Posts
We know that sales force management is the analysis, planning, implementation and control of sales force activities. To manage the sales force, it has some steps. These are as follows:
• Designing sales force strategy and structure
• Recruiting and selecting sales people
• Training sales people
• Compensating sales people
• Supervising sales people
• Evaluating sales people
These steps are as follows:
• Designig sales force strategy and structure: Marketing managers face several sales force strategy and design question. How should sales people and their tasks be structured? How big should be sales force be? Should sales people sell alone or work in teams with other people in the company? On the basis of above Questions Company design the sales force strategy and structure. Sales force structure is influenced by sales force strategy. The decision is simple if the company sells only one product line to one industry with customers in many locations. In that case the company would use a territorial sales force structure.
• Recruiting and selecting sales people: At the heart of any successful sales force operation is the recruitment and selection of good sales people. For this reason company select the experienced and experts sales force. Company can select the sales force from the internal source or external source of the company.
• Training sales people: Many companies used to send their new sales people into the field almost immediately after hiring them. They would be given samples, order books and general institutions. Although trainings can be expensive, it can also yield dramatic returns on the training investment training program have several goals, sales people need to know and identify with the company. So most training program begin by describing the company's history and objectives its organization, its financial structure and facilities and its chief products and markets.
• Compensating sales people: To attract the sales people company offers attractive package to the sales force. The success of the company depends on the operation of sales people. Again the performance of sales people depends on the quality of sales depends on the attractiveness of the package. So, company should offer huge compensation to the sales people.
• Supervising sales people: Now sales people need more than a territory, compensation and training. They need supervision. Through the supervision the company directs and motivates the sales force to do a better job.
• Evaluating sales people: It is the last step in the sale force management. In this step to evaluate the sales people require good feedback. Good feedback means getting regular information about sales people to evaluate their performance. Management get information about its sales people in several ways. The most important source 's sales reports. The sales manager might begin with a quantitative evaluation, looking at a sales person's knowledge of the company, products, customers, competitor's territory and task.
Showing posts with label Principles of Marketing. Show all posts
Showing posts with label Principles of Marketing. Show all posts
Friday, April 23, 2010
Major Sales Promotion Tools
Sales promotion is a short term incentives to encourage the purchase or sale of a product or services. Many tools can be used to accomplish sales promotion objectives. We can describe the sales promotion tools in below ways:
• Consumer promotion tools
• Trade promotion tools
• Business promotion tools
They are summarized in below:
• Consumer promoting tools: The main consumer promotion tools include
a. Sample: A small amount of a product offered to consumer for trail.
b. Coupons: Certificate that gives buyers a saving when purchase a specific product.
c. Cash refunds (rebate): Offer to refund part of the purchase price of a product to consumers who send a proof of purchase to the manufacturer.
d. Price packets: Reduced price that is marked by the producer directly on the local or package.
e. Premium: Good offered either free or at low cost an incentive to buy a product.
f. Advertising specialist: Useful article imprinted with an advertiser's name, given as gift to consumer.
g. Patronage rewards: Cash or other reward for the regular use of a certain company's products or service.
h. Point of purchase displays and demonstration etc: Display and demonstrations that takes place at the point of purchase or sale.
• Trade promotion tools: Trade promotion are as follow:
a. Discount: A straight reduction in price on purchase during a stated period of time.
b. Allowance: Promotional money paid by manufactures to retailers in return for an agreement to feature the manufacturer's product in some way.
• Business promotion tools: Companies spend huge amount each year on promotion to industrial customers. These business promotions are used to generate business leads, stimulate purchase reward customers and motivate people. Business promotion includes many of the same tools used for consumer or trade promotion.
• Consumer promotion tools
• Trade promotion tools
• Business promotion tools
They are summarized in below:
• Consumer promoting tools: The main consumer promotion tools include
a. Sample: A small amount of a product offered to consumer for trail.
b. Coupons: Certificate that gives buyers a saving when purchase a specific product.
c. Cash refunds (rebate): Offer to refund part of the purchase price of a product to consumers who send a proof of purchase to the manufacturer.
d. Price packets: Reduced price that is marked by the producer directly on the local or package.
e. Premium: Good offered either free or at low cost an incentive to buy a product.
f. Advertising specialist: Useful article imprinted with an advertiser's name, given as gift to consumer.
g. Patronage rewards: Cash or other reward for the regular use of a certain company's products or service.
h. Point of purchase displays and demonstration etc: Display and demonstrations that takes place at the point of purchase or sale.
• Trade promotion tools: Trade promotion are as follow:
a. Discount: A straight reduction in price on purchase during a stated period of time.
b. Allowance: Promotional money paid by manufactures to retailers in return for an agreement to feature the manufacturer's product in some way.
• Business promotion tools: Companies spend huge amount each year on promotion to industrial customers. These business promotions are used to generate business leads, stimulate purchase reward customers and motivate people. Business promotion includes many of the same tools used for consumer or trade promotion.
Public Relations,Major Tools,Personal Se
• THE ROLE OF THE SALE FORCE: Personal selling is the interpersonal arm of the promotion mix. Advertising consists of one-way non personal communication with target consumer group. In contrast, resonal selling involves two way personal communication between sales people and individual customer. Whether face to face by telephone, through video conferences or by other means personal selling can be more effective than advertising in more complex selling situations. Sales people can probe customers to learn more about their problems. They can adjust the marketing offer to fit the special needs of each customer and can negotiate terms of sale. They can build long term personal relationship with key decision makers.
• PERSONAL SELLING: Personal selling is an individual acting for a company by performing one or more of the following activities, prospecting, communicating, servicing and information gathering.
Personal selling means directly sale the product to the customer.
• MAJOR TOOLS OF PUBLIC RELATIONS:
• Sponsorship: Company participates in car racing, sports, cricket, boat racing or any other publication.
• Trade show: Trade show represents a great opportunity to build brand awareness, knowledge and interest.
• Club and consumer communicate: Company many arrange to build any club where consumer can enjoy and communicate with each other.
• Societal cost marketing: Company may spend money for any social welfare activities.
• Social development: Company may involve in the social development activities such as they may prepare hospital, bridge, culvert, barriers, etc.
• PUBLIC RELATIONS: Another major mass promotion tool is public relations. It makes good relations with the company's various publics by obtaining favorable publicity, building or heading off unfavorable rumors, stories and events.
Public relation departments may perform any or all of the following functions.
• Press relations
• Product publicity
• Public affairs
• Lobbying
• Counseling
• PERSONAL SELLING: Personal selling is an individual acting for a company by performing one or more of the following activities, prospecting, communicating, servicing and information gathering.
Personal selling means directly sale the product to the customer.
• MAJOR TOOLS OF PUBLIC RELATIONS:
• Sponsorship: Company participates in car racing, sports, cricket, boat racing or any other publication.
• Trade show: Trade show represents a great opportunity to build brand awareness, knowledge and interest.
• Club and consumer communicate: Company many arrange to build any club where consumer can enjoy and communicate with each other.
• Societal cost marketing: Company may spend money for any social welfare activities.
• Social development: Company may involve in the social development activities such as they may prepare hospital, bridge, culvert, barriers, etc.
• PUBLIC RELATIONS: Another major mass promotion tool is public relations. It makes good relations with the company's various publics by obtaining favorable publicity, building or heading off unfavorable rumors, stories and events.
Public relation departments may perform any or all of the following functions.
• Press relations
• Product publicity
• Public affairs
• Lobbying
• Counseling
Thursday, April 22, 2010
Selecting Advertising Media
It has some steps in selecting advertising media. The major steps in media selection are
• Deciding on reach, frequency and impact
• Choosing among media types
• Selecting specific media vehicles
• Defieing on media timing
They are summarized in below:
• Deciding on reach, frequency and impact: To select media, the advertiser must decide what reach and frequency are needed to achieve advertising objectives. It is a measure of percentage of people in the target market who are exposed to the advertising campaign during a given period of time. Frequency is a measure of how many times the first three months of the campaign.
• Chopping among major media types: The media planner has to know the reach frequency and impact of the major media types, the major media types are newspapers, television, direct mail, radio, magazines, outdoor and the internet. Each media has advantages and limitations media planners consider many factors when their media choices.
