Meaning and Definition of Marketing
Market:-
The term market, refers to a place
where actual buying and selling take
place or where buyers and sellers personally meet together to effect purchase
and sales. Market needn't mean any particular place . It is the sum total of
the situations or environment in which the resources, activities and attitudes
of the buyers and sellers affect the sales for the product in a given area.
Definition :
Chapman defines a market as
"not to a place but to a community or commodities and buyers and sellers
who are in direct competition with one another."
Marketing :-
Philip Kotler is of the view that
"any interpersonal or inter organizational relationship involving an
exchange is marketing" . Marketing is a
total system of business activities designed to plan, price, promote and
distribute want satisfying goods and services to the benefit of the
present and potential customers.
The American Marketing Association
defines marketing as "the performance of business activity that direct in
the flow of goods and services from producers to the consumer or users".
Marketing is the process of discovering and translating consumer needs and
wants into product and services specification,
creating demand for these product and services and then is turn
expanding this demand.
Market and
Marketing :-
The term market refer to the total
demand of the potential buyers for a product. The term marketing refers to all
the activities aimed at consumer satisfaction . market covers only exchange
function. The term marketing on the other hand covers not only exchange
function, but also others facilitating functions like financing, risk bearing,
standardization etc. The principal object of market is to facilitate the flow
of goods and exchange but the main objective of marketing is consumer
satisfaction . Thus marketing is a broader term.
Selling and
Marketing :
In selling the emphasis is on the
product. Selling focuses on the needs of the seller, marketing on the needs of
the buyer. Selling is preoccupied with the seller's needs to convert his
product into cash; marketing with the idea of satisfying the needs of the
consumer by means of the product.
Evolution of
Marketing Concepts :
The modern concept of marketing is not the result of a sudden change.
It is the result of changing situation which compelled the business people to
give an important place to the consumer and his wants , The various stages is
the evolution of marketing concept are :-
1. Self Sufficient Stage :-
In the earlier stages of human history each family was self
sufficient. It produces the goods needed by itself and there was no oriented
stage.
2 Exchange Oriental Stage :-
When the people began to realise the importance and uses of
division of labour and specialization ,
the next stage ie., exchange oriented stage came into being. Competition was
totally absent in those days. This is the first step in the evolution of
marketing.
3. Production Oriented stage :-
The Production Oriented stage is the result of industrial revolution. Large Scale
Production become the rule of the auction side , ignoring the problems of
marketing.
4. Sales Oriented Stage :-
Only in this stage the business managers began to realize the
importance of marketing . The place of the customers was though accepted no
serious steps were taken to satisfy their wants. The consumer has no other
alternative other than to accept only those goods produced by the producers.
5. Marketing Oriented State :-
During this stage the competition became more stiff than it
was in the previous stage. In this stage the business units began to expand
their production and produce more than the immediate needs of the society. The
producers began to realise that their products can't be sold without an
effective sales force and marketing.
6. Consumer Oriented Stage :-
Satisfaction of the consumers is the main object of
marketing. But until recently the importance of consumption was overlook by the
producer and all other agencies and institutions involved in marketing process.
The business men began to realize that their
objective of profit making could be possible only through consumer
satisfaction. Now a days all business men are trying their best to ascertain
the consumer reactions, their preference, their attitudes and variation etc.
Only on the basis of information collection , the producers can adjust his
production to suit the taste, preference and choice of the consumer. Therefore
he task of marketing starts with the consumer and ends with the consumer.
Functions
of Marketing
1. Buying and Assembling :-
Buying is the first step in the process of marketing.
Manufacturers buy raw materials for converting them into finished product.
Similarly Wholesales and Retails buy
goods for the purpose of resale.
Assembling starts after the goods have been purchased.
Assembling refers to bringing together variety of goods at different
quantities or of a large quantities
of similar items. It is done by the
middlemen and such assembled goods are sold to the retailer.
2. Selling :-
Selling is the crucial function in the process of marketing . It is the
actual point where transfer of ownership occurs. Now a days the selling
activity involves a number of problem such as advertising, creating demand for
new products, conducting market research, supply of goods in the right time and
place.
3. Transportation :-
Since markets are geographically separated from production
area, transportation is an essential marketing activity. Transportation
involves the movement of goods from the point of production to the place of
consumption. Transportation provides place utility to the product. Land, water
and air are the principal means of transport.
4. Storage and Warehousing :-
Most of the mass consumption goods are produced in
anticipation of demand. In fact all middlemen engaged in the process of
marketing should do some sort of storage work because they should hold
sufficient stock to meet the anticipated demand and to ensure smooth supply of
goods.
5. Financing :-
Money is required at each stage in the process of marketing .
Without adequate finance even the very
existence of business concern shall be affected. Although procurement of funds is the responsibility of
the finance department, amount of capital required in the marketing division is
considerably influenced by the decisions of the marketing managers.
