Essentials of marketing

Essentials of Marketing Manmohan Joshi Download free books at Manmohan Joshi Essentials of Marketing Download free eBooks at bookboon.com 2 Essentials of Marketing © 2012 Manmohan Joshi & Ventus Publishing ApS ISBN 978-87-403-0206-6 Download free eBooks at bookboon.com 3 Essentials of Marketing Contents Contents 1 Market and Marketing 8 1.1 Meaning of market 8 1.2 Marketing 8 1.3 Objectives of Marketing 8 1.4 Importance of Marketing to the Society 9 1.5 Merchandising 9 1.6 Selling 9 1.7 Distribution 10 1.8 Goods 10 1.9 Services 12 1.10 Modern Marketing 12 1.11 Features of Modern Marketing 12 2 Marketing System 14 2.1 Deinition 14 2.2 Marketing Process 14 www.sylvania.com We do not reinvent the wheel we reinvent light. Fascinating lighting offers an ininite spectrum of possibilities: Innovative technologies and new markets provide both opportunities and challenges. An environment in which your expertise is in high demand. Enjoy the supportive working atmosphere within our global group and beneit from international career paths. Implement sustainable ideas in close cooperation with other specialists and contribute to inluencing our future. Come and join us in reinventing light every day. Light is OSRAM Download free eBooks at bookboon.com 4 Click on the ad to read more Essentials of Marketing Contents 3 Marketing Functions 16 3.1 Classiication: 16 4 Pricing 19 4.1 What is Price? 19 4.2 Pricing Objectives 20 4.3 Procedure for Price Determination 21 4.4 Price Leader 23 4.5 One price or Variable Price 24 4.6 Resale Price Maintenance 24 5 Branding and Packaging 25 5.1 Branding 25 5.2 Packaging 27 6 he Promotional Programme 29 6.1 Forms of Promotion 29 360° thinking . Discover the truth at www.deloitte.ca/careers © Deloitte & Touche LLP and affiliated entities. Download free eBooks at bookboon.com 5 Click on the ad to read more Essentials of Marketing Contents 7 Sales Promotion 31 7.1 Importance of Sales Promotion 31 7.2 Objectives of Sales Promotion 31 7.3 Kinds of Sales Promotion 32 8 Advertising 38 8.1 What is Advertising? 38 8.2 Objectives of Advertising 38 8.3 Functions of Advertising 39 8.4 Advantages of Advertising 39 8.5 Advertising Media 41 9 Personal Selling 44 9.1 Objectives of Personal Selling: 44 9.2 Duties of a Salesperson: 44 9.3 Qualities of a successful Salesperson: 45 9.4 Sales Personality 45 9.5 Features of Personal Selling 46 9.6 Process of Personal Selling 46 We will turn your CV into an opportunity of a lifetime Do you like cars? Would you like to be a part of a successful brand? We will appreciate and reward both your enthusiasm and talent. Send us your CV. You will be surprised where it can take you. Send us your CV on www.employerforlife.com Download free eBooks at bookboon.com 6 Click on the ad to read more Essentials of Marketing Contents 10 Sales Forecast 48 10.1 Factors afecting a Sales Forecasting 48 10.2 Methods of Sales Forecasting 49 10.3 Categories of Sales Forecast 51 11 Marketing of Consumer Goods 52 11.1 52 11.2 Characteristics of Consumer Goods: 53 11.3 Classiication of Consumer Goods 54 11.4 Channels of Distribution: 57 12 Marketing of Industrial Goods 58 12.1 Classiication of Industrial Goods: 58 References 64 he Author 65 I joined MITAS because I wanted real responsibili� I joined MITAS because eal responsibili� Real work International Internationa na al opportunities �ree wo work or placements o �e Graduate Programme for Engineers and Geoscientists Maersk.com/Mitas www.discovermitas.com Month 16 as a construction I was supervisoras ina the North Sea advising and e helping foremen he ssolve problemse na al or o s Download free eBooks at bookboon.com 7 Click on the ad to read more Essentials of Marketing Market and Marketing 1 Market and Marketing 1.1 Meaning of market he common usage of market means a place where goods are bought or sold. A market need not necessarily mean a place of exchange. he word market is commonly used and may even mean or aim in any of the following: • Market may mean a place where buying and selling take place; • Buyers and sellers come together for transaction; • An organization through which exchange of goods takes place; • he act of buying and selling of goods (to satisfy human wants); • An area of operation of commercial demand for commodities. 1.2 Marketing Marketing is a human activity to satisfy needs and wants, through an exchange process. A demand is a want for which the consumer is prepared to pay a price. A want is anything or service the consumer desires or seeks. Wants become demands when backed by purchasing power. A need is anything the consumer feels to keep himself alive and healthy. A transaction consists of a value between two parties. he aim of marketing is to make sales in order to earn reasonable proit for the producer. Marketing is the creation and the delivery of a standards of living; it is inding out what customers want, then planning and developing a product or service that will satisfy those wants; and then determining the best way to price, promote and distribute that product or service. he purpose of business is to create a customer by which stress is laid on two aspects: (a) identiication of consumer needs, and (b) organizing the business to meet these needs. he modern concept focuses on the consumers and their satisfaction. he approach of modern marketing is consumer-oriented instead of solely product-oriented. 1.3 Objectives of Marketing In the modern business world the objective of marketing is more than making proit. he following are the aims of marketing: • Intelligent application of modern marketing policies; • To develop policies and their implementation for a good result; • To suggest solutions by studying the problems relating to marketing; • To ind sources for further information concerning the market problems; • To strengthen existing marketing function; • To take suitable actions as required. Download free eBooks at bookboon.com 8 Essentials of Marketing 1.4 Market and Marketing Importance of Marketing to the Society In today’s society marketing plays a major role. • It is a connecting link between the consumer and the producer. Marketing process brings new items to retail shops, from where the consumers can buy them. • It helps in increasing the living standard of people. Because of large scale production, prices of goods come down. hus reduction in price will result in a higher standard of living. • It helps to increase the nation’s income. Eicient system of marketing reduces the cost to the minimum, this in turn lowers the prices and the consumer’s purchasing power increases. his will increase the national income. • It increases employment opportunities. For continuous production continuous marketing is needed. hus increased activity provides more job opportunities to many people. • It helps in selling surplus goods to other countries where there is demand for such goods. 1.5 Merchandising Merchandising is only product planning. It aims at the internal planning relating to products or services for marketing at the right time, at the right price and in proper colour, quality and sizes. 1.6 Selling Selling is the need of the sellers. It is the internal aim of business. hus it is only a part of marketing study. Marketing is much wider than selling and much more dynamic. Selling revolves around the needs and interests of the seller; marketing revolves around the needs and interests of the buyer. Selling seeks proits by ‘pushing’ the products on the buyers. Marketing too seeks proits, but not through ‘pushing’ of the products but by meeting the needs of the customers and by creating value satisfaction for them. A truly marketing-minded company tries to create value-satisfying goods and services which the consumers want to buy. What it ofers for sale is determined not by the seller but by the buyer. Selling is certainly a part of marketing. hat is the last function in the process of marketing. Download free eBooks at bookboon.com 9 Essentials of Marketing Market and Marketing he following table gives the diference between selling and marketing: Selling Marketing 1. Emphasizes product. 1. Emphasizes on consumer’s wants. 2. Sales are the primary motive. 2. Satisfaction of the customer is primary. 3. First production, then 3. First customer’s need is known and then selling takes place at a proit production takes place; then the product is without knowing customer’s sold at a proit. needs. 4. External-market orientation. 4. Internal company orientation. 5. Company’s need is the 5. Buyer’s need is the motive. 6. Consumer determines price; price determines cost. motive. 6. Cost determines price. 7. Marketing views the customer as the very purpose of the business. 7. ‘Selling’ views the customer 8. It is a function that converts the consumer needs into products. as the last link in the business. 8. It is an activity that converts the goods into cash. 1.7 Distribution It means the physical transfer of goods. It is one of the processes of marketing. It covers the methods to get the products to the market. It is concerned with physical movement of goods from producer to wholesaler, from wholesaler to the retailer, and from retailer to the consumers. 1.8 Goods Goods may also be called as product. hey are: Download free eBooks at bookboon.com 10 Essentials of Marketing 1.8.1 Market and Marketing Consumer goods: hese types of goods are purchased by ultimate users or consumers for their personal use. For example, food, biscuits, toys, clothes, cars, refrigerators, electronics etc are purchased by consumers to satisfy their non-business wants. hese goods may be further classiied as: • Consumer goods: Consumers and purchasers get commodities such as bread, soap, sugar, petrol, cold drinks, and stationery items etc at minimum efort and cost. he purchase of such goods cannot be postponed because they are daily necessities of life. • Shopping goods: Before making inal selection, the consumers make an enquiry as to the products’ comparative prices, durability, style etc from diferent shops. Goods like jewelry, furniture, ready-made garments etc are more costly than convenience goods. heir need is also less when compared to the convenience goods. • Specialty goods: Certain products pose special attraction to the consumers. hese types of goods are of high value and are manufactured by reputed companies. For example, cars, refrigerators, fancy goods, televisions, fans, scooters, photographic equipment, stereo equipment etc. 1.8.2 Industrial goods: Goods which are used for production or used in producing other products are industrial goods. hese types of goods are generally sold to manufacturers who in turn use them to make their own products. he industrial goods can be further classiied as: • Raw materials: Raw materials are the basic materials entering physically into the inal products, for example, building stones, raw cotton, raw jute etc. • Fabricated materials: Materials of this category will enter physically into the inal products, but some type of processing is already undergone, for example, bricks, copper sheets, leather, yarn etc. As the processing is incomplete, further processing is required. • Component parts: Such types of parts have already undergone some processing and more or less the parts can be called as inal products. It means that the assembly of several component parts makes the inal products. he components are visible in the inal products, such as batteries, tyres, speedometer, spark plugs etc. • Installation: Machines, buildings, equipments etc do not enter into inal products and are durable for a long period. hey are essential for production, for example, gas, power installation etc. hey need heavy expenses for installation and sometimes decide the nature, scope and eiciency of an organization. Download free eBooks at bookboon.com 11 Essentials of Marketing Market and Marketing • Accessories: hey are light machines or tools which are used for the operation of a business. hey are not used for manufacturing a product, for example, hand-tools, cash register in retail shop, typewriters, calculators, computers, accounting machines etc. 1.9 Services Services are tangible activities which are ofered for sale as such or in connection with sale of goods, for example, consultation, banking etc. Services may be of two types: • Personal: hey comprise education, communication, medical, legal services etc. • Business: hey comprise advising, mercantile credits, collection agencies etc. 1.10 Modern Marketing Modern marketing covers all business activities in order to know all aspects of demand, product planning, distribution and facilitating the entire marketing process. Modern marketing gives importance to a well-coordinated marketing programme. It aims to attract the customers. 1.11 Features of Modern Marketing 1.11.1 Consumer orientation: Modern marketing recognizes that the consumer is supreme. he managerial attention is focused on the market and the consumer. Management is now concerned with consumer satisfaction and not proit or sales volume alone. Consumer has become the centre of all business decisions. Having satisied customers is the main aim of modern marketing. It is now believed that proit can be earned only by serving the consumer’s needs. 