(a)What is turnover in commerce?
(b) List and explain six factors that determine the turnover of a product.
Explanation
(a) Turnover is the total net sales of a trader during a given period of time OR Turnover is the total sales less goods returned for a particular period.
(b) Factors that determine the turnover of a product:
(i) The price of the product
(ii) The number of competitors for the product
(iii) The type/nature of the product
(iv) Advertising, publicity and sales promotion.
(v) Forces of demand and supply
(vi) Goodwill and reputation of the sellers.
(vii) Variety of goods offered by the seller.
(viii) location of the business
(ix) Terms of sale
(x) Availability of the product.
(i) The price of the product determines its turnover if the prices is very high, less of it will be sold, but if the price is low more of the product will be sold, resulting to high turnover.
(ii) If the product has a lot of competitors e.g. detergent, the turnover on the product will depend on the competing products. Thus, if the other products are not available in the market then the turnover of the product will be high.
(iii) The nature of the product will determine the turnover of the product. If the product is a necessity e.g. food-stuff then the turnover will be high, but if the product is a luxury e.g. electronics, cars, then the turnover will be low.
(iv) Advertising, publicity and sales promotion also determine the turnover of the particular product. The turnover of a product is usually increased by extensive advertising, publicity and sales promotion.
(v) The forces of demand and supply also determine the turnover of a product when there is an increase in the demand of a product, the turnover of that product will increase, but it falls if the demand for it also falls.
(vi) The Goodwill and reputation of the seller of the product also determine the turnover for that product. Generally, customers will run away from a seller that does not have good customer approach or manners.
(vii) Variety of goods offered by the seller: This also determine the turnover of the product. The turnover for a product will be high, if the seller has a lot of variety of products that are likely to attract customers to them.
(viii) Location of the business: It is more likely for a shop that is strategically located or in a highly populated area to make more sales than a shop that is in a hidden place or it is sparsely populated area.
(ix) Terms of sale: Shops that offers credit sales, discount or hire purchase facilities to customers can induced them to buy more form a particular shop than from others that do not.
(x) The product must be readily available to meet customers demand.