• Selecting specific media vehicles: The media planner must decide the best media vehicles. Media planners must compute the cost per thousand persons reached by a vehicle.
• Deciding on media timing: The advertiser must decide how to schedule the advertising over the course of a year. The firm can vary its advertising to follow the seasonal pattern to oppose the seasonal pattern or to be small all year.
• Deciding on reach, frequency and impact
• Choosing among media types
• Selecting specific media vehicles
• Defieing on media timing
They are summarized in below:
• Deciding on reach, frequency and impact: To select media, the advertiser must decide what reach and frequency are needed to achieve advertising objectives. It is a measure of percentage of people in the target market who are exposed to the advertising campaign during a given period of time. Frequency is a measure of how many times the first three months of the campaign.
• Chopping among major media types: The media planner has to know the reach frequency and impact of the major media types, the major media types are newspapers, television, direct mail, radio, magazines, outdoor and the internet. Each media has advantages and limitations media planners consider many factors when their media choices.
• Selecting specific media vehicles: The media planner must decide the best media vehicles. Media planners must compute the cost per thousand persons reached by a vehicle.
• Deciding on media timing: The advertiser must decide how to schedule the advertising over the course of a year. The firm can vary its advertising to follow the seasonal pattern to oppose the seasonal pattern or to be small all year.
Advertising, Major Advertising Decision
ADVERTISING: Advertising is any paid form of non personal presentation and promotion of ideas, goods or services by an identified sponsor.
MAJOR ADVERTISING DECISION:
Marketing management must make four important decisions when developing an advertising program these four important are as follows:
• Setting advertising objectives
• Setting advertising budget
• Developing advertising strategy
• Evaluating advertising campaign
They are summarized in below:
• Setting advertising objectives: The first step is to set advertising objectives. These objectives should be based on past decisions about target market, positioning and marketing mix, which define the job that advertising must do in the total marketing program advertising is a specific communication task to be accomplished with a specific target during a specific period of time. Advertising objectives can be classified by primary purpose-where the aim is to inform persuade or remind.
• Setting advertising budget: After determining its advertising objectives the company next sets its advertising budget for each product. A brand's advertising budget depends on its stages of product life cycle. Market share also impacts the amount advertising needed. Because building the market or taking share from competitors requires larger advertising spending than does simply maintaining current share, high share brands usually needs more advertising spending as a percentage of sales.
• Developing advertising strategy: Advertising strategy consists of two major elements.
a. Creating advertising message
b. Selecting advertising media
In the past companies often themed media planning as secondary to the message, creation process. These creative departments first created good advertisement then the media department selected first created good advertisement then the media department selected the best media for carrying these advertisements to desired target audience.
• Evaluating advertising campaign: It is the last step in major decision of advertising. In this stage evaluate the message of advertising. How much people get attention on the message of advertising. Its market covering capacity, style, tone, words and format etc are evaluated in this stage.
MAJOR ADVERTISING DECISION:
Marketing management must make four important decisions when developing an advertising program these four important are as follows:
• Setting advertising objectives
• Setting advertising budget
• Developing advertising strategy
• Evaluating advertising campaign
They are summarized in below:
• Setting advertising objectives: The first step is to set advertising objectives. These objectives should be based on past decisions about target market, positioning and marketing mix, which define the job that advertising must do in the total marketing program advertising is a specific communication task to be accomplished with a specific target during a specific period of time. Advertising objectives can be classified by primary purpose-where the aim is to inform persuade or remind.
• Setting advertising budget: After determining its advertising objectives the company next sets its advertising budget for each product. A brand's advertising budget depends on its stages of product life cycle. Market share also impacts the amount advertising needed. Because building the market or taking share from competitors requires larger advertising spending than does simply maintaining current share, high share brands usually needs more advertising spending as a percentage of sales.
• Developing advertising strategy: Advertising strategy consists of two major elements.
a. Creating advertising message
b. Selecting advertising media
In the past companies often themed media planning as secondary to the message, creation process. These creative departments first created good advertisement then the media department selected first created good advertisement then the media department selected the best media for carrying these advertisements to desired target audience.
• Evaluating advertising campaign: It is the last step in major decision of advertising. In this stage evaluate the message of advertising. How much people get attention on the message of advertising. Its market covering capacity, style, tone, words and format etc are evaluated in this stage.
Promotion
Promotion mix (Communication Mix): Promotio mix consist of the specific mix of advertising, personal selling, sales promotion, public relations and direct marketing tools a company uses to pursue its advertising and marketing objectives.
That means, the promotio mix has five distinctive tools, these are advertising, personal selling, sales promotion, public relations and direct marketing. They are summarized in below:
• Advertising: Advertising is any paid form of non-personal presentation and promotion of ideas, goods and services by an identified sponsor.
• Personaling selling: Personal selling is the personal presentation by the firm's force for the purpose of making sales and building customer relationships.
• Sales promotion: Sales promotion is a short term incentives to encourage the purchase or sale of a product or service.
• Public relations: Public relations is building good relations with the company's various publics by obtaining favorable publicity, building up a good corporate image and handling or heading off unfavorable quotmss, stoppi and events.
• Direct marketing: Direct marketing is direct communications with carefully targeted individual consumers to obtain an immediate response and cultivate lasting customer relationships through the use of telephone, mail, fax, e-mail, the internet, and other tools to communicate directly with specific customers.
INTEGRATED MARKETING COMMUNICATION
Integrated Marketing Communication (IMC): Integrated Marketing Communication is the concept under which a company carefully integrates and coordinates its many communication channels to deliver a clear, consistent and compelling message about the organization and its product. In another way, integrated marketing communications involves identifying the target audience and shaping a well coordinated promotional program to obtain the desired audience response too often marketing communications focus an immediate awareness, image, or preference goals in the target market. We can show the integrated marketing communication through the below figure:
Advertising ~ Personal Selling
Sales Promotion ~ Public Relations-~Consistent, clear and compelling company and product message
^Direct Marketing^
Figure: Integrated Marketing Communication (IMC)
COMMUNICATION SYSTEM
To communicate effectively, marketers need to understand how communication works. Communication involves the nine element shown in the below figure:
Sender > Encoding > Message* > Decoding > Receiver
^|Feedback < Response <___|
Sender Field of Experience * = (Media
Noise) Reciever Field of Experience
There are nine elements in the above figure and two of those elements are the major parties in a communication, the sender and the reciever. Another two are the major communication tools-the message and the media. Four are major communication functions-encoding, response and feedback. The last element is noise in the system. The definition of these elements is as follows:
• Sender: The party sending the message to another party.
• Encoding: The process of putting thought into symbolic form.
• Message: The set of symbols that the sender transmits.
• Media: The communication channels through which the message moves from sender to reciever.
• Decoding: The process by which the receiver assigns meaning to the symbols encoded by the sender.
• Receiver: The party receiving the message sent by another party.
• Feedback: The part of the receiver's response communicated back the sender.
• Noise: The unplanned static or distortion during the communication process, which results in the receiver's getting a different message than the one the sender sent.
STEPS IN DEVELOPING EFFECTIVE COMMUNICATION
• Identify the target audience
• Determine the communication objective
• Design a message
• Choose the media through which to send the message
• Select the message source and
• Collect feedback
That means, the promotio mix has five distinctive tools, these are advertising, personal selling, sales promotion, public relations and direct marketing. They are summarized in below:
• Advertising: Advertising is any paid form of non-personal presentation and promotion of ideas, goods and services by an identified sponsor.
• Personaling selling: Personal selling is the personal presentation by the firm's force for the purpose of making sales and building customer relationships.
• Sales promotion: Sales promotion is a short term incentives to encourage the purchase or sale of a product or service.
• Public relations: Public relations is building good relations with the company's various publics by obtaining favorable publicity, building up a good corporate image and handling or heading off unfavorable quotmss, stoppi and events.
• Direct marketing: Direct marketing is direct communications with carefully targeted individual consumers to obtain an immediate response and cultivate lasting customer relationships through the use of telephone, mail, fax, e-mail, the internet, and other tools to communicate directly with specific customers.