1.11.2 Modern marketing begins with the customers: Producers in earlier times had little care for the consumers. Now, production is carried on in large quantity. he manufacturer produces more than what the people need. he marketer aims to develop the market; the market becomes seller’s market. Similar marketers appear in the market and there arises competition. he consumer, who comes in the last stage, accepts the goods; there is no alternative. But the situation has changed. Market has developed from national to international. Competition is the order of the day. Businessmen have started realizing that earning proit is possible only through the consumer’s satisfaction. To satisfy a consumer, his needs are to be known. For this purpose, it has become necessary to know what the consumer needs. his is possible only when information is collected from the consumers. hrough market research information about current consumer needs can be known. herefore, we can say that the task of marketing starts with the consumer and ends with the consumer. Instead of trying to market what is easiest for us to make, we must ind out much more about what the consumer is willing to buy. Download free eBooks at bookboon.com 12 Essentials of Marketing Market and Marketing 1.11.3 Modern marketing begins before production: Earlier there was less competition and as such sales were easily made. But now this stage has changed. he consumer looks for the usefulness and acceptability of a product. As such it has become necessary to ind out the needs and desires of consumers through market research. he information from the market or the consumer will decide the future of the product. hus, product planning and development is undertaken before the actual production takes place. the pricing, distribution etc are secondary. 1.11.4 Modern marketing is a guiding element: At present competition has increased tremendously because many manufacturers produce similar goods in large quantities. he ability of the marketer depends on the ability to ind a consumer and to satisfy him. People may choose one among the many similar products. hey decide what product to purchase and what product not to purchase. Businessmen need to keep this in mind. Download free eBooks at bookboon.com 13 Click on the ad to read more Essentials of Marketing Marketing System 2 Marketing System 2.1 Deinition Meaning: he marketing system means an exchange between two parties i.e. business activity. As an example for the marketing system, we take a remote village, which consists of a small market, a few traders and donkeys, camels or bullock-carts for transportation. his is a marketing system which existed earlier in villages. But gradually changes took place and the marketing task became more complex. he manufacturers and the end users have no direct contact. he new concept of marketing – consumer-oriented marketing – took shape. All these cause the appearance of middlemen. hus the modern marketing system involves large scale production, tough competition, complex channels of distribution, communication etc. Hence the meaning of marketing system involves: • Business institutions engaged in marketing functions; • he marketing environment; • Customers served by business organizations; • he marketing tasks performed by the system. Briely, we can say that: • Producers, manufacturers etc perform one or more marketing functions. hey are primarily engaged in production. hey produce raw materials, semi-inished goods or services (such as banks), and are the irst marketing institutions. • Middlemen – such as retailers, transporters etc – add time, place, form and possession utility to the market. All these facilitate the low of goods from the producer to the market. • he ultimate consumers are those who consume the products or services. • Industrial users are those that use the goods or services in the course of business so as to produce goods for ultimate consumers – consumer goods or industrial goods. • he marketing system must aim at distribution, passing information about the product to the market through advertising, personal selling, display etc. 2.2 Marketing Process Marketing is a process by means of which goods and services are exchanged. he goal of marketing is to move the products from the producer to the consumer. he low of goods from the place of its origin to the place of distribution involves a number of activities, which is not a simple task. hese activities of transfer are functions which are known as marketing process. Download free eBooks at bookboon.com 14 Essentials of Marketing Marketing System he marketing process involves three major activities: 2.2.1 Collection: his is the irst process of marketing. It aims at the collection of products at a central place. It is because of: • Small lot output: Agricultural produce, eggs, vegetables, dairy products such as milk, butter etc are collected at a central place from a large number of farmers. hese are marketed in natural form. To make other marketing services such as grading and standardization, for the beneit of consumers, all products – rice, wheat, cotton, tea etc – are brought to a central place. • Assembly of parts: Some types of manufactured products need assembly work, for example, spare parts of products. hese parts are manufactured by diferent companies and at diferent places. To make the inal products, collection is necessary. • Regular supply: To ensure the continuous supply of products to the consumers, collection at a single point is necessary. Generally these jobs are undertaken by wholesalers, exporters, importers, agents etc. 2.2.2 Distribution: he goods or products, assembled at a certain place, have to be distributed to the consumers. • Some of the products are distributed to manufacturers and the remaining goods are distributed to the inal consumers through a chain of wholesalers, retailers, agents etc. • Distribution is necessary because the buyers are not located near the manufacturer. • he purpose of production aims at inding consumers at proitable and acceptable price. For this, a good system of distribution is necessary. 2.2.3 Equalization: Between the two activities i.e. collection and distribution, there is the equalization process. • Demand and supply of goods should be balanced through storage and transportation. • Supply should meet the demand in needed quantity and quality at the required time and place. • Equalization aims at regular supply of goods which are produced in a particular season, but consumed throughout the year e.g. rice, wheat, fruit, vegetables. Similarly, some type of goods have only seasonal demand, but production takes place continuously, for example, rain-coats, umbrellas, sweaters, woolen socks etc. his equalization ensures regular supply. • Transport brings equalization of supply, place-wise. • Warehousing enables equalization of supply, time-wise. Download free eBooks at bookboon.com 15 Essentials of Marketing Marketing Functions 3 Marketing Functions Marketing involves certain activities to make the goods to start journey from the place of production to the place of consumption. he act, operation and service which are concerned with the marketing activities are called marketing functions. he marketing functions link the producer and the ultimate consumer. he functions of marketing involve a number of operations to be performed side by side. Take for example wheat; it travels from the land (farmer) to the inal consumer through the functions of collection or buying, storing, grading, packing, transporting etc. hus it involves several functions including risk-bearing and market information. 3.1 Classiication: he marketing functions are classiied as under: 3.1.1 Exchange functions: Exchange brings about changes in the ownership of products. • Buying: It is the irst step of marketing functions. It is carried out by all marketers – manufacturers, wholesalers, retailers etc. Buying and selling both happen at the same time. For example, if I buy a thing, then there should be someone to sell the thing. hat is, without selling, there is no buying. Buying may be done either directly or through middlemen. Download free eBooks at bookboon.com 16 Click on the ad to read more Essentials of Marketing Marketing Functions • Assembling: Assembling is concerned with the collection of goods of the same type from diferent sources at a place for further movement. Generally, goods are bought from several sellers. When they are to be bought from diferent small producers, they are to be assembled together at a central place. he main aim of assembling is to bring the products to a central place in order to distribute them either for production or consumption purposes. he job of assembling is carried out by middlemen, manufacturers etc. • Selling: Selling and buying happen together. In business, the selling function is very important. he main aim of marketing is to sell the products at a proit. Sales are concerned with the activities which change the desire into demand. In the modern world, the process of selling is an important function because of large scale production, tough competition etc. 3.1.2 Physical functions: he next function of the marketing process is the physical supply. Physical transfer of goods from the manufacturer to the consumer takes place by means of storage and transportation • Storage: Products are kept safe from the time of production to the time of consumption. Production may be during a particular season, but demand is regular. In the same way, production may be regular, but demand may be only seasonal. In both the cases, products have to be stored. Storage function is necessary in collection as well as distribution. he function is done by manufacturers, wholesalers, and professional warehouse keepers. Marketers can easily balance the supply with demand through warehousing and transportation. • Transportation: Since markets are geographically separated from the production place, transportation is essential. When the distance between the production place and the consumption place increases, the importance of transport increases. he goods from a place where they are not needed are transferred to the place where they are needed. 3.1.3 Facilitating functions: hese functions are supporting activities. But these activities contribute in carrying out other functions. Download free eBooks at bookboon.com 17 Essentials of Marketing Marketing Functions • Financing: Finance is needed for production as well as for marketing. Generally, there is a gap of period between the purchase of raw materials and the production of raw materials and the production of inished goods. It means that the manufacturer who invests in raw materials has to wait till the consumers pay for the inished goods. his waiting period is undertaken by inancial institutions by granting loans. At every stage of buying or selling, the question of payment of price arises. he bankers – who are dealers in money – provide money on credit to the business. here are various kinds of inance needed – short term, medium term, long term etc. he sources of inance are commercial banks, inance companies etc. • Risk-bearing: In business there are several risks – damage to goods, physical loss, changes in the value of goods, bad management, credit losses etc. he losses may also be on account of ire, lood, bad debts etc. In all such cases business organizations try to reduce the possibility of risks. Some risks are insurable while others are not. For example, loss on account of ire, accident etc can be insured with insurance companies. But the loss on account of fall in demand, prices, competition etc cannot be insured. Marketing plans have to keep in mind such situations. • Standardization: Standard is used in providing certain basic qualities to the goods for their use. Standard is a speciication. It is a ‘grade’ or ‘category.’ Standards are ixed on physical characteristics of products. he standardized products possess uniform characteristics, for example, shape, weight, size etc. Ater standardization several products are graded. For example, grading of fruit and other agricultural products etc is done according to their size, colour, juice content, taste etc. Standardization and grading are closely related activities. Both are important and widen the markets. It is also useful for sales by description. • Market information: he success of marketing depends on correct and timely decisions. hese decisions are based on market information. Modern marketing must have information of size, location, characteristics of market. he customer’s wants, habits, purchasing power etc are to be considered. he strength or weakness of competitors, supply and demand is also to be taken into account. Marketing information includes all facts, estimates, opinions and other information used in making decisions, which afect the marketing of products and services. • Promotion: Promotion is a wide term including advertising, personal selling, sales promotions etc. Marketing communications are essential for both sellers and buyers. Promotional programmes are needed for consumer goods and industrial goods. Efective promotion will increase the market share of manufacturers. Download free eBooks at bookboon.com 18 Essentials of Marketing Pricing 4 Pricing Price is the main factor which afects the sales organization. A good price policy is of great importance to the producers, wholesalers, retailers and the consumers. If the prices are too high, only a few buyers purchase and if the prices are low, several buyers purchase. hus market may be reduced or increased. herefore, a sound pricing policy must be adopted to have maximum sales. Prices play an important role in the economy. he time within which the product is sold varies. he goods, which are of perishable nature and have frequent changes of style, may not be stocked for a long time. In the case of durable goods, they can be stocked for a longer time, in the hope of getting favourable price. Holding the stock depends upon the inancial resources of the farmer, middlemen, wholesaler etc, and the perishable nature of goods. 