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Foundation to Sales

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  1. Session One: Course Overview
    2 Topics
  2. Session Two: The Role of a Sales Person
    3 Topics
  3. Session Three: The Sales Conversation and Closing the Deal
    9 Topics
  4. Session Four: Sales Success Factors
    1 Topic
  5. Session Five: General Industry Terms and Concepts
    Session Five: General Industry Terms and Concepts
    1 Topic
  6. Session Six: Point of Purchase
    2 Topics
  7. Session Seven: The Importance of Good Sales and Customer Relations
    15 Topics
  8. Session Eight: Sales Ethics
    4 Topics
  9. Session Nine: On-line Sales Techniques
    15 Topics
  10. Session Ten: A Personal Action Plan
    3 Topics
  11. Course Summary
  12. Recommended Reading List
Session 5, Topic 1
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Most Important Concepts used in the Industry and in Sales

24 Jun 2021
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Most Important Concepts used in the Industry and in Sales

80-20 Rule

A commonly used rule of thumb, the 80/20 Rule, implies that a small number of events (20%) is responsible for a large percentage (80%) of the results. The principle was suggested by Joseph M. Juran and named after Italian economist Vilfredo Pareto.

Acid Ratio Test

A measurement of how well a business can meet its short-term financial obligations without selling any inventory.

Add-On Sales

Add-on sales is the promotion of additional products or services to a customer at the time of purchase.


Atmosphere is the physical characteristics and surrounding influence of a retail store that is used to create an image to attract customers.

Average Inventory

Average inventory cost is found by adding the beginning cost inventory for each month plus the ending cost inventory for the last month in the period. If calculating for a season, divide by 7. If calculating for a year, divide by 13.

Bill of Ladling

A bill of lading is a document used as evidence that a transport company or carrier received goods from a shipper.

Booking Programme

A vendor booking programme is the opportunity to view new products or samples now and to place an order for that merchandise to be delivered at a later date.

Brand Awareness

A gauge of marketing effectiveness measured by the ability of a customer to recognize and/or recall a name, image or other mark associated with a particular brand.


A brand is a name, symbol or other identifying mark for a seller’s goods or services. It is distinct from other sellers.


The point in business where the sales equal the expenses. There is no profit and no loss.

Brick and Mortar

Brick and mortar store refer to retail shops that are in a building as opposed to an online shopping destination, door-to-door sales, kiosk, or other similar site not housed within a structure.

Business Model

A retail business model is essentially how a retail business is planned, organized, and operates to cover expenses and generate a profit. Our business model is how we make money.

Business Plan

A detailed document describing the past, present and future financial and operational objectives of a company.


Capital is money available to build and grow a retail business. These liquid assets represent the amount of ownership and risk in a business.

Cash Discount

A percentage reduction in price for payment within a specified period.


The movement of money in and out of a business and the resulting availability of cash.

Chain store

One of a number of retail stores under the same ownership and dealing in the same merchandise.


Competition in retail is the rivalry between sellers striving to obtain the same customer.

Contribution Margin

Contribution Margin is the difference between total sales revenue and total variable costs. The term is applied to a product line and is generally expressed as a percentage.


The price paid for the product, plus any additional costs necessary to get the merchandise into inventory and ready for sale, including shipping and handling.


A promotional tool in the form of a document that can be redeemed for a discount when purchasing goods or services. Coupons feature specific savings amount or other special offer to persuade consumers to purchase specific goods or services or to purchase from specific retailers.


Customer Relationship Management (CRM) is a business strategy designed to reduce costs and increase profitability by strengthening customer loyalty.


Cross-selling refers to a sales technique in which the salesperson recognizes what a customer is purchasing and will make suggestions or recommendations of other related merchandise the shopper may also be interested in purchasing.


The number of identical products (or same SKU) facing out toward the customer. Facings are used in planograms and when zoning a retail store.


A method of stock rotation in which goods that are received first are sold first. Newly received product is stocked behind the older merchandise.

FOB Shipping

Shipping term used to indicate who is responsible for paying transportation charges.


A measure of inventory productivity that expresses the relationship between your total sales, the gross profit margin you earn on those sales, and the number of dollars you invest in inventory.

Gross Margin

Gross margin is the difference between what an item cost and for what it sells.


Inventory is the merchandise a retail store has on-hand. The term also refers to the act of counting, itemizing, and recording in-stock merchandise or supplies.

Inventory Turnover

The number of times during a given period that the average inventory on hand is sold and replaced.