6 Risk bearing :-
Risks are involved at almost all stages in the process of
marketing. From the product policy itself risk is possible due to various
reasons like changes in demand and supply conditions, loss in shortage and
transport etc. By carefully anticipating the risks that may arise in future a
market can avoid or at least minimise the risks.
7. Standardization and Grading :-
The term standardization refers to the establishment of
standards for a product. A standard is a measure which is generally recognized
as having fixed value. Standards are generally determined on the basis of
weight, colour, quantity etc.
8 Market Information :-
For the formulation of
marketing programmes, the marketing executive must be adequately informed not
only about the market for his product but also the attitudes of the customer
using the producer etc. For this information should be collected, analysed and interpreted. In fact the success in
marketing largely depends on the volume of information the management have.
Marketing Management
Marketing Management represents the
important functional area of business
Management under which goods and service flows from the producers to the
consumers. Marketing Management involves planning, implementation and control
of Marketing Programmes included in the process of marketing.
Philip Kotler has defines marketing
management as "the analysis, planning, implementation and control of
programmes designed to bring about desired exchange in target audiences. For
the purpose of mutual or personal gain". Thus marketing management is the process of ascertaining consumer
needs, working up through product planning, organizing , directing, controlling
and evaluating the effects of the group of people towards a common goal, which
emphasis on profitability with an optimum use of available resources.
Functions
of marketing Management
1. Determining objectives :-
Objectives form the foundation of marketing management . So
the marketing management must first determine the goals carefully. It is
necessary that these goals should be set forth clearly in writing and
communicated to the process concerned . The objective should be realistic and
relevant.
2. Planning :-
The next is to determine the manner in which the objectives
are to be achieved. Without
planning a company's operations
have no meaning. Planning may be for a short period or a long period.
Planning is concerned with laying plans
for a new product or sales forecast or the product distribution channel and promotional programmes. When an
overall plan of action is adopted , it is known as strategy.
3. Organizing :-
It is the process of arranging activities and the people in
such a way as to achieve the maximum output with highest degree of efficiency.
Under direction and guidance of
marketing manager the organisation drafts promotional programmes and campaigns
set up of marketing methods and procedures and makes other decisions and take other
actions for executing the policies and implementing the marketing plans.
4. Co-Ordination :-
Within the marketing
department activities in sales, advertising, marketing research, customer
service, new product development etc. require effective co-ordination trying these, more dosely to the
overall corporate programme. marketing can furnish sales estimated so that
the production department can better
plan to work. Outside the marketing department and the company , co-ordination
is needed with advertising transportation and other agencies.
5. Controlling :-
Primary purpose of any system of controlling is to set the
stage for decision and action. There are four faces of controlling function
namely establishment of performances, standards, measurement of performance,
results, evaluation of actual performance against the standards and the
corrective action as initiated by evaluation.
6. Staffing :-
One of the important functions of marketing management is to
assemble the human resources. Proper selection
of personnel is the key to elimination for substantial reduction in many
management problems.
7. Operating :-
Under this the plan or the programme is implemented. No plan
is worth much unless it is carried out efficiently. Success depends upon the
way in which the business is operated. The function of operating includes
operating a sales force and directing and advertising programme. The results of
companies activities are analysed and evaluated to determine whether they have
been successful.
8. Establishment of Marketing policies:-
Marketing policies is very essential for guiding executives
in their decision making that may frequently arise. Such a force is to afford
uniform executive action and uniform treatment to all customers. The policies
to be adopted are made stable yet flexible.
Market
Segmentation
The
marketers may divide the total market into smaller groups of consumers on the
basis of significant differences in buyers characteristics or buyer response to
marketing programme. Market can be segmented
on the basis of population , age, income, occupation, education, sex and
degree of Urban population.
"Market segmentation consist of taking the total
hetrogeneous market for a product and dividing it into several sub market each
of which tends to be homogeneous in all significant aspects." - Philip
Kotler.
Types
of Segmentation
1. Geographic Segmentation :-
Dividing a market into different geographical units such as
nation, states, regions, countries, cities etc.
2. Demographic Segmentation :-
Dividing the market into groups based on demographic
variables such as age, sex, family size, family life cycle ,income, education,
religion, race, occupation and nationality.
3. Psychographic Segmentation :-
Dividing a market into different groups based on social
class, life style or personality, characteristics etc.
4. Benefit Segmentation :-
Dividing the market into groups according to the different
benefits that consumers seek from the product.
5. Behavioural Segmentation :-
Dividing the market into
based on consumer knowledge attitude or response to a product.
Criteria for Segmentation
1. Identity :-
The marketing manager must have some means of identifying
members of the segments. That is some basis for classifying an individual as
being or not being a member of the segment. Members of segment are readily indentifiable by common
characteristic which display similar behaviour.
2. Accessibility :-
It must be possible to reach different segments in regard to
both promotion and distribution. In other words organization must be able to
focus its marketing effort on the total segments. The firm must be able to make
them aware of the product or services and they must get these products to them
through distribution systems at reasonable costs.
