4. Augmented Product: At the fourth level, the marketer prepares an augmented product that exceeds customer expectation. In developed countries brand positioning and competition take place at this level. In developing countries like India and Brazil however competition takes place mostly at the expected product level.

5. Potential Product: At the fifth level stands the potential product which encompasses all the possible augmentation and transformations the product or offering might undergo in the future.

Product Classifications- 1. Durability and Tangibility:

o Non-Durable Goods o Durable Goods o Service Goods

2. Consumer Goods Classification: o Convenience Goods o Shopping Goods o Specialty Goods o Unsought Goods

3. Industrial Goods Classification: o Material and Parts o Capital Items o Supplies and Business Services

#10. Product Mix or Product Assortments- A product mix is the set of all products and items a particular seller offers for sale. A product mix consists of various product lines. A product line refers to the sale of several related products. A product line can comprises related products of various size, types, colors, qualities or prices. E.g. Home & personal care and beverages. A company’s product mix has a certain width, length, depth and consistency. Product Width: The width of a product mix refers to how many different product lines the company carries. E.g. personal wash, laundry, skin care, hair care, oral care, deodorants, tea, coffee, ice-cream.

Potential Product

Augmented Product

Expected Product

Basic Product

Core Benefit

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The Product Length: The length of a product mix refers to the total number of items in the mix. E.g. Lux, Lifebuoy, Liril, Hamam, Dove, Pears, Rexona, Surf Excel, Wheel, Rin, Ponds, Lipton, Bru, etc. The Product Depth: The depth of a product mix refers to how many variants are offered of each

product in the line. E.g., Lux comes in four varients Exotic Flower Petals & Jojoes, Almond Oil & Milk Cream, Fruit Extract & Honey, and Milk & Sandal Saffron; and in two sizes, then it has a depth of eight. The Product Inconsistency: The inconsistency of the product mix refers to how closely relate the various product lines are in end use, production requirements, distribution channels or some other way. #11. New Product Development (NPD): Companies need to grow their revenue overtime by developing new products and services and expanding into new market. New product development shapes the company’s future. Improved or replacement products and services can maintain or build sales, new to the world products and service can reforms industry and companies and change lives. More and more companies are doing more innovation. They are fundamentally changing and developing new products and services. Steps involved in NPD:

#12. Product Life Cycle (PLC): A product has a life-cycle to show four things.

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1) Product has a limited life. 2) Product sales pass through

different stages. Each posing different challenges, opportunities, problems to the seller.

3) Profit rise and falls at different stages of the product life cycle.

4) Products require different marketing, financial, manufacturing, purchasing and human resource strategies in each life cycle stages.

The life cycle curve of the product is divided into four stages-

i. Introduction, ii. Growth, iii. Maturity, and iv. Decline.

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#13. Branding, Packaging & Labeling (BPL): Branding: According to American Marketing Association (AMA), a Brand may be defined as, “a name, term, sign, symbol or design or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors.” A brand is thus a product or service whose dimensions differentiate it in some way from other products or services designed to satisfy the same need. Role of Brands or Reasons for Branding:

1. To identify a particular product or service. 2. For easy advertising and publicity. 3. For making market segmentation easier. 4. To ensure standard quality and satisfaction to buyers. 5. To reduce personal selling efforts. 6. To increase the sale of the product.

Brand Name: According to AMA, Brand name is a part of a brand consisting of a word, letter, and group of words or letters comprising a name which is intended to identify goods and services of a seller or a group of sellers and to differentiate them from those of competitors. Brand Equity: Brand equity is the added value endorsed on products and services. It may be reflected in the way consumers think, feel and act with respect to the brand as well as in the prices, market share and profitability the brand commands for the firm. Brand Elements: Brand elements are those trade mark-able devices that identify and differentiate the brand. The criteria for brand element choice is-

1. Brand Build Elements- Memorable Meaningful Likeable

2. Defensive Elements- Transferable Adaptable Protectable

Branding Decision Strategies: There are four general strategies for branding decisions. 1. Individual Names: P&G serves individual brands in different product categories such as Vicks

(Health Care), Whisper (Feminine), Arial, Tide (Fabric Care), Pantene, Hair & Shoulder (Hair Care), and Pampers (Baby Care). A major advantage of individual names is that the company does tie its reputation to the product. If the product fails or seems low quality, the company’s name or image is not hurt.

2. Blanket Family Names: The blanket family name in the family of the company is used in diverse product categories such as Tata Salt, Tata Tea, Tata Automobiles, and Tata Steel. The firm spends less on development because there is no need for “name” research or heavy ad spending to create brand recognition; also’ product sales are likely to be strong if the manufacturer’s name is good.