A journal is the electronic or paper documentation of all transactions that have been recorded on a cash register.


Keystone pricing is a method of marking merchandise for resell to an amount that is double the wholesale price.

Loss Leader

Merchandise sold below cost by a retailer to attract new customers or stimulate other profitable sales.

Loss Prevention

Loss prevention is the act of reducing the amount of theft and shrinkage within a business.


The amount of gross profit made when an item is sold.


Planned reduction in the selling price of an item, usually to take effect either within a certain number of days after seasonal merchandise is received or at a specific date.

Marketing Calendar

A marketing calendar is a tool used by retailers to show what marketing events, media campaigns and merchandising efforts are happening when and where, as well as the results.


A percentage added to the cost to get the retail selling price.

Merchandise Mix

A merchandise mix is the breadth and depth of the products carried by retailers. Also known as product assortment.

Minimum Advertised Price (MAP)

A suppliers pricing policy that does not permit its resellers to advertise prices below some specified amount. It can include the resellers retail price as well.

Operating Expenses

The sum of all expenses associated with the normal course of running a business.


Visual description, diagram or drawing of a store’s layout to include placement of particular products and product categories.



Point-of-Purchase Display

Point-of-purchase displays, or POP displays, are marketing materials or advertising placed next to the merchandise it is promoting. These items are generally located at the checkout area or other location where the purchase decision is made. For example, the checkout counters of many supermarkets are cluttered with chewing gum and candy POP displays.

Point of Sale

Point of Sale (POS) refers to the area of a store where customers can pay for their purchases. The term is normally used to describe systems that record financial transactions. This could be an electric cash register or an integrated computer system which records the data that comprises a business transaction for the sale of goods or services.

Private Label

Products which are generally manufactured or provided by one company under another company’s brand.

Product Breadth

The product breadth is the variety of product lines offered by a retailer.

Product Depth

Product depth is the number of each item or style of a product on the shelves. Product depth is also known as product assortment or merchandise depth.

Product Life Cycle

The stages that a new product is believed to go through from the beginning to the end: Introduction, Growth, Maturity and Decline.

Profit Margin

A ratio of profitability calculated as earnings divided by revenues. It measures how much out of every dollar of sales a retail business keeps in earnings.

Purchase Order

A purchase order (PO)is a written sales contract between buyer and seller detailing the exact merchandise or services to be rendered from a single vendor.

Quantity Discount

A reduction in price based on the amount purchased. May be offered in addition to any trade discount.


Company that sells goods or commodities directly to consumers. These items are generally sold in small quantities, at a marked-up price from the manufacturer or wholesaler.


Radio Frequency Identification (RFID) refers to the technology that uses radio waves to transmit a product’s unique number from a tag to a reader.

Run of Paper

Run of paper is an advertising term by newspapers referring to an advertisement that may be placed anywhere within the paper.

Sales Floor

The sales floor is the location of a retail store where goods are displayed, and sales transactions take place. For example, the receiving of merchandise takes place in the stock room, but all direct sales and customer interactions are done on the sales floor.

Sell-Through Rate

Sell-through Rate is a calculation, commonly represented as a percentage, comparing the amount of inventory a retailer receives from a manufacturer or supplier against what is sold to the consumer.


Retail shrinkage is a reduction or loss in inventory due to shoplifting, employee theft, paperwork errors and supplier fraud.

Stock Keeping Unit

The Stock Keeping Unit (SKU) is a number assigned to a product by a retail store to identify the price, product options and manufacturer.

Staple Goods

Staple goods are products purchased regularly and out of necessity. Traditionally, these items have fewer markdowns and lower profit margins. While price shifts may raise or lower demand for certain kinds of products, the demand for staple goods rarely changes when prices change.


Sustainability refers to the characteristic of certain products that provide environmental, social and economic benefit. Sustainable products are produced with minimal energy and packaging. They are considered eco-friendly as they cause no harm to the environment throughout their entire life cycle.

Trade Credit

An open account with suppliers of goods and services.

Trade Discount

A discount on the list price given by a manufacturer or wholesaler to a retailer.

Visual Merchandising

Visual merchandising is the art of implementing effective design ideas to increase store traffic and sales volume.


Wholesale is the sale of goods, generally in large quantity, to a retailer for resale purposes.

Word of Mouth

Possibly the most effective form of marketing. It is the verbal recommendation and positive approval by a satisfied customer.

Working Capital

Liquid assets available to build and grow a retail business. It is measured by current assets minus current liabilities. A positive working capital is needed until the shop can produce a profit.


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