INTEGRATED MARKETING COMMUNICATION
Integrated Marketing Communication (IMC): Integrated Marketing Communication is the concept under which a company carefully integrates and coordinates its many communication channels to deliver a clear, consistent and compelling message about the organization and its product. In another way, integrated marketing communications involves identifying the target audience and shaping a well coordinated promotional program to obtain the desired audience response too often marketing communications focus an immediate awareness, image, or preference goals in the target market. We can show the integrated marketing communication through the below figure:
Advertising ~ Personal Selling
Sales Promotion ~ Public Relations-~Consistent, clear and compelling company and product message
^Direct Marketing^
Figure: Integrated Marketing Communication (IMC)
COMMUNICATION SYSTEM
To communicate effectively, marketers need to understand how communication works. Communication involves the nine element shown in the below figure:
Sender > Encoding > Message* > Decoding > Receiver
^|Feedback < Response <___|
Sender Field of Experience * = (Media
Noise) Reciever Field of Experience
There are nine elements in the above figure and two of those elements are the major parties in a communication, the sender and the reciever. Another two are the major communication tools-the message and the media. Four are major communication functions-encoding, response and feedback. The last element is noise in the system. The definition of these elements is as follows:
• Sender: The party sending the message to another party.
• Encoding: The process of putting thought into symbolic form.
• Message: The set of symbols that the sender transmits.
• Media: The communication channels through which the message moves from sender to reciever.
• Decoding: The process by which the receiver assigns meaning to the symbols encoded by the sender.
• Receiver: The party receiving the message sent by another party.
• Feedback: The part of the receiver's response communicated back the sender.
• Noise: The unplanned static or distortion during the communication process, which results in the receiver's getting a different message than the one the sender sent.
STEPS IN DEVELOPING EFFECTIVE COMMUNICATION
• Identify the target audience
• Determine the communication objective
• Design a message
• Choose the media through which to send the message
• Select the message source and
• Collect feedback
Wholesaler
Wholesaler includes all activities involved in selling goods and services to those for resale or business use. It purchases or services from the producers but they sell it to the reseller for resale or business users.
Types of wholesaler: Wholesalers fall into three major groups. They are as follows:
• Merchant wholesalers
• Brokers and agents
• Manufacture's sales branches and office.
They are summarized in below:
• Merchant wholesalers: Merchants wholesalers are the largest single group of wholesalers accounting for roughly 50% of all wholesaling. Merchant wholesalers include two broad types:
a. Full service wholesalers and
b. Limited services wholesalers
Full service wholesalers provide a full set of services whereas the various limited service wholesalers offer fewer services to their suppliers and customers.
• Brokers: Brokers is one type of wholesaler who does not take title to goods and whose function is to bring buyers and sellers together and assist in negation.
Agent: Agent is a wholesaler who represents buyers or sellers on a relatively permanent basis performs only a few functions and does take title to goods.
• The third major type of wholesaling is that done in manufacturer's sales branches and offices by sellers or buyers themselves rather than though independent wholesalers.
Wholesalers marketing decisions
• Wholesaler strategy
• Target market
Service
Positioning
• Wholesaler strategy
• Product and service assortment
Prices
Promotion
Places(location)
• Figure: Wholesaler marketing decisions
Types of wholesaler: Wholesalers fall into three major groups. They are as follows:
• Merchant wholesalers
• Brokers and agents
• Manufacture's sales branches and office.
They are summarized in below:
• Merchant wholesalers: Merchants wholesalers are the largest single group of wholesalers accounting for roughly 50% of all wholesaling. Merchant wholesalers include two broad types:
a. Full service wholesalers and
b. Limited services wholesalers
Full service wholesalers provide a full set of services whereas the various limited service wholesalers offer fewer services to their suppliers and customers.
• Brokers: Brokers is one type of wholesaler who does not take title to goods and whose function is to bring buyers and sellers together and assist in negation.
Agent: Agent is a wholesaler who represents buyers or sellers on a relatively permanent basis performs only a few functions and does take title to goods.
• The third major type of wholesaling is that done in manufacturer's sales branches and offices by sellers or buyers themselves rather than though independent wholesalers.
Wholesalers marketing decisions
• Wholesaler strategy
• Target market
Service
Positioning
• Wholesaler strategy
• Product and service assortment
Prices
Promotion
Places(location)
• Figure: Wholesaler marketing decisions
Retailing
Retailing means all the activities involved in selling goods or services directly to final consumers for their personal non-business use.
Types of Retailing: Retailing can be classified in terms of several characteristics, they are:
• The amount of service they offer
• The breadth and depth of product line
• The relative price of the product and
• How they are organized
Mainly on the basis of above factors retailing are classified.
On the basis of service retailing can be classified in below four ways:
• General stores: General store is a unit marketing that is dealing business by many products. But its amount of products is very poor. It involves meeting the local demand of product.
• Single line stores: Single line store is a one-product store. But it is dealing business by the huge of that product. It is like a general store but its amount is more than general store.
• Limited line store: Limited line store is dealing business only some kinds of products but their amount is very large.
• Door to door selling: It is a small retailing business. It provides door-to-door service to the customer. That means it sells the product to the customers by going their home. Generally their amount of product is poor but they sell many types of product.
Retailing by limited product but more profit oriented: On the basis of limited product but more profit retailing, it can divide in two ways-
Super market: It is a self-service store that carries a wide variety of food, laundry and house hold products. The main characteristics of super market are it has no salesman. Customer is buyer and seller. For this reason it is called self service retailing.
• Convenience store: Convenience store is a small store located near a residential area that is opened long hours seven days a week and carries a limited of high turn over convenience goods.
Another type of retailing:
• Department store: Department store is a retail organization that carries a wide variety of product lines, typically clothing, home furnishing and household goods. Each line is operated as a separate department managed by specialist's buyers or merchandisers.
• Super store: A store almost twice the size of a regular super market that carries a large assortment of routinely purchased food and non food items and offers services such as dry cleaning, post offices, photo finishing, check cashing, bill paying, lunch counters, car case and set care.
Retailing marketing decisions
It can present the retail marketing decision in below ways by the figure
[Retailer strategy
Target market retail store positioning]|~[Retailer marketing mix
Product and service assortment
Price
Promotion
Places(location)]
Figure: Retail marketing decisions
Types of Retailing: Retailing can be classified in terms of several characteristics, they are:
• The amount of service they offer
• The breadth and depth of product line
• The relative price of the product and
• How they are organized
Mainly on the basis of above factors retailing are classified.
On the basis of service retailing can be classified in below four ways:
• General stores: General store is a unit marketing that is dealing business by many products. But its amount of products is very poor. It involves meeting the local demand of product.
• Single line stores: Single line store is a one-product store. But it is dealing business by the huge of that product. It is like a general store but its amount is more than general store.
• Limited line store: Limited line store is dealing business only some kinds of products but their amount is very large.
• Door to door selling: It is a small retailing business. It provides door-to-door service to the customer. That means it sells the product to the customers by going their home. Generally their amount of product is poor but they sell many types of product.
Retailing by limited product but more profit oriented: On the basis of limited product but more profit retailing, it can divide in two ways-
Super market: It is a self-service store that carries a wide variety of food, laundry and house hold products. The main characteristics of super market are it has no salesman. Customer is buyer and seller. For this reason it is called self service retailing.
• Convenience store: Convenience store is a small store located near a residential area that is opened long hours seven days a week and carries a limited of high turn over convenience goods.
Another type of retailing:
• Department store: Department store is a retail organization that carries a wide variety of product lines, typically clothing, home furnishing and household goods. Each line is operated as a separate department managed by specialist's buyers or merchandisers.
• Super store: A store almost twice the size of a regular super market that carries a large assortment of routinely purchased food and non food items and offers services such as dry cleaning, post offices, photo finishing, check cashing, bill paying, lunch counters, car case and set care.