4.1 What is Price? Price may be deined as the exchange of goods or services in terms of money. Without price there is no marketing in the society. What you pay is the price for what you get. Excellent Economics and Business programmes at: “The perfect start of a successful, international career.” CLICK HERE to discover why both socially and academically the University of Groningen is one of the best places for a student to be www.rug.nl/feb/education Download free eBooks at bookboon.com 19 Click on the ad to read more Essentials of Marketing Pricing When you pay fee to school or college. When you engage a labour on wages. When you pay rent on your house. You pay a When you pay salary to a salesperson. WZ/ When you pay charges on your trip. When you pay interest on loans. When you pay for your food, clothing etc. 4.1.1 Importance of Price he market price of a product inluences wages, rent, interest and proits. he price is a matter of great importance to the buyer and the seller. Exchange of the goods or services takes place only when the prices are agreed upon by the seller and the buyer. Price can decide the success or failure of a business organization. he marketing demand for a product or service to a large extent depends upon the price of the product. Price will afect the competitive position and share of the market. 4.2 Pricing Objectives To perform the marketing job eiciently, the management has to set goals irst. Before determining the price itself, the management must decide the objectives of pricing. he main goals in pricing may be classiied as follows: 4.2.1 Pricing for target return: Business needs capital for various types of activities. When a businessman invests capital in a business, he calculates the probable return on his investment. A certain rate of return on investment is aimed. hen the price is ixed accordingly. he target of a business organization is ixed in terms of investment. For example, a company may set a target of 10% or 15% return on investment. his target may be for a long term or short term. Wholesalers and retailers may follow the short term, usually a year. hey charge a certain percentage over and above the price at which they purchased, which is enough to meet operational costs and some proit. his target may be revised from time to time. he objective of pricing is also known as pricing for proit. Download free eBooks at bookboon.com 20 Essentials of Marketing 4.2.2 Pricing Market share: he target share of the market and the expected sales are the most important consideration in pricing the products. Sometimes a company may lower the prices, in comparison to the competitors’ products, with the intention to increase its market share. By reducing the price customers get the beneit. he management can compare the present market share with the past market share and can know well whether the market share is going up or coming down. When the price is lowered, the proit may come down but the sales will increase as more customers may buy the product. his way the company will also not lose but rather gain ultimately. 4.2.3 To meet or prevent competition: he pricing objective may be to meet or prevent competition. While ixing the price, the price of similar products, produced by the same company, will have to be considered. At the time of introduction of new products to the market, a low price is likely to attract customers, and can establish a good market share. he low price policy discourages the competitors. 4.2.4 Proit maximization: Business is run with an idea of earning proit at the maximum. he aim should be to maximize proits on total output, rather than on every item. 4.2.5 Stabilize price: It is long term objective and aims at preventing frequent changes in price. It also prevents price war among the competitors. When the price changes oten, customers start losing conidence in the product. he prices are determined in such a way that they do not fall below a particular level and also do not go up beyond a certain level. he aim is to live and let live. he companies remain satisied with small proits during periods of short supply of products. 4.2.6 Customers’ ability to pay: he prices that are charged quite oten difer from person to person, according to his ability to pay. For example, several doctors charge fees for their services according to the paying ability of the patient. 4.3 Procedure for Price Determination Every business organization follows its own policy in determining the prices of its products. However, the following steps may generally be followed: 4.3.1 Determining demand for the product: he marketer has to make an estimate for his product. Each price that the company might charge will lead to a diferent level of demand. here is a relation between the price charged and the resulting demand i.e. normally higher the price, lower the demand. First it is to be determined whether there is a price which the market expects, and second, to estimate the sales volume at diferent prices. Comparison of the prices of rival products is a good guide in pricing products. In certain cases, the marketer conducts regular survey of buyers, retailers, and wholesalers etc to determine the expected price. Download free eBooks at bookboon.com 21 Essentials of Marketing 4.3.2 Pricing Predict and analyze the competitive reaction: he competitors can inluence the price. To predict the reactions of the competitors, it is necessary to collect information about their product, cost, market share etc. 4.3.3 Establish expected market share: A marketer must decide the share of the market at the expected price. Low priced products may get larger share of the market, and a high priced product may get a small share of the market. Share of the market is also decided by such factors such as present production capacity, cost of plant extension etc. 4.3.4 Select pricing strategy: One strategy is to charge high initial price of the product, at the time of introduction of the product in the market. Manufacturers aim at proit maximization in the shortest period, when market conditions are also favourable. he price is brought down when competitors enter the market. he other strategy is to keep a low introductory price to get a large market share. Here the aim is to catch the major portion of the market. American online LIGS University is currently enrolling in the Interactive Online BBA, MBA, MSc, DBA and PhD programs: ▶ enroll by September 30th, 2014 and ▶ save up to 16% on the tuition! ▶ pay in 10 installments / 2 years ▶ Interactive Online education ▶ visit www.ligsuniversity.com to ind out more! Note: LIGS University is not accredited by any nationally recognized accrediting agency listed by the US Secretary of Education. More info here. Download free eBooks at bookboon.com 22 Click on the ad to read more Essentials of Marketing 4.3.5 Pricing Consider company’s marketing policies: For durable products – such as car, radio, clothes etc – prices need not be reduced. But when the fashion changes, the marketer may compel the wholesalers to sell out the stocks before they go out of fashion. Systems of distribution of products also inluence a manufacturer’s price. A company may sell directly to wholesalers and retailers without any middlemen. hus it can ofer lower price as the likely cost on account of middlemen comes down. 4.3.6 Setting the price: Ater studying and analyzing the above factors diferent companies may decide the prices of their products. hey may also revise their prices from time to time keeping in mind the demand and market share for their products. 4.4 Price Leader All the marketers should decide, whether as a result of policy, they will initiate or follow price changes. he company initiating price changes is called price leader and those following it, price followers. Factors afecting price Price moves up: reasons Price moves down: reasons 1. here is more demand but less 1. here is more supply but less demand. supply. 2. here are weak competitors. 2. here are strong competitors. 3. Sellers hold up goods for higher 3. Sellers push out goods. price. 4. Wages are stable and productivity rises. 4. here is increase in wages but not in productivity. 5. Factors of production are used eiciently. 5. Factors of production are used ineiciently. 6. Buyers are not eager to buy. 6. Buyers are eager to buy. 7. Goods are perishable by nature. 7. Goods are non-perishable by nature. Download free eBooks at bookboon.com 23 Essentials of Marketing 4.5 Pricing One price or Variable Price Generally marketers prefer to sell at one price basis i.e. ofering all similar buyers the same price. his is a fair trade practice, and there is no bargaining. Under variable price, the seller sells similar quantities at diferent prices. Under this policy the price is usually set as a result of bargaining. 4.6 Resale Price Maintenance Resale price is a price at which a retailer sells the products to his buyers. Resale price maintenance is a policy where manufacturers want to control the prices at which retailers will resell the manufacturers’ product. Manufacturers adopt this as marketing policy, identify their product by brand, patent, trade mark etc, and place restrictions and control on the price at which the product will be sold by the retailers. he price will be ixed, printed on the product, and the product will be sold at not more than the maximum price printed. he manufacturer must see that the price is maintained till his products reach the ultimate consumer. his policy prevents unhealthy price competition and bargaining. Download free eBooks at bookboon.com 24 Essentials of Marketing Branding and Packaging 5 Branding and Packaging 5.1 Branding When a manufacturer wants to introduce a new product to the market, he wants to identify his product with an attractive name – Brand name. he buyers identify the product and diferentiate it from those of competitors. Now, almost all products are branded and packaged attractively. he basic purpose of branding is to ix the identity of the producer of a given product. 5.1.1 What is a Brand? • Brand: A brand is a name, term, sign, symbol or design or a combination of them by which the buyers can identify the goods or services of one seller or group of sellers and diferentiate them from those of competitors. • Brand name: hat part of a brand which can be spoken, for example, Sony TV, Toyota car, Nike shoes etc. • Brand mark: hat part of a brand which can be recognized but cannot be spoken, such as a symbol, design, colouring or lettering. . Download free eBooks at bookboon.com 25 Click on the ad to read more Essentials of Marketing Branding and Packaging • Branding: It is a process by which a product is branded. It is the practice of giving a particular name to a product or group of products of one seller. Branding is the process of inding and ixing the means of identiication. In other words, naming a product, like naming a baby, is known as branding. Parents have children and manufacturers too have children i.e. products. hus branding is a marketing process by which a product is named i.e. branded. 5.1.2 Reasons for Branding • It is useful for sales promotion in the market where there is tough competition. • It makes advertisement and publicity easy. • It creates interest in consumers for the product. • Sales can be increased through brands. • It gets the immediate attention of buyers. • It diferentiates the goods of a producer from the goods of competitors. • It ensures standard quality and satisfaction to buyers. 5.1.3 Features of a good Brand • Brand should suggest something about the product – purpose, quality, beneit, use, action etc, for example, Compaq Laptop, Nokia Mobile. • It should be simple, short and easy to pronounce and remember, for example, Lux, Pepsi. • It should be easy to advertise and identify. • It should be of a permanent nature. • It should be clear and attractive. • It must have a pleasing sound to the ear. • It must be original. • It should not be ofensive. • It should create a good image. 5.1.4 Advantages to the Producer • Brand enables a company to build reputation. • It makes it easy for introduction of new products, in a simple process. • It distinguishes products from rival companies. • It is essential for sales promotion and building a demand. • It increases the markets, through demand creation. • It helps in reducing advertising cost. • It brings repeated sales. • It reduces the need for price comparison. Download free eBooks at bookboon.com 26 Essentials of Marketing 5.1.5 Branding and Packaging Advantages to Wholesalers/Retailers • hey require less time to get sold. • Branded products are less risky. • here is a constant demand for branded products. • Branding helps in advertising and display programmes. • Branding reduces the price comparisons. 