Marketing Indicator 2.11

1. Marketing Indicator 2.11 Process the sale to complete the exchange.

2. Types of Charges Associated with Purchases • Companies allow the following methods to obtain payment for a sale • Cash or check Sales • Credit Card • Debit Card • Layaway • On Approval • Cash On Delivery • Sales Transactions are also affected by: • Returns • Exchange • Allowance • Shipping Charges • Sales Tax

4. John Smith 7150 E. 24th Street Yuma, AZ 85365 04/08/11 38760 6 3 $29.95 $89.95 Shirts $527.60 *.066 $31.66 2 36.95 $73.90 Belts Pair of Boots 125.00 2 $250.00 3 37.95 $113.85 Halters $527.60 +$31.66 $559.26 $527.60 .066% $31.66 $559.26

5. Business to Business Sales Much of the math done in business-to-business sales is for purchase orders or invoices

6. Purchase Orders • To place an order, most companies prepare a purchase order (PO). • It is a legal contract between the buyer and the supplier. • It lists the quantity, price, and description of the products ordered. • It lists the terms of payment and delivery.

7. Invoices • When filling an order based on a PO, a vendor will include an invoice with the delivered merchandise. • In addition to the merchandise total there are also places for sales tax, shipping charges, and the amount to be paid by the customer.

8. Dating Terms • Dating terms state when a bill must be paid and the discount permitted for paying early. • Ordinary dating occurs when the dating terms are based on the invoice date. • Ex: 2/10, net 30 --- specifies the percentof discount permitted for paying early (2 percent), the number of days the buyer has to take advantage of the discount (10 days), and the number of days within which the invoice must be paid (30 days).

9. Types of charges and discounts associated with purchases. • Purchase Discount – set amount of money that a business saves on a specific order if the payment is made within a certain period of time. Example A purchaser brought a $100 item, with a purchase discount term 3/10, net 30. If he pays within 10 days, he will only need to pay $97. If not, the amount needs to be fully paid within 30 days. • Bulk Discounts – purchasing a large quantity and getting a discount on the price

10. Shipping • In retail sales transactions, shipping charges are not subject to tax. • Parcel Post – offered by the U.S. Postal Service • Express Mail services include Federal Express, UPS (United Parcel Service), and DHL Express.

11. Tax TableSales Tax and Example Your store ships products worldwide from one fulfillment center. You must collect a 15% sales tax on orders shipped to geographical zone A and a 7% sales tax on orders shipped to geographical zone B. You do not need to collect sales tax for orders shipped to other regions in the world. The following tables summarize the taxes that must be collected:

12. Shipping/Delivery TableShipping Charges and Example • You must also charge shipping for orders shipped to geographical zone A and geographical zone B. • For shipments to addresses in geographical zone A, shipping charges are $15, while shipping charges are $10 for shipments to addresses in geographical zone B. The rest of the world is subject to $25 shipping charges.

13. Delivery • Delivery terms are part of the selling arrangement negotiated between the buyer and the seller. • F.O.B. = Free On Board • F.O.B. destination – The ownership remains with seller until goods reach their destination. Seller pays costs. • F.O.B. shipping point – The buyer pays shipping costsand is responsible for transit damages. • F.O.B. factory freight prepaid – The goods become the buyer’s property, but the seller pays for shipping. • F.O.B. destination charges reversed – The buyer pays but if goods are lost or damaged in transit, the buyer’s investment is protected.

14. How do charges and discounts affect the price of purchases? • Can increase the cost of items, overall, to cover credit card charges and frequent discounts • Retailers want to make money, so they pass the charges/loss of revenue because of discount down to the customer

15. How does technology speed up calculations of charges and discounts? • Don’t have to figure “in your head” or by hand calculations of charges and/or discounts • Cash register/POS (point of sale) terminal/Register does it for you, so you don’t have to make change • Ex: $6.65 sale. You are given a $10 bill. How will you make change? • Lessens the time taken to double check figures.

16. What is the impact of incorrectly calculating charges/discounts? • Drawer/register doesn’t balance • Costs the retailer money • May cost the retailer a customer • Ex: Overcharging the customer • Ex: Customer loses confidence in store, as the transaction wasn’t correct • Takes time to redo the sale/void out the previous transaction • Books/accounting don’t reconcile

17. What is a special order? The request of an item not normally in stock or carried at a store

18. How does accepting special orders affect retailers? • Continue to meet customers’ needs and establish their loyalty • Time consuming to find the item, place, track, and deliver order • May lose money on an item if a price is quoted to a customer before the total cost (price, shipping, tax) is made aware to you---the retailer.

19. What is the criteria for accepting special orders? • Being able to locate the item and get it in a reasonable amount of time (ie by when the customer needs it) • 20% or sometimes 50% deposit required • Will the business make money on it? Or lose money on it?

20. What paperwork is needed to process special orders? • Ticket—outlining exactly what is ordered (color, size, model) • Deposit money recorded on ticket • Purchase order for vendor • Sales receipt---paid in full

21. Why obtain specific information when processing special orders? • To insure retailer is ordering exactly what customer wants • If wrong color or size is ordered, customer won’t be happy and may not do business with the retailer anymore. • Vendor may not take incorrectly ordered item back. • Costs money for the retailer to ship back/replace (if can) or to have at store and not sell.

22. .30 * $163.00 = $48.90 .05 * 64.00 = $3.20