Retailing marketing decisions
It can present the retail marketing decision in below ways by the figure
[Retailer strategy
Target market retail store positioning]|~[Retailer marketing mix
Product and service assortment
Price
Promotion
Places(location)]
Figure: Retail marketing decisions
Distribution Channel, Functions Level
DISTRIBUTION CHANNEL AND THEIR FUNCTIONS
Distribution channel: Distribution is a set of interdependent organizations involved in the process of making a product or service availale for use or consumption by the consumer or business user. That means distribution channels mean who are taking duty to reach the product or service from the producer to final consumer. In the case of industrial market research the product from the supplier to industrial users.
Functions of distribution channel: The distribution channel notes goods and services from producers to consumers. It overcome the major time place and possession gaps that separate goods and services from those who would use them. Members of marketing channel perform the below key functions:
• Information
• Contract
• Promotion
• Matching
• Negotiation
• Physical distribution
• Financing
• Risk taking
They are summarized below:
• Information: Gathering and distributing marketing research and intelligence information about actors and forces in the marketing environment needed for planning and adding exchange.
• Contract: Finding and communicating with prospective buyers.
• Promotion: Developing and spreading persuasive communications about an offer.
• Matching: Shaping and fitting the offer to the buyer's needs including activities such as manufacturing, grading, assembling and packaging.
• Negotiation: Reaching an agreement on price and other terms of the offer so that ownership or possession can be transferred.
• Physical distribution: Transporting and storing goods.
• Financing: Acquiring and leasing funds to cover the cost of the channel work.
• Risk taking: Assuming the risk of carrying out the channel work.
CHANNEL LEVEL: Channel level is a layer of intermediaries that performs some work in bringing the product and its ownership closer to the final buyer. Since producer and the final consumer both perform some work they are part of every channel. Channel level may customer marketing channel and business marketing channel.
• Customer marketing channel
Channel-1: Manufacturer-consumer
Channel-2: Manufacturer-retailer-consumer
Channel-3: Manufacturer-wholesaler-retailer-consumer
Channel-4: Manufacturer-wholesaler-jobber-retailer-consumer
• Business marketing channel
Channel-1: Manufacturer-industrial customer
Channel-2: Manufacturer-industrial distributor-industrial customer
Channel-3: Manufacturer-manufactser's representative or sales branch-industrial customer
Channel-4: Manufacturer-manufactser's representative or sales branch-industrial distributor-industrial customer
Distribution channel: Distribution is a set of interdependent organizations involved in the process of making a product or service availale for use or consumption by the consumer or business user. That means distribution channels mean who are taking duty to reach the product or service from the producer to final consumer. In the case of industrial market research the product from the supplier to industrial users.
Functions of distribution channel: The distribution channel notes goods and services from producers to consumers. It overcome the major time place and possession gaps that separate goods and services from those who would use them. Members of marketing channel perform the below key functions:
• Information
• Contract
• Promotion
• Matching
• Negotiation
• Physical distribution
• Financing
• Risk taking
They are summarized below:
• Information: Gathering and distributing marketing research and intelligence information about actors and forces in the marketing environment needed for planning and adding exchange.
• Contract: Finding and communicating with prospective buyers.
• Promotion: Developing and spreading persuasive communications about an offer.
• Matching: Shaping and fitting the offer to the buyer's needs including activities such as manufacturing, grading, assembling and packaging.
• Negotiation: Reaching an agreement on price and other terms of the offer so that ownership or possession can be transferred.
• Physical distribution: Transporting and storing goods.
• Financing: Acquiring and leasing funds to cover the cost of the channel work.
• Risk taking: Assuming the risk of carrying out the channel work.
CHANNEL LEVEL: Channel level is a layer of intermediaries that performs some work in bringing the product and its ownership closer to the final buyer. Since producer and the final consumer both perform some work they are part of every channel. Channel level may customer marketing channel and business marketing channel.
• Customer marketing channel
Channel-1: Manufacturer-consumer
Channel-2: Manufacturer-retailer-consumer
Channel-3: Manufacturer-wholesaler-retailer-consumer
Channel-4: Manufacturer-wholesaler-jobber-retailer-consumer
• Business marketing channel
Channel-1: Manufacturer-industrial customer
Channel-2: Manufacturer-industrial distributor-industrial customer
Channel-3: Manufacturer-manufactser's representative or sales branch-industrial customer
Channel-4: Manufacturer-manufactser's representative or sales branch-industrial distributor-industrial customer
GENERAL PRICING APPROACHES
The price the company charges will be some where between one that is too low produce a profit and one that is too high to produce any demand. Company follows the below general approaches to determine the price for a product.
• Cost based approach
• The buyer based approach
• The competition approach
They are summarized below:
• Cost based on approach: In cost based pricing includes
a. Cost plus pricing: The simplest pricing method is cost plus pricing-adding a standard markup to the cost of the product that means adding the expectations profit with the total cost of the product determine the price in cost plus pricing approach. Suppose-variable cost 10 TK, fixed cost 300000 TK, Expected unit sales 50000
Them unit cost = variable cost + Fixed cost/ Unit sales
= 10 + 300000/50000
= 16 TK.
If the company wants to earn 20% profit them price will be
= Unit cost/(1-Desired return on sales)
= 16 / 1 - 0.2 (20% )
= 20 TK.
b. Break even pricing (target profit pricing): The firm tries to determine the price at which it will break even or make the target profit it is seeking. Break even pricing or target profit pricing uses the concept of a break even chart, which shows the total cost and total sequente expected at different sales volume levels. The break even chart is as follows:
1000_|_
........._|_
800._|_
........._|_
600._|_
........._|_
400._|_
........._|______________Fixed cost 200._|_|__|__|__|__|__|__|_______
( * )10 20 30 40 50
* Sales volume in units (Thousands)
Figure: Break Even Chart for determining target price
In above figure, fixed costs are 3,00,000 TK. Regardless of sales volume, variable costs are added to fixed costs to form total costs, which rise with volume. The total revenue curve starts at zero and rise of 20 TK. Per unit.
Break Even Volume = _F_i_x_e_d_c_o_s_t_
Price-variable cost
=_3_0_0_0_0_0_0_
20-10
= 30,000 units
• Buyer based approach: Buyer based approach means value based approach. An increasing number of companies are basing their prices on the products perceived value. Value based pricing uses buyer's perception of value not the seller's cost as the key to pricing. Value based pricing means that the marketer can not design a product and marketing program and them set the price. Price is considered along with the other marketing mix variable along before marketing is set.
• Competition based pricing: Competition based pricing is setting prices based for similar on the prices that competitors charge for similar product. One form of competition based pricing is going rate pricing in which a firm bases its price with less attention paid to its own costs or to demand. The firm might charge the same more or less than its major competitors. They charge their prices when the market leader's prices change, rather than when own demand or costs change.
• Cost based approach
• The buyer based approach
• The competition approach
They are summarized below:
• Cost based on approach: In cost based pricing includes
a. Cost plus pricing: The simplest pricing method is cost plus pricing-adding a standard markup to the cost of the product that means adding the expectations profit with the total cost of the product determine the price in cost plus pricing approach. Suppose-variable cost 10 TK, fixed cost 300000 TK, Expected unit sales 50000
Them unit cost = variable cost + Fixed cost/ Unit sales
= 10 + 300000/50000
= 16 TK.
If the company wants to earn 20% profit them price will be
= Unit cost/(1-Desired return on sales)
= 16 / 1 - 0.2 (20% )
= 20 TK.
b. Break even pricing (target profit pricing): The firm tries to determine the price at which it will break even or make the target profit it is seeking. Break even pricing or target profit pricing uses the concept of a break even chart, which shows the total cost and total sequente expected at different sales volume levels. The break even chart is as follows:
1000_|_
........._|_
800._|_
........._|_
600._|_
........._|_
400._|_
........._|______________Fixed cost 200._|_|__|__|__|__|__|__|_______
( * )10 20 30 40 50
* Sales volume in units (Thousands)
Figure: Break Even Chart for determining target price
In above figure, fixed costs are 3,00,000 TK. Regardless of sales volume, variable costs are added to fixed costs to form total costs, which rise with volume. The total revenue curve starts at zero and rise of 20 TK. Per unit.