5.1.6 Advantages to the Consumer • Brand diferentiates the products of diferent producers. • Consumer gets quality goods. • Several people get satisfaction on certain brands which are in great popularity. • It ensures standard of the product. 5.2 Packaging he packaging of a consumer product is an important part of the marketing plan. A good number of companies make square packages in place of round packages which save space. AXA Global Graduate Program Find out more and apply Download free eBooks at bookboon.com 27 Click on the ad to read more Essentials of Marketing Branding and Packaging Packaging means wrapping of goods before they are transported or stored or delivered to a consumer. Packaging is a part of the packing function of marketing. It is one among the activities of designing and producing the container or wrapper for a product. he wrapper or the container is called package. 5.2.1 Packaging as a Marketing Tool he following are the factors which inluence the growth of packaging as a marketing tool: • Self-service: A number of products are sold through the supermarkets on a selfservice basis. hus they are packed and kept ready for sale. Packages attract attention, telling product features, create overall impression and win consumers’ conidence. So good packaging is a must. • Consumer interest: Consumers are willing to pay a little more for convenience, appearance and dependability of better packages. • Company and brand image: To provide special attraction, there must be a good brand and package. 5.2.2 Functions of Packaging • Product protection: Package protects the products. heir journey from manufacturer to consumer is made easy. Package prevents breakage, chemical change, insect attack etc. • Product containers: Package means using just the space in which a product will be contained. Ordinary packing is in the form of throw-away containers. • Product attractiveness: he size and shape of the package, its colour, printed matter on it etc must make the package attractive to look at. Generally consumers feel that a good package contains good quality product. • Product identiication: Packages diferentiate similar products. Packaging and labeling are closely related to branding. Package has a great importance when the product cannot be seen by the buyer – packed milk, fruit juice etc. Buyers depend on the package label in understanding the product in the package. An attractive label is a means of success in marketing. • Efective sales tool: A good package is more likely to increase sales. An attractive package invites customers. Packaging has another value as a large number of people buy the products for their containers. Download free eBooks at bookboon.com 28 Essentials of Marketing The Promotional Programme 6 The Promotional Programme Promotion refers to the activities to push forward or to advance an idea, in such a way as to gain its approval and acceptance. Promotion is telling and selling. Product planning, pricing and distribution are marketing activities that are performed mainly within the company or between the company and its marketing ‘partners.’ Sales are the life-blood of business. Tough competition has increased the importance of sales promotion eforts on the part of the producers. hus, sales promotion means all the steps that are taken for the purpose of increasing sales. Promotional activity in marketing is basically an exercise in communication. Communication is very essential. For example, we have the best products with good package, fair price etc. he products cannot be sold to consumers unless they know about it. People must know that the right products are available at the right place and at the right price. his is the job of promotion in marketing. 6.1 6.1.1 Forms of Promotion Personal selling: It is the most important, the most efective and the most costly form of promotion. It is the best means of oral or face-to-face or direct communication. Personal presentation inluences sales positively. Join the best at the Maastricht University School of Business and Economics! Top master’s programmes • 33rd place Financial Times worldwide ranking: MSc International Business • 1st place: MSc International Business • 1st place: MSc Financial Economics • 2nd place: MSc Management of Learning • 2nd place: MSc Economics • 2nd place: MSc Econometrics and Operations Research • 2nd place: MSc Global Supply Chain Management and Change Sources: Keuzegids Master ranking 2013; Elsevier ‘Beste Studies’ ranking 2012; Financial Times Global Masters in Management ranking 2012 Visit us and ind out why we are the best! Master’s Open Day: 22 February 2014 Maastricht University is the best specialist university in the Netherlands (Elsevier) www.mastersopenday.nl Download free eBooks at bookboon.com 29 Click on the ad to read more Essentials of Marketing 6.1.2 The Promotional Programme Advertising: It is an impersonal method of communication as well as an impersonal salesmanship for mass selling and it is a means of mass communication. Advertising is also an important form of promotion and it costs less than personal selling. 6.1.3 Sales promotion: he marketing activities other than advertising, publicity and personal selling are known as sales promotion. It serves as a bridge between selling and advertising. It is an aggressive method of selling. 6.1.4 Publicity: It increases demand for a product or service or a business unit by making publicity through radio, television or stage. 6.1.5 Public relation: It is a form of promotion. It creates, develops and maintains a good image of an organization on the public. hus the goodwill of the seller increases and it leads to good selling and promotes the sale of goods. When there is heavy competition, this method is very efective. 6.1.6 Point of purchase display: It is the silent salesperson that attracts the buyers’ attention to the product and makes them decide to buy. Promotion at the point of purchase is very efective. Proper display of products is done by manufacturers or distributors. It varies widely. Automobile showroom with promotional literature and pricing information helps the buyers to test the products. Display serves to examine the product and make buying decision. With the combination of personal selling and advertising, display gives the maximum efectiveness. 6.1.7 Packaging: It diferentiates and protects a product. It plays two important promotional roles. First, it calls the attention of the customer to the product in retail stores. Secondly, it carries the selling messages and other information to make buying decision. Package provides product protection, ease of handling, selling ability, convenience and information. It attracts the customers. 6.1.8 Direct mail: Newspaper advertisement reaches millions of people, while direct mail is sent to the selected customers. It will attract the customers to buy the goods. It gives information directly. It supports other forms of promotion. It helps the product awareness or acceptance. 6.1.9 Other forms of promotion: Sampling is a form of special promotion. Sampling of new food products, and other consumer products, especially sample medicines to doctors is done to introduce the new products to the consumers. Giving coupons is another form of promotion. Coupon ofers a price reduction or rale draws to increase the sale of new (or even old) products. Download free eBooks at bookboon.com 30 Essentials of Marketing Sales Promotion 7 Sales Promotion Sales promotion methods aim to attract the customers and increase the sales volume. hey aim at creating demand. A manufacturer must make the customers know about the product and he must inluence them to buy that product. Sales promotion is the connecting link between personal selling and advertising. It is an important and specialized function of marketing. 7.1 Importance of Sales Promotion In recent years, the importance of sales promotion has increased. his is due to the changes in the marketing environment. It is also due to the thinking of new ideas for creating a favourable condition for selling and promoting future sales. It is a part of marketing strategy. For a new product or new brand, sales promotion is very important. Sales promotion methods inform, remind or encourage the buyers at the point of purchase. A good sales promotional programme will remove the consumer’s dissatisfaction with respect to retail selling. Sales promotion increases as a result of the growing use of self-service and other sales methods. 7.2 Objectives of Sales Promotion he main objectives of sales promotion are: • To increase buying interest at the customers’ level; • To increase the sales eforts of dealers and sales personnel; • To attract new customers; • To inform the public about the new product and its specialties, attraction and advantages; • To get the major share of the market; • To create a good impression about the product; • To meet the competition of other companies; • To efect of-season sales to increase sales; • To encourage the demand by popularizing the products; • To establish and maintain communication with large markets; • To keep the memory about product alive; • To create additional talking points to sales personnel; • To create brand image; • To remove customers’ dissatisfaction; • To bridge the gap between advertising and personal selling. Download free eBooks at bookboon.com 31 Essentials of Marketing 7.3 Sales Promotion Kinds of Sales Promotion Sales promotion can be divided into three kinds: • Consumer sales promotion • Dealer sales promotion • Sales force promotion 7.3.1 Consumer sales promotion: Activities aimed at reaching the consumer at his home or in his oice may be called consumer sales promotion. It is aimed to inform or educate the consumers and to encourage them to buy certain products. Consumer sales promotion increases the use of the product by the consumers, and attracts new customers. he following are the various sales promotion schemes at the consumers’ level: • Sampling: Free samples are given to consumers to increase their interest in the product. hey are also given to introduce a new product and increase the market share. It increases the sales volume when the product is a new one to the customers. It is an efective method when the product is purchased oten e.g. soaps, detergents, tea, cofee etc. It is a method of demand creation. Sampling gives a chance to the consumers to compare certain products with others. Samples may be delivered door to door, sent by mail, picked up in a store, attached to another product etc. It is the most efective way to introduce a new product. Download free eBooks at bookboon.com 32 Click on the ad to read more Essentials of Marketing Sales Promotion • Coupons: Coupons are supplied along with a product. Coupons can be mailed, enclosed in the packets or printed in the advertisements. he purpose is to attract the customers and bring them to a particular shop to increase the sales of a particular brand. • Demonstration: It is a promotional tool to attract the attention of customers. When products are of a complex and technical nature, demonstration is necessary e.g. computers, sotware, ield machinery etc. Demonstration is also done in front of customers for goods such as mixer, grinder, in retail shops etc. • Contests: hese are conducted to attract new customers or to introduce new products. he consumers are asked to state in a few words why they prefer a particular product. To participate in the contest, the consumers must purchase a product and submit the evidence (a label of package or a card attached to the product) with the entry form for the contest. Consumers’ skill and their ideas are tested and the prize is given to the best entry. It encourages sales at the retail level. • Money refund ofers: If the purchaser is not satisied with the product, a part or all of the purchaser’s money will be refunded. It is stated on the package. It will create new users and strengthen brand loyalty. Sometimes, the money will be refunded if 10 top covers or empty bottles or packages are sent back to the manufacturer. • Premium ofer: It is a temporary price reduction which encourages the buyers. Products are ofered at a reduced price to encourage purchasing. It is ofered to consumers mainly for consumer goods like soap, brush, toothpaste, washing powder, sot drinks, milk cartons etc. For example, when the customer buys two pieces of soap, a soap box is given free. he soap box is the premium. In certain cases, the price is reduced. he reduced price is the premium. • Price of ofer: It encourages sales during the period when the sales are quite low. It gives a temporary discount to the consumers i.e. goods are ofered at a price less than the printed price. For example, fans may be sold at reduced price during winter, • Consumer rale draw: Retailers give tickets or coupons to the customers on the purchase of goods for a certain amount. At the speciied time, lots will be drawn, and the prizes given. Download free eBooks at bookboon.com 33 Essentials of Marketing Sales Promotion • Free trial: Customers are invited to try the product without cost, in the hope that they will buy the product. hus buyers are encouraged by free trial to create interest in purchase. 