3. Separate Family Names for all Products: The Aditya Birla Group uses separate family names for its various products. Hindalco for aluminium, Ultratech for cement, Grasim and Graviera for suitings. If a company produces quite different products, separate family names are more appropriate than one blanket family name.

4. Corporate Name Combined with Individual Product Name: Kellogg combines corporate and individual names in Kellogg’s Rice Krispies, Kellogg’s Raisin Bran, as do Honda, Sony, Hewlet-Packard (HP) for their products. The company name legitimizes while the individual name individualizes each product.

Packaging: Packaging may be defined as all the activities of designing and producing the container for a product. Packages might include up to three levels of materials, e.g., Cool Water Cologne comes in a bottle (Primary Package) in a cardboard box (Secondary Package) in a corrugated box (Shipping Packaging) containing six dozen boxes. Marketing Tools for Packaging:

1. Self-service 2. Consumer affluence 3. Company & brand image

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4. Innovation opportunity Labeling: The label may be a simple tag attached to the product or an elaborately designed graphic that is part of the packaging. It might carry only the brand name or a great deal of information. Label performs several functions:

1. Identifies the product. 2. Grade the product. 3. Describe the product. 4. Promote the product.

#14. PRICE: Price is the one element of the marketing mix that produces revenue; the other elements produce costs. Prices are the easiest element of the marketing program to adjust; product features, channels, and even promotion take more time. Price also communicates to the market the company’s intended value positioning of its product or brand. A well-designed and marketed product can command a price premium and reap big profits. Setting the Price:

1. Selecting the Pricing Objective o Survival o Maximum Current Profit o Maximum Market Share o Maximum Market Skimming o Product Quality Leadership o Other Objectives

2. Determining Demand o Price Sensitivity o Estimating Demand Curves o Price Elasticity of Demand

3. Estimating Costs o Types of Costs & Level of Production o Accumulated Production o Target Costing

4. Analyzing Competitors’ Costs, Prices and Offers 5. Selecting a Pricing Method

o Mark-up Pricing o Target Return Pricing o Perceived Value Pricing o Value Pricing o Going Rate Pricing o Auction Type Pricing

6. Selecting the Final Price o Impact of Other Marketing Activities o Company Pricing Policies o Gain and Risk Sharing Pricing o Impact of Price on Other Parties

#15. PLACE: Distribution Channel means a route or pathway taken by the products as they flow from the point of production to the point of ultimate consumption. According to AMA, “Channel of Distribution is the structure of intra-company organization units and intra-company agents and dealers, wholesale and retail, through which a commodity, a product or service is marketed.” According to Philip Kotler, “Every producer seeks to link together the set of marketing intermediaries that best fulfill the firm’s objective. The set of marketing intermediaries is called the marketing channels or trade channels or distribution channels.” Functions of Distribution Channels-

Price is not just a number on a tag or an item. Price is all around us. You pay rent for your apartment, tuition for your education, and a fee to your physician or dentist. The airline, railway, taxi, and bus companies charge you a fare; the local utilities call their price a rate; and the local bank charges you interest for the money you borrow.

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1. Contact between producers and consumers 2. Satisfaction to the consumers 3. Transferring the title 4. Fixing prices 5. Performing promotional activities 6. Function of financing 7. Function of distribution 8. Function of communication 9. Help in production function 10. Creating time and place utilities

Types or Levels of Distribution Channels: 1. Zero-Level Channel, 2. One-Level Channel, 3. Two-Level Channel, and 4. Three-Level or Multi-Level Channel.

#16. Retailing; It includes all the activities in selling goods or services directly to final consumers for personal, non-business use. A retailer or retail store is any business enterprise whose sales volume comes primarily from retailing. Types of Retailers: Retailing can be broadly divided into two categories-

A. Store Retailing: 1. Specialty stores 2. Department stores 3. Super market 4. Convenience store 5. Discount store 6. Off-price retailer 7. Super stores 8. Catalog showrooms

B. Non-Store Retailing: 1. Direct Selling or Multi-level Selling or Network Marketing 2. Direct Marketing or Internet Marketing or Tele Marketing 3. Automatic Vending 4. Buying Service

Corporate Retailing: Corporate retail organizations achieve economies of scale, greater purchasing power, wider brand recognition and better trained employees. The major corporate retailers operating in India are corporate chain stores (Shoppers’ Stop, Food World), Retailer Co-operating (National Egg Coordination Committee), Consumer Cooperative (Super Bazaar) and Franchise organization (McDonalds, Raymond’s and Vimal Outlets). #17. Wholesaling: It includes all the activities in selling goods or services to those who buy for re-sale or business use. It excludes manufacturers, farmers and retailers. Functions of Wholesaler:

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1. Selling and promoting 2. Buying and assortment building 3. Bulk breaking 4. Warehousing 5. Transportation 6. Financing 7. Risk bearing 8. Market information 9. Management service and counseling