Break Even Volume = _F_i_x_e_d_c_o_s_t_
Price-variable cost
=_3_0_0_0_0_0_0_
20-10
= 30,000 units
• Buyer based approach: Buyer based approach means value based approach. An increasing number of companies are basing their prices on the products perceived value. Value based pricing uses buyer's perception of value not the seller's cost as the key to pricing. Value based pricing means that the marketer can not design a product and marketing program and them set the price. Price is considered along with the other marketing mix variable along before marketing is set.
• Competition based pricing: Competition based pricing is setting prices based for similar on the prices that competitors charge for similar product. One form of competition based pricing is going rate pricing in which a firm bases its price with less attention paid to its own costs or to demand. The firm might charge the same more or less than its major competitors. They charge their prices when the market leader's prices change, rather than when own demand or costs change.
Factors 2B considered when setting price
We know that price is the amount of money charged for a product or a service or the sum of the values that consumer exchange for the benefits of having or using the department or service.
Considerable factors: A company's pricing decisions are affected by both internal company factors and external environmental factors. The below internal factors affect a pricing decisions.
• Marketing objectives
• Marketing mix strategy
• Cost
• Organizational considerations etc.
They are summarized in below:
• Marketing objectives: Before setting the price the company must decide on its strategy for the product. If the company has selected its target market and positioning carefully them its marketing mix strategy including price will be fairly straight forward. Company's objectives may be:
a. Survival
b. Current profit maximization
c. Market share maximization
d. Product quality
The above objectives are very considerable factors to determine a price. Because on the basis of above objectives pricing is different.
• Marketing Mix Strategy: Price is only one of the marketing mix tools that a company uses to achieve its marketing objectives. Price decisions must be coordinated with product design, distribution and promotion decisions to form a consistent and effective marketing program. Decisions made for other marketing mix variables may affect pricing decisions.
• Costs: The base of pricing decision is cost. The company wants to determine the price is such a way so that it is more than production cost, distribution and selling cost. So, we can say that cost is one of the most important factors for determining a price.
• Organizational Consideration: Management must decide who within the organization should set prices. Companies handle pricing in a variety of ways. In recent small companies prices are often set by top management rather than by the marketing or sales departments. In large companies pricing is typically handled by divisional or product line managers. So, we can say that organizational factors affect a pricing decision.
EXTERNAL FACTORS: External factors that affect pricing decision include
• The nature of market and demand
• Competition and
• Other environmental elements.
They are summarized below:
• The nature of market and demand: Where as costs set the lower of prices, the market and demand set the upper limit. Both consumer and industrial buyers balance the price of a product or service against the benefits of owing it. Thus before setting prices, the marketer must understand the relationship between price and demand for its product.
• Competition: The number of competitors in market affects a pricing decision. If the market is highly competitive them company select comparably less price. Again if the price is less competitive them company can determine comparably high price. So, competition affects a pricing decision.
• Other external factors: When setting prices, the company also must other factors in its external environment. Economic conditions can have a strong impact on the firms pricing strategies. Economic factors such as boom or recession, inflation and interest rates affect the cost of producing a product and consumer perceptions of the product's price and value.
Considerable factors: A company's pricing decisions are affected by both internal company factors and external environmental factors. The below internal factors affect a pricing decisions.
• Marketing objectives
• Marketing mix strategy
• Cost
• Organizational considerations etc.
They are summarized in below:
• Marketing objectives: Before setting the price the company must decide on its strategy for the product. If the company has selected its target market and positioning carefully them its marketing mix strategy including price will be fairly straight forward. Company's objectives may be:
a. Survival
b. Current profit maximization
c. Market share maximization
d. Product quality
The above objectives are very considerable factors to determine a price. Because on the basis of above objectives pricing is different.
• Marketing Mix Strategy: Price is only one of the marketing mix tools that a company uses to achieve its marketing objectives. Price decisions must be coordinated with product design, distribution and promotion decisions to form a consistent and effective marketing program. Decisions made for other marketing mix variables may affect pricing decisions.
• Costs: The base of pricing decision is cost. The company wants to determine the price is such a way so that it is more than production cost, distribution and selling cost. So, we can say that cost is one of the most important factors for determining a price.
• Organizational Consideration: Management must decide who within the organization should set prices. Companies handle pricing in a variety of ways. In recent small companies prices are often set by top management rather than by the marketing or sales departments. In large companies pricing is typically handled by divisional or product line managers. So, we can say that organizational factors affect a pricing decision.
EXTERNAL FACTORS: External factors that affect pricing decision include
• The nature of market and demand
• Competition and
• Other environmental elements.
They are summarized below:
• The nature of market and demand: Where as costs set the lower of prices, the market and demand set the upper limit. Both consumer and industrial buyers balance the price of a product or service against the benefits of owing it. Thus before setting prices, the marketer must understand the relationship between price and demand for its product.
• Competition: The number of competitors in market affects a pricing decision. If the market is highly competitive them company select comparably less price. Again if the price is less competitive them company can determine comparably high price. So, competition affects a pricing decision.
• Other external factors: When setting prices, the company also must other factors in its external environment. Economic conditions can have a strong impact on the firms pricing strategies. Economic factors such as boom or recession, inflation and interest rates affect the cost of producing a product and consumer perceptions of the product's price and value.
New Product Development Stages
We know that new product development means the development of original products, product improvement, product modifications and new brands through the firms own research and development effort. To develop a new product effort. To develop a new product needs to maintain below stages:
• Idea generation
• Idea screening
• Concept development and testing
• Marketing strategy development
• Business analysis
• Product development
• Market testing and commercialization
They are summarized below:
• Idea generation: It is the first task to develop a new product. Idea generation is the systematic search for new product idea. To develop a new product at first needs to generate idea for a new product from the company's internal and sources.
• Idea screening: After generating the idea from various sources, in second stages need to screen the idea from that ideas. That means from the various ideas in first stage select the best and suitable idea for developing a new product.
• Concept development and testing: In this step the above selected ideas convert into the concept, that means here consider the idea in written form and test concept. Moreover here defined the product features design size, etc.
• Marketing strategy development: In this step develop the marketing strategy for the above developed product that means here decides what product will be produced what will be its price, distribution channel, promotion and so on.
• Business analysis: Business analysis is the review of the sales, costs and profit projections for a new product whether these factors satisfy the company's objectives.
• Product development: So far, for many new product concepts, the department may have existed only as a word description, a drawing or perhaps a crude mock up. If the department concept passes the business test, it involves into product development that means after analyzing the product in business side develop the product in physical form.
• Market testing and commercialization: After developing a new product, in this stage test the market for this new product and know the customer opinion regarding the new products. It it can get the positive signal from the market them commercialize the new product.
• Idea generation
• Idea screening
• Concept development and testing
• Marketing strategy development
• Business analysis
• Product development
• Market testing and commercialization
They are summarized below:
• Idea generation: It is the first task to develop a new product. Idea generation is the systematic search for new product idea. To develop a new product at first needs to generate idea for a new product from the company's internal and sources.
• Idea screening: After generating the idea from various sources, in second stages need to screen the idea from that ideas. That means from the various ideas in first stage select the best and suitable idea for developing a new product.
• Concept development and testing: In this step the above selected ideas convert into the concept, that means here consider the idea in written form and test concept. Moreover here defined the product features design size, etc.
• Marketing strategy development: In this step develop the marketing strategy for the above developed product that means here decides what product will be produced what will be its price, distribution channel, promotion and so on.
• Business analysis: Business analysis is the review of the sales, costs and profit projections for a new product whether these factors satisfy the company's objectives.
• Product development: So far, for many new product concepts, the department may have existed only as a word description, a drawing or perhaps a crude mock up. If the department concept passes the business test, it involves into product development that means after analyzing the product in business side develop the product in physical form.
• Market testing and commercialization: After developing a new product, in this stage test the market for this new product and know the customer opinion regarding the new products. It it can get the positive signal from the market them commercialize the new product.
Definition & Characteristics of Services
Service: Services are a form of product that consists of activities, benefits or satisfactions offered for sale that are essentially intangale and do no result in the ownership of anything.
That means services is not physical form of product but intangle and it only indicates the activities or benefits or satisfaction that can offer in market for sale and it can satisfy the consumer need and wants. It can not separate from the service providers and vary person to person.