7.3.2 Dealer sales promotion: Manufacturers use a number of techniques to get the cooperation of wholesalers, retailers or the middlemen. hese activities, which increase the interest of dealers and distributors, are called dealer or distributor sales promotion. It is the middlemen who are important for the fast movement of products. Following are the dealer promotion methods: • Buying allowance: It is an ofer of money of or temporary reduction to dealers for purchasing during a particular period of time. It is a very efective method to introduce new products in the market. It encourages the dealers to buy a quantity that they will not buy in normal time. his buying allowance gives the dealers immediate proit. • Merchandise allowance: An advertising allowance is given to the dealers for advertising the features of the manufacturer’s product. A display allowance is given to them for arranging special displays of the product. Ater verifying the promotional activities of the dealer, the manufacturers will give a certain amount of money for promotional activities. hey hope that additional eforts will be made to increase the sales at retail level. Some manufacturers, as an encouragement, ofer additional quantities of merchandise. his technique is known as merchandise deal. • Price deals: Apart from the regular discount, special discounts are also ofered to the dealers for a speciied quantity of purchase. his special discount is over and above the regular discount. • Push money or premium: Manufacturers may ofer push money. It is a payment in cash or gits to dealers or to their sales force to push the manufacturer’s product. To push his brand, the manufacturer will ofer free specialty items that carry the company’s name, such as pens, pencils, calendars, memo pads etc. Download free eBooks at bookboon.com 34 Essentials of Marketing Sales Promotion • Cooperative advertising: Dealers spend money on advertising manufacturer’s product with the consent of the manufacturer. he dealer can claim an allowance by giving the proof of the advertisement. his is an indirect advertising for the manufacturer. It will increase the sales of the manufacturer’s product. But it is a burden on the manufacturer’s budget. • Dealer sales contests: his is an indirect way of increasing the sales. his type of contest is conducted at the level of retailers and wholesalers. his is in the form of window display, store display, sales volume etc. Prize is awarded for outstanding achievement. his method is aimed at encouraging distributors, dealers, sales staf etc. • Dealer’s listed promotion: Listing dealer is an advertisement. It gives a list of dealers or retailers who stock the product or who are engaged in its promotion. he consumer can buy the product from anyone of the listed dealers. his method encourages the dealers to stock the products, and the consumers are encouraged to buy the products from the listed dealers. • Dealer’s git: Manufacturers give attractive and useful articles to dealers against their order. he articles may be mobile phone, radio, television, clock, watch etc. Sometimes manufacturers ofer free family holiday tours to dealers who place more orders. Need help with your dissertation? Get in-depth feedback & advice from experts in your topic area. Find out what you can do to improve the quality of your dissertation! Get Help Now Go to www.helpmyassignment.co.uk for more info Download free eBooks at bookboon.com 35 Click on the ad to read more Essentials of Marketing Sales Promotion • Point of purchase: his plays the role of the silent salesperson. he competition among the retailers encourages point of purchase advertising, which is an important method for sales promotion. It is generally at the retailer’s shop. Floor displays, overhead signs, wall signs, posters etc are examples of point of purchase method. Retailers adopt this method to draw the attention of customers. his method is suitable for consumer goods as well as industrial goods. • Sales force promotion: As dealer and consumer promotion, the sales force promotion also is a necessary one. he activities of sales force must be encouraged. he role of a salesperson is very important. he idea of sales force promotion is to make the salesperson’s efort more efective. he methods for sales force promotion are: - Bonus to sales force: he manufacturer sets a target of sales for a year. If the sales force sells the products above the targeted sales, bonus is ofered to them. his is an encouragement given to the sales personnel to sell more products. - Sales force contests: To increase the interest and eforts of sales force over a speciied time, these contests are announced. Prizes are given to the sales personnel who secure the maximum sales in sales contests. hus it encourages the sales force to sell more products. - Sales force meetings and conferences: he idea behind these is to educate, inspire and reward sales personnel. Encouragement is given to them during the discussions. New selling techniques are described to them and discussed in the conference. Download free eBooks at bookboon.com 36 Essentials of Marketing Sales Promotion Tools of Sales Promotion Consumer Promotion Dealer Promotion Sales Force Promotion 1. Sampling 1. Buying allowance 1. Bonus 2. Coupons 2. Merchandise allowance 2. Contests 3. Demonstrations 3. Price deals 3. Meetings and conferences 4. Contests 4. Push money 5. Money refund ofer 5. Cooperative advertising 6. Premium ofer 6. Sales contests 7. Price-of ofer 7. Dealer’s listed promotion 8. Rale draws 8. Dealer’s git 9. Free trial 9. Point of purchase Download free eBooks at bookboon.com 37 Essentials of Marketing Advertising 8 Advertising Today’s business is of mass production and mass distribution. Similar products are taken to the market by various producers. his involves tough competition among the producers. Companies adopt various means to remain in the market. All businessmen aim to make proit by increasing the sales. When we manufacture good quality products or ofer expert services, these must be known to the public. For this, mass communication is needed as the population is large or the market area is wide. We can adopt sales promotion and advertising as tools for marketing. In the present business world, suitable publicity is done through advertising, which is adopted by almost all types of companies. herefore, advertisement is a method of publicity. 8.1 What is Advertising? Advertising is the activity by which visual or oral messages are addressed to the general public. Its purpose is to inform or inluence them in order to increase the sales of the advertiser. It is done with a view to sell the goods or services ofered by the advertiser. he success of advertising greatly depends upon efective advertising programme. 8.2 Objectives of Advertising Personal selling and other forms of promotion are supported by advertisement. It is the main objective. he long term objectives of advertising are concerned with the achievement of the company’s over-all objectives. Some of these are as follows: • To do the entire selling job; • To introduce a new product; • To build brand preference; • To remind users to buy the product; • To meet competitors’ advertising; • To increase sales in of-season; • To introduce price deal; • To describe the assistance ofered by the company; • To increase market share; • To convince people about the changes in prices; • To educate the buyers; • To announce the location of distributors, retailers etc; • To invite enquiries; • To make special ofers. Download free eBooks at bookboon.com 38 Essentials of Marketing 8.3 Functions of Advertising 8.3.1 Increasing the number of customers: Advertising • By increasing the customers and widening the market; • By developing brand loyalty; • By focusing the qualities of the product in a better way than other similar products. 8.3.2 Increasing the consumption rate among the present customers: • By explaining the multiple use of the product; • By reminding the customers about the products; • By educating the public about the product, its uses, advantages etc. 8.4 Advantages of Advertising Advertising helps in a number of marketing activities. It is technique of sales promotion. Sales volume is increased by advertising. It helps and supports the salesperson in selling the products. Consumer’s knowledge about the product is increased by advertising. Advertising helps the consumers to save their time in purchasing. It also helps the manufacturers to sell their products. Hence quick selling is possible, which leads to more production at less cost. hus advertising is advantageous to the following groups of people: Brain power By 2020, wind could provide one-tenth of our planet’s electricity needs. Already today, SKF’s innovative knowhow is crucial to running a large proportion of the world’s wind turbines. Up to 25 % of the generating costs relate to maintenance. These can be reduced dramatically thanks to our systems for on-line condition monitoring and automatic lubrication. We help make it more economical to create cleaner, cheaper energy out of thin air. By sharing our experience, expertise, and creativity, industries can boost performance beyond expectations. Therefore we need the best employees who can meet this challenge! The Power of Knowledge Engineering Plug into The Power of Knowledge Engineering. Visit us at www.skf.com/knowledge Download free eBooks at bookboon.com 39 Click on the ad to read more Essentials of Marketing 8.4.1 Advertising Advantages to manufacturers: • It increases the sales volume. • It increases the net proit. • It stabilizes the sales volume. • It controls product price. • It helps in opening new markets. • It maintains the existing market. • It creates reputation. • It secures more dealers. • It is less expensive. • It gives wider information. 8.4.2 Advantages to sales personnel: • It creates a background. • It reduces the burden of the salesperson’s job. • It helps in selling the product with the least efort. • It helps in understanding the customer’s need. • It creates conidence. 8.4.3 Advantages to wholesalers and retailers: • It creates easy sales. • It increases the turn-over. • It attracts more customers. • It increases the reputation of the store. • It gives publicity to them. 8.4.4 Advantages to customers: • It helps in easy purchasing. • It is a connecting link between the manufacturer and the customers. • It helps the customers to get the product at a fair price. • It saves time. • It ensures the best quality product. • It educates the customers. • It helps the people to get the products directly from the producers through mail order business. Download free eBooks at bookboon.com 40 Essentials of Marketing 8.4.5 Advertising Advantages to community: • It increases employment opportunities. • It raises the standard of living of the people. • It has educative value. • It helps the media – radio, television, newspaper etc – to increase their income. 8.5 Advertising Media Media or medium is a means through which the advertising message is conveyed to the consumers. he proper selection of the media, by which the message is to be conveyed, must achieve the advertiser’s goals. Some or all of the following media may be used by the manufacturers: 8.5.1 Indoor advertising: When advertising is done through this method – so that people can get the message at home – it is known as indoor advertising. he following are the kinds of indoor advertising: • Press – newspaper, magazine • Radio • Television • Film • Text messages on mobile phones 8.5.2 Outdoor advertising: Outdoor advertising passes the message to those people who are the moving audience. Generally, almost all the people go out on some purpose or other – oice, walk, sight-seeing, travel, park visit, shopping etc, and can’t avoid looking at the advertisements. hus outdoor advertising has the best efect of advertising. Following are the various types of outdoor advertising: • Posters • Advertising boards • Vehicles • Painted display • Travelling display • Electric display • Sky advertising • Sandwich-men (dressed in fancy clothes) • Handbills (lealets) Download free eBooks at bookboon.com 41 Essentials of Marketing 8.5.3 Advertising Direct advertising: he objective of direct advertising is to create a direct contact with the customers. he advertiser can keep a close touch with the customers or the public who are supposed to have interest in his product. He contacts them through mail advertising. It is a common method. It is also known as direct mail advertising. It may be of the following types: • Sales letters • Circulars • Booklets and catalogues • Folders • Package inserts • Store publications 8.5.4 Promotional advertising: he objective of promotional advertising is to increase the sales. his is also known as ‘display advertising.’ By this, we mean that the products are systematically kept in a place so as to attract the attention of the people who walk that way. he following are the important types: • Window display • Interior display • Showrooms • Exhibitions Download free eBooks at bookboon.com 42 Click to read more Click on on thethe ad ad to read more Essentials of Marketing 8.5.5 Advertising Examples of advertisement slogans: • GLAXO builds bunny babies • NESCAFE – the cofee that tastes good • DUNLOP leads the way • NIKE – just do it • NOKIA – connecting people • Passion to lead – TOYOTA • SONY – like no other • NISSAN – shit the way you move Download free eBooks at bookboon.com 43 Essentials of Marketing Personal Selling 9 Personal Selling Like advertising and sales promotion, personal selling is also a method of communication. Each person is contacted by face-to-face conversation. Personal selling inluences the buyers to buy a product. Personal selling reaches the goal of marketing efort i.e. to increase proitable sales. he purpose of personal selling is to bring the right product to the notice of the right customers. Personal selling is very efective as through it the person concerned is contacted in person. 9.1 Objectives of Personal Selling: Personal selling has two types of objectives – long-term and short-term. hese objectives are: • To serve the existing customers; • To search out and get new customers; • To keep customers informed of changes in the product line; • To provide technical advice and assistance to customers; • To provide advice and assistance to middlemen whenever needed; • To collect and report market information on signiicant matters to company management; • To obtain a speciied sales volume; • To secure and retain a speciied share of the market. 9.2 Duties of a Salesperson: He/She: • Has to make sales of products or services; • Has to do the assigned duty (travelling); • Has to make collection of bills relating to sale; • Has to make reports – sales done, calls made, services provided, customers lost etc; • Must satisfy customers; • Must maintain relations with customers; • Must assist the customers to make good selection; • Must develop a goodwill for the company and the products; • Must have cooperative attitude; • Has to take periodic inventory of the stocks. Download free eBooks at bookboon.com 44 Essentials of Marketing 9.3 Personal Selling Qualities of a successful Salesperson: • Establishing good relationship with a variety of people; • Learning quickly; • Planning and eiciently managing time and eforts; • Working hard to achieve long-term goals; • Communicating clearly both in speech and in writing; • Producing constantly both in quality and quantity • Possessing and living up to high moral standards that enable people to admire, respect and trust him/her. 9.4 Sales Personality he qualities of a salesperson may be described as follows: 9.4.1 Knowledge of: • Self • Product • Company • Customers • Competition • Market • Selling techniques 9.4.2 Personal qualities: Some of the important qualities are: • Good appearance • Sound health • Good manners • Imagination • Self-conidence • Tact • Cooperation • Dependability • Sincerity • Loyalty • Creative talk • Self-management Download free eBooks at bookboon.com 45 Essentials of Marketing 9.5 Personal Selling Features of Personal Selling 9.5.1 A salesperson must maintain lasting relations between the company and its customers. 9.5.2 It is a creative art. Sales personnel create wants in customers. A human need may change into human want because of salesmanship. They should possess the ability to change needs into wants. 9.5.3 A salesperson must have the ability to inluence the customer’s mind. 9.5.4 A salesperson must satisfy the customers not only by selling products but also provide knowledge and assistance to satisfy the needs of customers. 9.5.5 The new type of sales personnel have to play an important role in the total marketing process. They must have the ability to learn and the ability to communicate expert knowledge in which they deal. 9.6 Process of Personal Selling Personal selling aims at oral presentation by conversation between a salesperson and a probable customer. Generally, the following are the methods involved in personal selling: Download free eBooks at bookboon.com 46 Click on the ad to read more Essentials of Marketing 9.6.1 Personal Selling Prospecting: Prospecting means searching for people to whom sales can be made. Prospect is a person who has wants to be satisied and has ability and willingness to pay. herefore, this is a irst step in identifying and locating of prospects, either from the company’s past records or customers or advertisements. A list of such prospects is prepared, and this helps in planning the selling eforts. 9.6.2 Pre-approaching: It involves developing an understanding about the prospective buyers as to their needs, problems, buying motives, personal character etc. his pre-approach is efective for making a ground for approach. 9.6.3 Approaching and attention: his is a sales interview. his stage is very important. he irst impression of the salesperson may bring a long-term beneit i.e. repeated sales. 9.6.4 Demonstration: he characteristics of the product are to be presented or demonstrated. he prospects may be made to understand the beneits of the product. hey may also be informed of the special features, merits, beneits etc of the products. he salesperson can also show the survey reports, relevant data, free gits, referring to speciic problems in other products, giving examples etc. 9.6.5 Handling objections: When one shows interest in buying the products, generally, every salesperson faces objections from the prospective buyers. When a buyer purchases a product at a price, buyer asks questions and explanations. he salesperson must face the buyer by giving satisfactory answers. 9.6.6 Closing the sales: It aims at taking an order for the products from the prospective buyer. he salesperson also asks questions about the products – choice of colour, periodicity of delivery, quantity, terms etc. At the inal stage, the prospects place orders with the salesperson. 9.6.7 Follow-up: Satisfaction of the buyer is important as a source of publicity. his stage is important to have information from buyers regarding the product use, and problems, if any. he salesperson keeps contact to know the problems, if any. Ater-sale service should be followed strictly i.e. punctuality, personal attention etc. Download free eBooks at bookboon.com 47 Essentials of Marketing Sales Forecast 10 Sales Forecast Future is uncertain. Man thinks about future. He may be a businessman, a broker, a manufacturer, a commission agent etc. All of them try to guess about the future in their respective ield of interest. We try to know, through a clear imagination, what will be happening in the near future – ater a week, a month, or a year. It can be called forecast or prediction. he process of forecasting is based on reliable data of past and present. Forecasting is one of the important aspects of management. Successful marketing depends greatly on forecasting market demand. A sales forecast is an estimate of sales volumes that a company can expect to achieve within the plan period. A sales forecast is not just a sales prediction. It is the act of matching opportunities with the marketing eforts. hus sales forecasting shows the probable volume of sales. 10.1 Factors afecting a Sales Forecasting A sales manager should consider all the factors afecting the sales, while predicting the company’s sales in the market. An accurate sales forecast can be made if the following factors are considered carefully: 10.1.1 General economic conditions: It is essential to consider all economic conditions related to the company and the consumers. he forecaster must see the general economic trend – inlation or delation – which afect the business favourably or adversely. 10.1.2 Consumers: Products like garments, luxury goods, furniture, vehicles etc keep changing in fashion and style. his needs to be studied before forecasting. 10.1.3 Industrial behaviours: Markets are full of similar products manufactured by diferent companies, which compete among themselves to increase the sales. As such, the pricing policy, design, advanced technological improvements, promotional activities etc of similar industries must be carefully observed. A new company may come up with products to the market and naturally afect the market share of the existing companies. Unstable conditions – industrial unrest, government control through rules and regulations, improper availability of raw materials etc – directly afect the production, sales and proits. 10.1.4 Changes within the company: Future sales are greatly afected by the changes in pricing, advertising policy, quality of products etc. A careful study in relation to the changes on the sales volume may be done. Sales may be increased by price cut, suitable advertising policies, increase in sales promotions, concessions to customers etc. Download free eBooks at bookboon.com 48 Essentials of Marketing Sales Forecast 10.1.5 Period: he required information must be collected on the basis of period – short-term, mediumterm or long-term forecasts. 10.2 Methods of Sales Forecasting Forecasting techniques and procedures difer from company to company. However, following are some of the methods of sales forecasting. 10.2.1 Executive opinion: One or more of the executives, who are experienced and have good knowledge of the market factors, make out the expected sales. All the factors – internal and external – are taken into account. his method is simple as experience and judgment are pooled together in making sales forecast. 10.2.2 Sales force opinion: Under this method, sales people are required to make out an estimate of sales in their respective territories for a given period. Sales people are in close touch with the consumers and possess good knowledge about the future trend. hus all the sales force estimates are processed, and a sales volume estimate formed for the whole market for the given period. 10.2.3 Test marketing result: Under the market test method, products are introduced in a limited geographical area and the result is studied. Taking this as a base, sales forecast is made. his test is conducted in order to understand the market response. 10.2.4 Consumers’ buying plan: Consumers, as a source of information, are approached to know their likely purchases during the period under a given set of conditions. his method is suitable when there are a few customers. his type of forecasting is generally adopted for industrial goods. It is suitable for industries which produce costly goods for a limited number of buyers – wholesalers, retailers, potential consumers etc. 10.2.5 Market factor analysis: A company’s sales may depend on the behaviour of certain market factors. he main factors which afect the sales may be determined. By studying as the behaviour of the factors, forecasting is done. For example, you publish a text book on “Banking” for college students. Find out the approximate number of students likely to be admitted to the colleges for this course. Also ind out whether it is a compulsory or an optional subject. By getting all these details and also by considering the sales activities of promotional work, you may be able to estimate the number of copies to be printed. he key to the successful use of this method lies in the selection of the appropriate market factors. Minimizing the number of market factors is also important. hus the decision- makers have to consider price, competition, advertising, buying habits, change in population etc. Download free eBooks at bookboon.com 49 Essentials of Marketing Sales Forecast 10.2.6 Expert opinion: Many types of consulting agencies have entered into the ield of sales. he consultancy agency has specialized experts in their respective ields. hey include dealers, trade associations etc. hey may conduct market research and possess ready-made data. Companies may make use of the opinions of such experts. hese opinions may be carefully analyzed by the company and sound forecasting made. 10.2.7 Past sales: Past sales are a good basis and on this basis future sales can be forecast. Today’s sales activity lows into tomorrow’s sales activity, that is last year’s sales extend into this year’s sales. However, this method is not suitable for new industries and for new products, as there cannot be any past records. 10.2.8 Other factors: Apart from the above, the following factors may also be considered: • Availability of raw materials • Plant capacity • Government policies • Buying habit of consumers • Fashion trends • Distribution system • Financial capacity • Market competition • Sales promotions • National income movement Challenge the way we run EXPERIENCE THE POWER OF FULL ENGAGEMENT… RUN FASTER. RUN LONGER.. RUN EASIER… READ MORE & PRE-ORDER TODAY WWW.GAITEYE.COM Download free eBooks at bookboon.com 50 Click on the ad to read more Essentials of Marketing 10.3 Sales Forecast Categories of Sales Forecast here are three categories of sales forecasts: 10.3.1 Short-term forecast: It is also known as operating forecast, covering a maximum of one year or it may be half-yearly, quarterly, monthly and even weekly. his type of forecasting can be advantageously utilized for estimating stock requirements, providing working capital, establishing sales quotas etc. It helps the management to improve and coordinate the policies and practices of marketing – production, inventory, purchasing, inancing etc. Short-term forecast is preferred to all types and brings more beneits than other types. 