Types of Wholesalers: 1. Merchant wholesalers 2. Full service wholesalers 3. Limited service wholesalers 4. Brokers and agents 5. Manufacturer’s and retailer’s branches and offices 6. Specialized wholesalers

Wholesalers vs. Retailers: 1. Wholesalers pay less attention to promotion, atmosphere and location because they are

dealing with business customers rather than final consumers. 2. Wholesale transactions are usually larger than retail transactions. 3. Wholesale usually covers a larger trade area than retailers. 4. The government deals with wholesalers and retailers differently in terms of legal regulations

and taxes. #18. Market Logistics: It includes planning the infrastructure to meet demand than implementing and controlling the physical flows of materials and final goods from points of origin to points of use to meet customer requirements at a profit. Market Logistic Decisions:

1. Order processing 2. Warehousing 3. Inventory 4. Transportation

Integrated Logistic System: It includes material management, material flow system and physical distribution aided by information technology. Supply Chain Management: It means strategically procuring the right inputs (raw materials, components and capital equipments), converting them efficiently into finished products and dispatching them to the final destinations. #19. PROMOTION Marketing Communication: Marketing communications are the means by which firms attempt to inform, persuade and remind consumers directly or indirectly about the products and brands they sell. Marketing Communication Mix or Promotion Mix: It consists of eight major modes of communication.

1. Advertising 2. Sales Promotion 3. Events and Experiences 4. Public Relations and Publicity 5. Direct Marketing 6. Interactive Marketing 7. Word-of-Mouth Marketing 8. Personal Selling

#20. ADVERTISING: It is any paid form of non-personal presentation and promotion of ideas, goods or services by identified sponsor.

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Process of Advertising or Developing an Advertising Plan or 5Ms of Advertising:

Advertising Objectives:

1. To Inform 2. To Persuade 3. To Remind 4. To Reinforce

#21. PUBLIC RELATIONS (PR): A public is any group that has an actual or potential interest in or impact on a company’s ability to achieve its objective. Public relations include a variety of programs to promote or protect a company’s image or individual products. Functions of PR:

1. Press relations 2. Product publicity 3. Corporate communications 4. Lobbying 5. Counseling

Marketing Public Relations (MPR): MPR is somewhat advance to publicity. This is to support corporate or product promotion and image making. PMR plays an important role in the following tasks:

1. Launching new products 2. Repositioning a mature product 3. Building interest in product category 4. Influencing specific target groups 5. Differentiating products that have encountered public problems 6. Building the corporate image in a way that reflects favorably on its products

Major Tools in MPR: 1. Publications 2. Events 3. Sponsorships 4. News 5. Speeches 6. Public service activities 7. Identity media

Major Decisions in MPR or Process of MPR: 1. Establishing objectives

o Awareness o Credibility

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o Enthusiasm o Promotion cost

2. Choosing Messages and Media Vehicles 3. Implementing the plans and evaluating results

#22. DIRECT MARKETING: Direct marketing is the use of consumer direct channels to reach and deliver goods and services to customers without using marketing middleman. Direct marketers can use a number of channels to reach individual prospects and customers like direct mail, catalog marketing, tele marketing, interactive T.V., kiosks, websites and mobile devices. Nowadays, direct marketers build long term relationships with customers. They send birthday cards, information material or small premiums. Word-of-Mouth: The social networks create an aspect of word-of-mouth and the number and nature of conversations and communication between different parties. Means of Word-of-Mouth: There are two particular forms of word-of-mouth:

1. Buzz Marketing: It generates excitement, creates publicity and conveys new relevant brand related information through unexpected means.

2. Viral Marketing: It encourages consumers to pass alone company developed products and services or audio-video or return information to others online.

#23. SALES FORCE: Sales force refers to the person or group of persons who locate prospects, developed them into customers and grow the business or they hire manufacturer representatives and agents to carry out the direct selling task, e.g., Avon, Amway, Marry Kay, Mysillync, Tupperware use direct selling techniques. Objectives of Sales Force:

1. Prospecting 2. Targeting 3. Communicating 4. Selling 5. Servicing 6. Information gathering 7. Allocating

Managing the Sales Force: 1. Recruiting and Selecting the Representatives 2. Training and Supervising Representatives 3. Motivating Sales Representatives 4. Evaluating Sales Representatives

Personal Selling: It is an ancient art of approaching to the customers personally for the purpose of taking orders and or of delivering goods. Major Steps in Effective Selling:

(Figure-#23. Process of Effective Selling)

------------x---------x---------x---------x----------x----------x--------

Prospecting & Qualifying

Pre-approachPresentation & Demonstration

Overcoming Objections

ClosingFollow-up &

Maintainance