From the above definition, we get the below characteristics of a service:
• Service is intangle
• It is inseparable
• Variability and
• Perishability
They are summarized below:
• Inseparability: A major characteristics of services they are produced and consumed at the same time and can not be separated from their providers whether the providers are people or machines.
• Variablity: Another important characteristics of service is their quality may vary greatly depending on who provides them and when, where and how.
• Perishability: Since when services is produced them it needs to consume. For this reason, they can not stored for later sale or use.
That means services is not physical form of product but intangle and it only indicates the activities or benefits or satisfaction that can offer in market for sale and it can satisfy the consumer need and wants. It can not separate from the service providers and vary person to person.
From the above definition, we get the below characteristics of a service:
• Service is intangle
• It is inseparable
• Variability and
• Perishability
They are summarized below:
• Inseparability: A major characteristics of services they are produced and consumed at the same time and can not be separated from their providers whether the providers are people or machines.
• Variablity: Another important characteristics of service is their quality may vary greatly depending on who provides them and when, where and how.
• Perishability: Since when services is produced them it needs to consume. For this reason, they can not stored for later sale or use.
Individual Product Decision
Individual product decisions involve the development of a product and related decisions regarding marketing a product. The below things are related in individual product decisions.
• Product attributes decision
• Branding
• Packaging
• Labeling etc.
They are summarized in below:
• Product attributes decisions: It is the first task to define the product's benefits for developing a product. These benefits are communicated and delivered by product attribued such as quality, features, style and design.
The below factors are related with the product attributes decision.
Product Quality: Product quality is the ability of a product to perform its functions, it includes the product's overall durability, reliability, precision, case of operation and repair and other value attributes.
Product features: A can product be offered with varying features. Ve company can create higher models by adding more features. Features are a competitive tool for differentiating the company's product from competitor's products.
Product style and design: Another way to add customer value is through distinctive product style and design. Product is design is an elusive blend of form and function, quality and style, art and engineering.
• Branding: Perhaps the most distinctive skill of professional marketers is their ability to create, maintain, protect and enhance brand of their products and service. A brand is a name, term, sign, symbol or design or a combination of these that identifies the maker or seller of a product or service.
• Packaging: Packaging is the activities of designig and producing the container or wrapper for a product.
• Labeling: Labels may range from simple tags attached to products to complex graphics that are part of the package. At the very least, the label identifies the product or brand. It might also describe several things about the product who made it, where it was made, when it was made, its contents, how it is to be used and how to use it safety.
• Product attributes decision
• Branding
• Packaging
• Labeling etc.
They are summarized in below:
• Product attributes decisions: It is the first task to define the product's benefits for developing a product. These benefits are communicated and delivered by product attribued such as quality, features, style and design.
The below factors are related with the product attributes decision.
Product Quality: Product quality is the ability of a product to perform its functions, it includes the product's overall durability, reliability, precision, case of operation and repair and other value attributes.
Product features: A can product be offered with varying features. Ve company can create higher models by adding more features. Features are a competitive tool for differentiating the company's product from competitor's products.
Product style and design: Another way to add customer value is through distinctive product style and design. Product is design is an elusive blend of form and function, quality and style, art and engineering.
• Branding: Perhaps the most distinctive skill of professional marketers is their ability to create, maintain, protect and enhance brand of their products and service. A brand is a name, term, sign, symbol or design or a combination of these that identifies the maker or seller of a product or service.
• Packaging: Packaging is the activities of designig and producing the container or wrapper for a product.
• Labeling: Labels may range from simple tags attached to products to complex graphics that are part of the package. At the very least, the label identifies the product or brand. It might also describe several things about the product who made it, where it was made, when it was made, its contents, how it is to be used and how to use it safety.
Product Line Decision, Mix Decision
• Product Line Decision: We have looked at product strategy decisions such as branding, packaging, labeling and support service for individual products and service. But product strategy also calls for building a product line.
Product line: Product line group of products via are closely related because they function in a similar manner, are sold to the same customer groups, are marketed through the same type of outles, or fall within given price ranges.
• Product Mix Decision: An organization with several product lines has a products mix. A product mix or product assessment consists of the entire product for sale.
Product line: Product line group of products via are closely related because they function in a similar manner, are sold to the same customer groups, are marketed through the same type of outles, or fall within given price ranges.
• Product Mix Decision: An organization with several product lines has a products mix. A product mix or product assessment consists of the entire product for sale.
Product Life Cycle
After launching the new product, management wants the product to enjoy a long and happy life. Although it does not expect huge product to sell over, the company wants to farm a decent profit to cover all the effort and risk that went into launching it.
It involves five distinct stages. They are as follows:
• Product development
• Introduction
• Growth
• Maturity
• Decline
The product revenue and profits
can be plotted as a function of
the life-cycle stages as shown in
the graph below: /We can represent these stages through the figure in below way:
Management is aware that each product will have a life cycle, although the exact shape and length is not known in advance. So product life cycle is the course of a product's sales and profits over its life time.
*Product Life Cycle Diagram
• Product developement: Product Developement begins when company finds and develops a new product idea. During product development sales are zero and the company's investment costs mount.
• Introduction: Introduction is a period of slow sales growth as the product is introduced in the market. Profits are non existent in this stage because of heavy expenspes of product introduction.
• Growth: Growth is a period of market acceptance and increasing profit.
• Maturity: Maturity is a period of slow down in sales growth because the product has recieved acceptance by most potential buyers. Profit level off or decline because of increasing against competition.
• Decline: Decline is the period when sales fall off and profit drop.
It involves five distinct stages. They are as follows:
• Product development
• Introduction
• Growth
• Maturity
• Decline
The product revenue and profits
can be plotted as a function of
the life-cycle stages as shown in
the graph below: /We can represent these stages through the figure in below way:
Management is aware that each product will have a life cycle, although the exact shape and length is not known in advance. So product life cycle is the course of a product's sales and profits over its life time.
*Product Life Cycle Diagram
• Product developement: Product Developement begins when company finds and develops a new product idea. During product development sales are zero and the company's investment costs mount.
• Introduction: Introduction is a period of slow sales growth as the product is introduced in the market. Profits are non existent in this stage because of heavy expenspes of product introduction.
• Growth: Growth is a period of market acceptance and increasing profit.
• Maturity: Maturity is a period of slow down in sales growth because the product has recieved acceptance by most potential buyers. Profit level off or decline because of increasing against competition.
• Decline: Decline is the period when sales fall off and profit drop.
Classification of Product
Mainly these are two types of product.
A. Consumer product
B. Industrial product
A. Consumer product: Consumer products are those bought by final consumer for personal consumption. Marketers usually classify those products further based on how consumers go about buying them or on the basis of consumers shopping habit marketers classify the consumer goods. There are four types of consumer goods/product:
• Convenience product: Convenience products are consumer products and services that the customer usually buying frequently, immediately and with a minimum of comparison and buying effort. Generally it is less costly and it can get everywhere. Such as soap, candy, tooth paste, newspapers, salt, oil etc.
• Shopping product: Shopping products are consumer products that the customer on such bases as suitability quality, price and style. When consumer purchases shopping products and services them he spends much time and effort in gathering information and making comparison. It includes Furniture, Sharee, Clothing, Ornament, TV etc.
• Specialty product: Specially products are consumer products with unique characteristics or brand identification for willing to make a special brands and types of cars, high priced photographic equipment, designer, clothes and the service of medical or legal specialists.
• Unsought product: Unsought products are consumer products that the consumers either does not know about or knows about but does not normally think of buying. Such as life insurance and blood donations to the Red Cross.
B. Industrial goods: Industrial products are those products bought by individuals and organizations for further processing or for use in conducting a business.
The three groups of industrial product and services include.
• Material and parts
• Capital items and
• Suppliers and services
They are summarized below:
• Material and parts: Materials and parts are industrial products that totally entered the marketers or producers product. If is parts of main product. Materials and parts includes raw materials and manufactured materials and parts.
* Raw materials: Raw materials consists of farm products (wheat, cotton, livestock, fruits, vegetables) and natural producs (fish, lumber, crude petroleum, iron)
* Manufactured materials and parts: Manufactured materials and parts consists of component materials (iron, yarn, cement, wires) and component parts (small motors, tires, casting)
• Capital items: Capital items are industrial products that aid in the buyers production or operation or operation. Capital items include installation and accessory equipment.