10.3.2 Medium-term forecast: his type of forecast may cover from more than one year to two or four years. his helps the management to estimate probable proit and control over budget, expenditure, production etc. 10.3.3 Long-term forecast: his type of forecast may cover one year to ive years, depending on the nature of the company. Seasonal changes are not considered. he forecaster takes into account the population changes, competition changes, new inventions, economic conditions etc. his type is good for adding new products and dropping old ones. he methods of forecasting discussed above have their respective merits and demerits. No single method may be suitable. herefore, a combination method is suitable and may give a good result. he forecaster must be cautious while making decision on sales forecast. Periodical review and revision of sales forecast may be done, in the light of performance. A method which is quick, less costly and more accurate may be adopted. Download free eBooks at bookboon.com 51 Essentials of Marketing Marketing of Consumer Goods 11 Marketing of Consumer Goods 11.1 11.1.1 Deinition: Goods may be deined as any commodity, product or services which are useful for people and have monetary value. Goods may be divided into three categories on the basis of consumer needs: • Manufactured goods: Manufactured goods are those goods that are semi-inished or inished goods used by producers and consumers. Manufactured goods are of two types – consumer goods and industrial goods. Consumer goods are those goods which are meant for direct consumption by ultimate consumers, for example, car, television, radio, cycle, shoes, furniture, toys etc. Industrial goods are those goods which are used in the process of manufacturing other goods and services, for example, raw materials, machines, maintenance supplies etc. • Agricultural goods: Agricultural goods refer to the produce out of cultivation, for example, vegetables, grains, fruit, and also dairy farming, poultry farming, eggs, meat etc. Of these agricultural goods, wheat, rice, pulses etc are food products for human consumption, whereas oilseeds, cotton etc are raw material for industry. hat is, these agricultural products are classiied into two categories – industrial goods and consumer goods. • Natural raw materials: Natural raw materials are the gits of nature, for example, mines, forests etc, and these provide raw materials which need further processing before use. 11.1.2 Diferences between Consumer Goods and Industrial Goods Consumer goods Industrial goods 1. Goods bought are for further 1. Goods bought are meant for processing. consumption. 2. here is a direct demand. 2. here is indirect demand. 3. Purchase is made in small lots. 3. Purchase is made in large quantities. 4. To make purchases, ordinary 4. To make purchases, expert knowledge is needed. knowledge is enough. 5. he demand is inelastic. 5. he demand is elastic. Download free eBooks at bookboon.com 52 Essentials of Marketing 11.2 Marketing of Consumer Goods Characteristics of Consumer Goods: Manufactured consumer goods are sold to the consumers for consumption purposes. Further processing is not required before consumption. he following are the characteristics of manufactured consumer goods: 11.2.1 Customers are numerous: People of the whole world are buyers. Goods are manufactured to meet their day-to-day needs. he buyers of consumer goods are scattered and the markets are widespread. Because of the numerous buyers, it is not possible for the manufacturers to deal directly with the buyers individually. Hence the producers of manufactured goods employ the services of middlemen – wholesalers and retailers – through whom the distribution of goods is done. 11.2.2 Purchase in small lots: Generally, the unit cost of consumer goods is low. People buy in small quantities, for example, paste, brush, soap, hair oil etc. Such goods are available easily and that too in any quantity. he manufacturers of consumer goods generally adopt methods of mass selling. hey advertise their products on radio, television, and in newspapers, magazines etc. hey also adopt distribution of free samples, display of the products in various retail shops. Download free eBooks at bookboon.com 53 Click on the ad to read more Essentials of Marketing Marketing of Consumer Goods 11.2.3 Mass production: Consumer goods are manufactured in large quantities. he demand for consumer goods is high and as such large scale production is necessary. Because of the nondurable nature of the goods, continuous supply is needed. Moreover, markets are wide-spread and demand is regular. 11.2.4 Buyers are poorly informed: Consumers may buy varieties of goods, though generally they may not be interested in studying their characteristics. Manufacturers also do not inform the buyer-consumer about the characteristics of the product. hey depend on the advice of the seller. Advertising and other promotional tools inluence the consumer’s choice. Varieties of similar goods are available in the market. Communication and advertisement about a product satisfy many consumers. 11.2.5 Changes in fashion: We may generally come across occasions of ‘clearance sales.’ his is mainly because of change in fashion. New products to meet this fashion-change arrive in the market. So manufacturers adopt methods of introducing some changes in the existing products or they go for clearance sales. 11.2.6 Personal considerations guide purchases: Consumer goods must give satisfaction to the consumer. Conditions of sales – home delivery, repair facility, itting, installation etc – have inluence on the buying decisions. When a person purchases a durable product, he makes an enquiry as to the facilities, such as ater-sales service etc, available to him. 11.2.7 Manufacturer exercises control over the price: Manufacturer has complete control over the price of his products, through the controls of quality or quantity. he demand for the products depends upon economic conditions, size of population, fashion, taste etc of the consumers. A producer can produce goods that the buyers need. hus the manufacturer exercises a degree of control over the prices of his products. 11.2.8 Buying motives: Consumer goods are bought by consumers because of pride, prestige, comfort, social status etc. For example, we may buy a wide-screen LCD television with all the latest features. 11.3 Classiication of Consumer Goods Consumer goods are meant for inal consumption. On the basis of buying habits, manufactured consumer goods are classiied into three categories: Download free eBooks at bookboon.com 54 Essentials of Marketing Marketing of Consumer Goods 11.3.1 Convenience goods: A. Features: • Most of the convenience goods are perishable. • Consumers possess full knowledge of the goods. • Shops dealing in the goods are located at convenient places. • here is a regular demand for these goods. • he goods are purchased frequently in any quantity. • Amongst the competitors, there is a keen competition. • All goods are standardized and branded. • To get the goods, minimum efort is needed. • Such goods have close substitutes, for example, soap, paste, pens etc. • Almost all the goods are daily necessities of life. B. Marketing: Since close substitute products are available to consumers, there arises a keen competition. Convenience goods are produced by many companies, in large quantities and in many varieties. he following factors are given consideration: • Display: It is important to have a display of goods. Widow display and counter display are essential to attract the customers at the point of purchase. www.sylvania.com We do not reinvent the wheel we reinvent light. Fascinating lighting offers an ininite spectrum of possibilities: Innovative technologies and new markets provide both opportunities and challenges. An environment in which your expertise is in high demand. Enjoy the supportive working atmosphere within our global group and beneit from international career paths. Implement sustainable ideas in close cooperation with other specialists and contribute to inluencing our future. Come and join us in reinventing light every day. Light is OSRAM Download free eBooks at bookboon.com 55 Click on the ad to read more Essentials of Marketing Marketing of Consumer Goods • Advertising: A wide range of advertising is essential. A retail store may stock several brands and is interested to make a sale but not of a particular brand. Hence the manufacturer advertises his products in newspapers and magazines, and on radio and television. • Wholesalers: Consumers are countless. Direct selling is not practical. he product must be available in almost all retail shops. If the desired product is not available, consumers may go for the substitute brands. he services of wholesalers are essential to facilitate the distribution of convenience goods to retailers who stock such products in suicient quantity. 11.3.2 Shopping goods: Shopping goods are consumers’ products, for example, furniture, clothes, television, washing machine, jewelry etc. A. Features: • Products are durable. • Purchase is not frequent. • he unit price is higher than that of consumer goods. • Comparison and evaluation are done by buyers. • It is always a pre-planned purchase. • Branding is not essential for many such products. • Buyers devote time and efort in the selection process. • Great care is given when purchase is made. • Generally producers supply goods directly to retailers. • Retail shops may not keep all rival products. B. Marketing: Shops dealing in shopping goods are located in central places. Manufacturers generally have a few outlets for the sale of goods. Shopkeepers keep the right goods to satisfy the customers. Generally, manufacturers supply goods directly to retailers. For example, a shop dealing in electrical goods may stock electrical goods but not other goods. Consumers are easily able to compare the quality of goods, prices, performance etc. Advertisements and displays are commonly done by the retailer. he location of the store, reputation of the dealer, salesmanship, price, design etc are important to the consumers. Download free eBooks at bookboon.com 56 Essentials of Marketing 113.3 Marketing of Consumer Goods Specialty goods: Specialty goods are those goods which have some particular attraction for the consumer, for example, watches, cars, shoes, television, mobile phones, computers etc. A. Features: • Consumers insist on a particular brand. • Goods are high-priced ones. • he buyers are well-informed. • here is a limited demand. • Goods have their own special attraction. • Consumers are prepared to spend considerable time and efort for these goods. • Customers make purchases without looking around everywhere. • Substitute brands are not generally accepted by consumers. B. Marketing: Specialty goods enjoy brand loyalty. Generally, manufacturers may also run their own outlets for sale of specialty goods. It the preferred brand is unavailable or out of stock, customers prefer to wait until it arrives in stores. Manufacturers and retailers advertise the products extensively. In the marketing of goods, facilities of repair service, installations etc are very important. he retailer’s reputation also plays an important role. 11.4 Channels of Distribution: A channel of distribution is the route through which goods move from the manufacturers or producers to the ultimate consumers. he types of distribution or channel for consumer goods are: • Manufacturer to consumer. • Manufacturer to retailer to consumer. • Manufacturer to wholesaler to retailer to consumer. • Manufacturer through an agent to wholesaler to retailer to consumer. • Manufacturer through an agent to middlemen to retailer to consumer. Download free eBooks at bookboon.com 57 Essentials of Marketing Marketing of Industrial Goods 12 Marketing of Industrial Goods Industrial goods are those goods which are meant for use in making other products or for providing a service in the operation of a business. Industrial users – businesses, manufacturers, government, service organizations, middlemen etc – buy products to use for their operations in making other products. Industrial goods are not inal products; they are used for further production of goods to be bought by the ultimate consumers. Industrial goods are sold in industrial markets. hey are also known as producer’s goods. 12.1 Classiication of Industrial Goods: Industrial goods may be classiied, based on the uses of the product but not on the basis of buying habits, into ive categories: 12.1.1 Raw materials: Raw materials are those industrial goods, which in part or in whole, become a part of the physical product, but have undergone only as much processing as is required for the product. 360° thinking . Discover the truth at www.deloitte.ca/careers © Deloitte & Touche LLP and affiliated entities. Download free eBooks at bookboon.com 58 Click on the ad to read more Essentials of Marketing A. Marketing of Industrial Goods Features of natural raw materials: • he supply of natural raw materials is limited. • Production needs specialized activity and generally requires much capital investment. • he quality may difer from place to place. • he materials are bulky in nature but the internal actual value is low. • Certain types of natural raw materials are perishable. • Over-production can be controlled. B. Marketing consideration: here are problems in marketing raw materials. Since the materials are bulky, shorter channel of distribution is required. he following problems are involved in marketing: • Transportation of these bulky materials to a longer distance will cost more. Hence such industries are set up close to the source of raw materials. For example, sugar mill industries are located near the place where sugarcane is cultivated. • he qualities of natural raw materials are widely diferent from place to place and time to time. As the quality of raw materials, so is the quality of the inished product. Buyers of such raw materials carefully inspect the materials, on the basis of their needs, before purchase. • Manufacturers of inished goods generally invest huge amounts in ixed investment, employ a large number of people, and aim at mass production. For successfully meeting all these, regular supply of raw materials is to be assured by the supplier. his may be done either by entering into long-term contract with the supplier, purchasing from open market or by owning the source of supply. 12.1.2 Fabricating materials and parts: Fabricating materials which have been processed will undergo further processing in the course of manufacturing of inished products. he original material cannot be identiied in the inal product, for example, lour going into bread, yarn going into cloth, pig iron going into steel etc. Fabricating parts are also industrial goods that have undergone complete manufacturing process, and generally do not require further processing. hey become part of the inished product and can be identiied easily. his is because no change in the form or further processing is done on these parts. hese fabricated parts, without much change in form, are assembled or combined into the inal product, for example, batteries, spare parts, nuts, bolts, speaker etc. hese items can be taken out from the inished products, in their original form. Download free eBooks at bookboon.com 59 Essentials of Marketing A. Marketing of Industrial Goods Features: • A manufacturer of inished goods needs regular and adequate supply of fabricated materials and parts. For example, without tubes cycles cannot be produced; without lour bread cannot be prepared; without yarn cloth cannot be made etc. • Buyers of these goods, generally, possess knowledge of these products. hey are particular about the quality, stability, price etc. hey personally go to the market in the process of selection and make thorough enquiry before making a decision to buy. • here are many producers of fabricating materials and parts. his means there is competition in selling. hese materials must be priced at competitive price, so that manufacturers are able to produce their inished products at competitive price. • Standards of quality and uniformity in size are of great importance to the buyers. If one supplier is unable to supply standard materials and parts, buyers have many choices. As such, industrial users go in for the materials which are of standard quality and are uniform in size, durability, price, shape etc. B. Marketing consideration: • Fabricating materials and parts are purchased in large quantities. Buyers need better quality. Brand has little to do with the buying motives. he price is also not considered to a large extent. hey look to the quality, performance and durability. he buyer’s speciication is important and accordingly the materials are supplied. • he purchase is always based on timely and uniform supply. his is because the inished products are manufactured along with the fabricated materials or spares. If these are not supplied regularly and timely, an industrial user cannot produce products. herefore, the buyers need surety of supply on the basis of needs. hus, the buyer prefers to buy these materials on a contract basis, six months to one year, so as to ensure regular and timely supply. • Most of the fabricating materials and parts are sold directly to industrial users, with orders placed oten a year or more in advance. Maximum dealings are direct; middlemen are used for small quantity. he company supplying the materials has its own sales personnel and they call upon the users. 12.1.3 Installations: Installations are manufactured industrial products – the long-life expensive major equipment of an industrial user. Installations consist of building factories and oices, ixed equipments – power looms, generators, elevators, boilers etc. he negotiation period for them is also long. Download free eBooks at bookboon.com 60 Essentials of Marketing A. Marketing of Industrial Goods Features: • Speciications are always designed by the purchaser/user. Before making a decision to purchase, suggestions are taken from the experts. he installations are manufactured strictly according to the speciication laid down by the user. Since it is highly costly and durable, much care is taken while designing installations. • Fashions, habits, behaviour of consumers in the market etc may change oten. he inished product must suit the market. Because of the development of science and technology, new inventions or economical methods may come up. his may cause the machinery or installations to become out of date. • Installations are costly and are meant for longer period, for example, installations in a sugar factory can be used for a long period. • Generally it is found that the working of installations cannot be judged exactly. When the installations are put into use, the working or performance can be checked. B. Marketing consideration: • he buyers of installations, which cost a huge amount, always expect ater-sales service. In many cases, pre-sale and ater-sale services are needed. Even a single sale is important to the seller. As such, the seller keeps a constant touch with the buyers and makes provision for repairing in order to earn goodwill. We will turn your CV into an opportunity of a lifetime Do you like cars? Would you like to be a part of a successful brand? We will appreciate and reward both your enthusiasm and talent. Send us your CV. You will be surprised where it can take you. Send us your CV on www.employerforlife.com Download free eBooks at bookboon.com 61 Click on the ad to read more Essentials of Marketing Marketing of Industrial Goods • Generally no middlemen are involved and the channel is direct from the producer to the user. he negotiation period is longer. A high degree of talent and sales efort are needed. Personal selling is more efective than any other method. • It is a problem to the management to have huge amounts locked up while starting new installations. As the price is high, buyers may go for getting them on lease instead of outright purchase. he leasing system is widely followed. 12.1.4 Accessory equipment: hese are minor machines and machine tools, for example, welding equipment, speed reducers, typewriters, cash registers, trolleys, computers etc. All these, commonly called accessory equipments, are industrial products. hese are used in aid of the production. hey do not enter into the inal products. hey do not have inluence on the scale of production, as they do not perform any basic operation. But they facilitate the manufacturing process. heir life is also shorter than installations, but more than operating supplies. hese are standardized products and are not made to order whereas installations are made to order in almost all cases. A. Features: • Since they are equipments and tools used by diferent customers, most of the products are standardized in respect of quality, durability, size and price. hey are produced in anticipation of demand. • Accessory equipments do not become out of date. hese items are meant for certain purposes; for example, tools are required for itting machines. Machines may become out of date, but it is not so with the accessory equipments. • he cost of these items is cheap. heir life is longer than that of operating supplies. hese are subject to wear and tear because of regular use. • he buyers have brand preferences over the buying decision. Preferences of the workers and reputed manufacturers are important in marketing these products. For example, you may purchase a calculator of ‘A’ company; some others may purchase it from ‘B’ company. Each product has its own originality. • here is a diference in appearance or material input. It difers widely from company to company. Industrial users make enquiries from those who are already using them before making a decision. hey are purchased frequently. B. Marketing consideration: • here are many producers of accessory equipments and tools in the market. hey compete among themselves. To attract industrial users, wide publicity is made, apart from sales promotional methods, for example, typewriters, fans, hand tools etc. Download free eBooks at bookboon.com 62 Essentials of Marketing Marketing of Industrial Goods • Manufacturers of these products like to sell industrial users through their own sales personnel and also through middlemen – direct selling and indirect selling. When the market is geographically scattered, the services of middlemen are used. Direct selling is done where the unit value is high or the demand is for several units. • In the absence of these items, the scale of operation is not afected. However, the low of production is afected. As such, timely supply is preferred. 12.1.5 Operating supplies: Items such as lubricants, oil, grease, petrol, stationery, distilled water etc are operating supplies. hese are similar to convenience goods, and are required in the company’s operation. hey do not become part of the inal product. hey are consumed in the operation. heir life is short. A. Features: • he life of operating supplies is short. hey are low priced. Such products are consumed in the company during the operation of a plant. hey are used up or they lose value immediately, for example, oil, grease etc used in the machines. • Almost all such supplies can be purchased with minimum efort. hey are readily available in the market, apart from being low in unit value. hey are purchased in small quantities frequently. B. Marketing considerations: • he producers of these goods are numerous and hence competition arises, especially on the basis of price. Generally the buyer’s decision is based on price. his is because many manufacturers produce similar goods. • Almost all the producers need the operating supplies. here is widespread market. Sales of these items are in small quantities as they are available anywhere and at any time. hey are similar to convenience goods. • Most of the supplies are indirect, as these resemble convenience goods. hese industrial operating supplies necessitate broad distribution. he producers of these products sell them through an extensive network of wholesalers. heir unit value is low. hey are bought in small quantities and they go to many users. Download free eBooks at bookboon.com 63 Essentials of Marketing References References • Sue Bridgewater Colin Egan, “International Marketing Relationships,’ Palgrave Macmillan, 2002 • Roger Palmer and Richard Brookes, “ he New Global Marketing Reality,” Palgrave Macmillan, 2004 • Philip Kotler and Gary Armstrong, “Principles of Marketing,” Prentice Hall, New Delhi, 2006 • Rajan Saxena, “ Marketing Management,” Tata McGraw Hill, New Delhi, 2006 • Jonathan Sutherland and Diane Canwell, “Key Concepts in Marketing,” Palgrave Macmillan, 2004 • William D. Perreault Jr., E. Jerome McCarthy, “Basic Marketing: A Global Management Approach,” Tata McGraw Hill, New Delhi, 2006 I joined MITAS because I wanted real responsibili� I joined MITAS because eal responsibili� Real work International Internationa na al opportunities �ree wo work or placements o �e Graduate Programme for Engineers and Geoscientists Maersk.com/Mitas www.discovermitas.com Month 16 as a construction I was supervisoras ina the North Sea advising and e helping foremen he ssolve problemse na al or o s Download free eBooks at bookboon.com 64 Click on the ad to read more Essentials of Marketing The Author The Author Manmohan Joshi, M.A., M.Ed., Cert., Dip. HRD has over 40 years’ teaching, training and administrative experience. He has worked as Principal of large and reputed educational institutions in India, Kuwait and the Sultanate of Oman. For his work on Innovative Practices in Value Education he was awarded by the National Council of Educational Research and Training, India. He is also the recipient of the Best Teacher Award from the Government of Tamilnadu (India) as well as the Central Board of Secondary Education, India. He has presented papers at various national and international conferences under the auspices of UNESCO. He has also conducted various workshops for teachers, students, parents, and administrators. he topics covered a wide area viz. Leadership and Team Building, Value Education, Administration Skills, Choosing a Career, Efective Decision Making, Efective Communication Skills, Interpersonal Relationships, Continuous Comprehensive Evaluation, Skills in Dealing with Managers, Secretarial Skills. Currently, he is working as Consultant in Arabian Institute for Financial and Administrative Studies, Sultanate of Oman, and also conducts workshops for teachers, trainers, educational administrators, managers, supervisors and marketing personnel. He may be contacted through e-mail: [email protected] 65