* Installations: Installations consist of major purchases such as buildings (factories and office) and fixed equipment (generations, drill, presses, large computers, elevators) etc.
* Accessory equipment: Accessory equipment includes portable factory equipment and tools (hand tools, lift trucks) and office equipment (fax, machineries desks). They have a shorter life than installation and simply aid in the production process.
• Suppliers and services: The final group of business products is suppliers and services. Supplies include operating supplies (lubricants, coal, paper, pencil and repairs and maintenance items (paints, nails, brooms). Suppliers are the convenience product of the industrial field because they are usually purchased with a minimum of effort or comparison. Business service includes maintenance and repair services (window cleaning computer repair) and business advisom services (legal, management consulting advertising). Such services are usually supplied under contract.
A. Consumer product
B. Industrial product
A. Consumer product: Consumer products are those bought by final consumer for personal consumption. Marketers usually classify those products further based on how consumers go about buying them or on the basis of consumers shopping habit marketers classify the consumer goods. There are four types of consumer goods/product:
• Convenience product: Convenience products are consumer products and services that the customer usually buying frequently, immediately and with a minimum of comparison and buying effort. Generally it is less costly and it can get everywhere. Such as soap, candy, tooth paste, newspapers, salt, oil etc.
• Shopping product: Shopping products are consumer products that the customer on such bases as suitability quality, price and style. When consumer purchases shopping products and services them he spends much time and effort in gathering information and making comparison. It includes Furniture, Sharee, Clothing, Ornament, TV etc.
• Specialty product: Specially products are consumer products with unique characteristics or brand identification for willing to make a special brands and types of cars, high priced photographic equipment, designer, clothes and the service of medical or legal specialists.
• Unsought product: Unsought products are consumer products that the consumers either does not know about or knows about but does not normally think of buying. Such as life insurance and blood donations to the Red Cross.
B. Industrial goods: Industrial products are those products bought by individuals and organizations for further processing or for use in conducting a business.
The three groups of industrial product and services include.
• Material and parts
• Capital items and
• Suppliers and services
They are summarized below:
• Material and parts: Materials and parts are industrial products that totally entered the marketers or producers product. If is parts of main product. Materials and parts includes raw materials and manufactured materials and parts.
* Raw materials: Raw materials consists of farm products (wheat, cotton, livestock, fruits, vegetables) and natural producs (fish, lumber, crude petroleum, iron)
* Manufactured materials and parts: Manufactured materials and parts consists of component materials (iron, yarn, cement, wires) and component parts (small motors, tires, casting)
• Capital items: Capital items are industrial products that aid in the buyers production or operation or operation. Capital items include installation and accessory equipment.
* Installations: Installations consist of major purchases such as buildings (factories and office) and fixed equipment (generations, drill, presses, large computers, elevators) etc.
* Accessory equipment: Accessory equipment includes portable factory equipment and tools (hand tools, lift trucks) and office equipment (fax, machineries desks). They have a shorter life than installation and simply aid in the production process.
• Suppliers and services: The final group of business products is suppliers and services. Supplies include operating supplies (lubricants, coal, paper, pencil and repairs and maintenance items (paints, nails, brooms). Suppliers are the convenience product of the industrial field because they are usually purchased with a minimum of effort or comparison. Business service includes maintenance and repair services (window cleaning computer repair) and business advisom services (legal, management consulting advertising). Such services are usually supplied under contract.
Product, Level of Product
Generally PRODUCT means things or physical goods. But its meaning in marketing is massive. In the side of marketing product means goods or services that can satisfy the wants of the consumer. In this context invisible goods may be a product. Such as services of bankers or doctors etc.
According to Philip Kotler, Product is anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need. It includes physical objects, services, events, persons, places, organization, ideas or mixes of these entities.
From the above discussion we can play our opinion that product is tangible or intangible things that can satisfy the want or need of the consumer.
• Level of Product
To prepare and offer a product, marketer needs to consider five levels of a product. These levels are as follows:
1. Core product or benefit
2. Expected product
3. Expected product
4. Augmented product
5. Potential product
These are summarized in below:
1. Core product or benefit: It is the primary levels to the developement of a product. It is a prime and central part of a product. It is the internal qualities of a product that satisfy the main warmt of a customer. By the answer of what product consumer is buying and what benefit he will get, it is expressed the core product or benefit. It is the main objective for purchasing a product, such as a hotel guest is buying "rest and sleep". The purchases of a drill is buying holes.
2. Expected product: At the second level the marketer has to turn the core benefit into a basic product. Thus a hotel room includes a bed, bathroom, towels, desk, dresser and closer.
3. Expected product: At the third level, the marketer prepares an expected product. It is a set of attributes and conditions that buyers normally expect when they purchase this product. Suppose Hotel guest expect a clean bed, fresh towels, working lamps and as relative degree of quiet.
4. Augmented product that exceeds customer expectations. A hotel can inatted a remote control television set, fresh floors, rapid check in, express checkout and fine dining and room service.
5. Potential product: At the fifth level stands the potential product which encompassess all the possible augmentations and transformations the product might go in the future. Here is where companies search for new ways to satisfy customers and distinguish their offers.
According to Philip Kotler, Product is anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need. It includes physical objects, services, events, persons, places, organization, ideas or mixes of these entities.
From the above discussion we can play our opinion that product is tangible or intangible things that can satisfy the want or need of the consumer.
• Level of Product
To prepare and offer a product, marketer needs to consider five levels of a product. These levels are as follows:
1. Core product or benefit
2. Expected product
3. Expected product
4. Augmented product
5. Potential product
These are summarized in below:
1. Core product or benefit: It is the primary levels to the developement of a product. It is a prime and central part of a product. It is the internal qualities of a product that satisfy the main warmt of a customer. By the answer of what product consumer is buying and what benefit he will get, it is expressed the core product or benefit. It is the main objective for purchasing a product, such as a hotel guest is buying "rest and sleep". The purchases of a drill is buying holes.
2. Expected product: At the second level the marketer has to turn the core benefit into a basic product. Thus a hotel room includes a bed, bathroom, towels, desk, dresser and closer.
3. Expected product: At the third level, the marketer prepares an expected product. It is a set of attributes and conditions that buyers normally expect when they purchase this product. Suppose Hotel guest expect a clean bed, fresh towels, working lamps and as relative degree of quiet.
4. Augmented product that exceeds customer expectations. A hotel can inatted a remote control television set, fresh floors, rapid check in, express checkout and fine dining and room service.
5. Potential product: At the fifth level stands the potential product which encompassess all the possible augmentations and transformations the product might go in the future. Here is where companies search for new ways to satisfy customers and distinguish their offers.
Business Buying Behavior
If we describe the business buyer behavior, them we find four questions. Which are:
a. What buying decision do business buyers make?
b. Who participates in the buying process?
c. What are the major influences on buyers?
d. How do business buyers make their buying decisions?
These questions answer are discussed below:
A. Major types of buying situation: There are three major types of buying situation. These are:
• Straight rebuy: Straight rebuy is a business buying situation in which the buyer routinely recorders something without any modifications.
• Modified rebuy is a buying situation in which the wants to modify product specifications, prices, terms or suppliers.
• New task: New task is a business buying situation in which the buyer purchases a product or service for the first time.
B. Participants in the business buying process: The trillions of Taka worth of goods and services needed by business organization. The decision making unit of a buying organization is calle buying center. The buying center includes all members of the organization who play any of the five role in the purchase decision process. They are discussed below:
• Users: Users are members of the buying organization who will actually use the purchased product or service.
• Influencers: Influencers often help define specifications and also provide information for evaluation alternatives. Naturally, the technical efficient person work as influencers.
• Buyers: Buyers have the formal authority to select the supplier and arrange term of purchase.
• Deciders: Deciders are the people of organization's buying center who have formal or informal power to select or approve the final suppliers.
• Gatekeepers: Gatekeepers are the people in the organization buying center who can control the flow of information to others. These person are technically and the level of secreterial person.
C. Major influence on business buyers: Business buyers are influenced when they make their buying decision. Various groups of influences on business are- environmental, organizational, interpersonal and individual. They are discussed below:
• Environmental factors: Business buyers are influenced by factors in the current and expected economic environment. Such as level of primary demand, the economic outlook and the cost of money.
• Organizational factors: Each buying organization has its own objectives, policies, procedures and system. The business marketer must understand the factors well.
• Interpersonal factors: The buying center usually includes many participants who influence each other. So interpersonal factors also influence the business buying process. However, it is often to difficult to assess such interpersonal factors and groups dynamics.
• Individual factors: Each participant in the business buying-decision process brings in personal motives, perceptions and preferences. These individual factors are affected by personal characteristics such as age, income, education, professional identification, personality and attitudes toward risk.
D. The business buying process: Business buyers do not buy goods and services for personal consumption. They buy goods and services to make money or to satisfy the customers. There are eight stage in the business buying process. They are discussed below:
• Problem recognition: The first stage of the business buying process in which some one in the company recognizes a problem or need that can be met by acquiring a good or service.
• General need description: The second stage is general need description, the stage ing the business buying process in which the company describes the general characteristics and quality of a needed item.
• Product specification: The next stage is product specification. The stage of the business buying process in which the buying organization decides on and specifies the best technical product characteristics for a needed item.
• Supplier search: After product specification the next stage is suppliers search. The stage of the business buying process in which the buyer tries to find the best vendors.
• Prospoal solicitation: The fifth stage is proposal solicitation. The stage of the business buying process in which the buyer invites qualified suppliers to submit proposals.
• Supplier selection: The next stage is supplier selection. The stage of the business process in which the buyer reviews proposals and rejects a supplier or suppliers.
• Order-routine specification: The seventh stage is order-routine specification. The order of the business buying process in which the buyer writes the final order with the chosen suppliers, listing the technical specifications, quantity needed, expected time of delivery, return policies and warranties.
• Performance review: The last stage is performance review. The stage of the business buying process in which the buyer rates its satisfaction with suppliers, deciding whether to continue, modify or drop them.
a. What buying decision do business buyers make?
b. Who participates in the buying process?
c. What are the major influences on buyers?
d. How do business buyers make their buying decisions?
These questions answer are discussed below:
A. Major types of buying situation: There are three major types of buying situation. These are:
• Straight rebuy: Straight rebuy is a business buying situation in which the buyer routinely recorders something without any modifications.
• Modified rebuy is a buying situation in which the wants to modify product specifications, prices, terms or suppliers.
• New task: New task is a business buying situation in which the buyer purchases a product or service for the first time.
B. Participants in the business buying process: The trillions of Taka worth of goods and services needed by business organization. The decision making unit of a buying organization is calle buying center. The buying center includes all members of the organization who play any of the five role in the purchase decision process. They are discussed below:
• Users: Users are members of the buying organization who will actually use the purchased product or service.
• Influencers: Influencers often help define specifications and also provide information for evaluation alternatives. Naturally, the technical efficient person work as influencers.
• Buyers: Buyers have the formal authority to select the supplier and arrange term of purchase.
• Deciders: Deciders are the people of organization's buying center who have formal or informal power to select or approve the final suppliers.
• Gatekeepers: Gatekeepers are the people in the organization buying center who can control the flow of information to others. These person are technically and the level of secreterial person.
C. Major influence on business buyers: Business buyers are influenced when they make their buying decision. Various groups of influences on business are- environmental, organizational, interpersonal and individual. They are discussed below:
• Environmental factors: Business buyers are influenced by factors in the current and expected economic environment. Such as level of primary demand, the economic outlook and the cost of money.
• Organizational factors: Each buying organization has its own objectives, policies, procedures and system. The business marketer must understand the factors well.
• Interpersonal factors: The buying center usually includes many participants who influence each other. So interpersonal factors also influence the business buying process. However, it is often to difficult to assess such interpersonal factors and groups dynamics.
• Individual factors: Each participant in the business buying-decision process brings in personal motives, perceptions and preferences. These individual factors are affected by personal characteristics such as age, income, education, professional identification, personality and attitudes toward risk.
D. The business buying process: Business buyers do not buy goods and services for personal consumption. They buy goods and services to make money or to satisfy the customers. There are eight stage in the business buying process. They are discussed below:
• Problem recognition: The first stage of the business buying process in which some one in the company recognizes a problem or need that can be met by acquiring a good or service.
• General need description: The second stage is general need description, the stage ing the business buying process in which the company describes the general characteristics and quality of a needed item.
• Product specification: The next stage is product specification. The stage of the business buying process in which the buying organization decides on and specifies the best technical product characteristics for a needed item.
• Supplier search: After product specification the next stage is suppliers search. The stage of the business buying process in which the buyer tries to find the best vendors.
• Prospoal solicitation: The fifth stage is proposal solicitation. The stage of the business buying process in which the buyer invites qualified suppliers to submit proposals.
• Supplier selection: The next stage is supplier selection. The stage of the business process in which the buyer reviews proposals and rejects a supplier or suppliers.
• Order-routine specification: The seventh stage is order-routine specification. The order of the business buying process in which the buyer writes the final order with the chosen suppliers, listing the technical specifications, quantity needed, expected time of delivery, return policies and warranties.
• Performance review: The last stage is performance review. The stage of the business buying process in which the buyer rates its satisfaction with suppliers, deciding whether to continue, modify or drop them.
Characteristics of Business Market
Business market is formed by individual market, resale market and government. In large business market every businessman sell their produced goods to the other businessmen. The goods are provided to the ultimate consumer through dealer, wholesaler, retailer etc. The characteristics of business market are discussed below:
• MARKET STRUCTURE AND DEMAND: In business market, marketers are few but transaction is large amount. The characteristics which under market structure and demand are discussed below:
• Fewer but larger buyer: In business market, the buyers are few but the amount of purchase is large. Industrial organizations are needed to large amount of goods for large production.
• Geographically concentrated: Business market is concentrated geographically, that means business market in established in a certain area.
• Derived Demand: Derived demand is created from the final consumer demand. If the need of consumable goods increase or decrease then the industrial market increase or decrease.
• Inelastic demand: Demand of many business market is more inelastic. The demand is not affect as much as short run by price changes.
• Fluctuating demand: Demand in business markets fluctuates more and more quickly. If the need of consumable goods little increase then the need of industrial goods more increase.
NATURE OF BUYING UNIT: Business purchase is more complex that consumer purchase and the buyer have more professional effort. Sometimes this purchase is implemented by appointing trained up purchase agent.
TYPES OF DECISION AND THE DECISION PROCESS: Business marketer have to face more complex buying decision than the consumer marketer. Because a large amount of money is transacted for purchasing goods, which consider the monetary matter. In this buying process many people of the organization are engaged. Business buyer takes more time to take buying decision for complexity.
Above these are the characteristics of business.
• MARKET STRUCTURE AND DEMAND: In business market, marketers are few but transaction is large amount. The characteristics which under market structure and demand are discussed below:
• Fewer but larger buyer: In business market, the buyers are few but the amount of purchase is large. Industrial organizations are needed to large amount of goods for large production.
• Geographically concentrated: Business market is concentrated geographically, that means business market in established in a certain area.
• Derived Demand: Derived demand is created from the final consumer demand. If the need of consumable goods increase or decrease then the industrial market increase or decrease.
• Inelastic demand: Demand of many business market is more inelastic. The demand is not affect as much as short run by price changes.
• Fluctuating demand: Demand in business markets fluctuates more and more quickly. If the need of consumable goods little increase then the need of industrial goods more increase.
NATURE OF BUYING UNIT: Business purchase is more complex that consumer purchase and the buyer have more professional effort. Sometimes this purchase is implemented by appointing trained up purchase agent.
TYPES OF DECISION AND THE DECISION PROCESS: Business marketer have to face more complex buying decision than the consumer marketer. Because a large amount of money is transacted for purchasing goods, which consider the monetary matter. In this buying process many people of the organization are engaged. Business buyer takes more time to take buying decision for complexity.
Above these are the characteristics of business.
Subscribe to:
Posts (Atom)