3. Responsiveness :-
A clearly defined segment must react to changes in any of the
elements of the marketing mix. e.g.. If
a particular segment is defined as being cost conscious , it should react
negatively to price rises. If it doesn't , it is an indication that the segment
needs to be refined.
4. Size :-
The segment must be reasonably large enough to be a
profitable target. It depends upon the number of people in it and their purchasing power. The idea is
that enough potential buyers should exist to conver the cost of production and
marketing required in that segment.
Benefits of Market Segmentation
If properly
used market segmentation can be a benefit to the company, the consumer and the
community. Generally it offers the following benefits :-
1. A more precise definition of the Market
:-
Segmentation improves a company's understanding of why the
consumers do or do not buy certain products. By knowing this the company can
make adjustments to meet changing marketing demands.
2. A more efficient Marketing programme
Effective marketing programme can be prepared to satisfy the
needs of the consumer, if the company understands the consumer needs.
3. Better assessment of the strength and
weaknesses of the competitor :-
If the competing product is deeply entrenched in one segment,
then effort may be needed to capture new
market rather than wasting the resources on the older one.
4. Better allocation of Marketing
resources :-
If the Market segment is clearly identified, promotional
appeals can be co- ordinated effectively and the marketer may decide how much
marketing may be allotted to different
segments.
Levels of Market Segmentation
1. Mass Marketing :-
In mass marketing seller engages in mass production, mass
distribution and mass promotion of one product for all buyers.
2. Segment Marketing :-
A market segment consists of a large identifiable group with
in a market. A company that practices segment marketing recognizes, the buyers
differ in their wants, purchasing power, buying attitudes and buying habits.
Segmentation is the mid point between mass marketing and individual marketing.
3. Niche Marketing :-
The Niche is a narrowly defined group typically a small
market whose needs are not well served.
So a Niche is a sub segment of a segment.
4. Local Marketing :-
In this case marketing programme are being tailored to the
needs and wants of local customer groups.
5. Individaul Marketing :-
The ultimate level of segmentations leads to segments of one
to one in the market. Here consumers are served as individuals with tailor made
products, exclusively for that customer.
6. Self Marketing :-
Self marketing is a form of individual marketing in which the
individual consumer takes more responsibility to determine the product and
trends.
e.g. A consumer
searching internet web for purchasing a product.
Target Marketing
Target
market is a group of customers on whom the organization specially intends to aim its marketing efforts.
Steps in target
Marketing
1. Evaluate the market segment :-
This evaluate looking for three factors namely; segment size
and growth, segment structural attractiveness and company's objectives and
resources.
2. Selecting the market segments :-
Having evaluated
different segment the company must now
decide which and how many segments to have.
Company can opt for a single segment concentration, selective
specialization, product specialization, market specialization or all market
coverage.
Product Positioning
Positioning is the act of designing
the company's offer and image so that it occupies a distinct and valued place
in the target customer's mind. A company should develop a unique selling
production (USP) for each brand and stick to it. Company can try for single
benefit positioning or double benefit positioning. Each brand should put an
attribute and project it towards the
consumers. The company's positioning must be rooted in an understanding of how
the target market defines value and makes choices among vendors.
Consumer Behaviour
Introduction :-
One thing that we have in common is
that we are all consumers. Everyday we
are buying different goods and services.. Each consumer is unique and this
uniqueness is reflected in the consumption. Consumer behaviour can be defined
as "those acts of individuals that is involved in obtaining, using and
disposing of economic goods and services, including the direction process that
precede and determine these acts.
A simple
model of consumer behaviour
All
marketing managers should find the answer to the following questions:-
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1.
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Who constitute
the market?
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Occupants
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2.
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What does the
market buy?
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Objects
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3.
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Why does the
market buy?
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Objectives
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4.
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Who
participate in buying?
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Organizations
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5.
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How does the
market buy?
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Operations
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6.
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When does the
market buy?
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Occasions
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7.
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Where does the
market buy?
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Outlets
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Market
Stimuli
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Other
Stimuli
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Buyers
characteristic
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Buyers
decision process
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Buyers
decision
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Product
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Economic
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Social
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Problem
recognition
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Product Choice
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Price
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Technical
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Cultural
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Information
search
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Dealer choice
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Place
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Political
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Personal
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Evaluation
Decision
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Brand choice
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Promotion
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Cultural
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Psychological
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Post purchase
behaviour
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Purchase
timing
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Purchase
quantity
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Figure
presents the detailed model of factors influencing consumer buying behaviour. A
consumer optimise various types of stimulus from his surroundings. It includes
marketing stimuli and other stimuli. A stimulus is marketing stimuli that
affect the senses. This is also known as a sensory input. This includes
product, brand names, advertising and other marketing strategies. Other stimuli
includes the sensory input from consumer
political, cultural, technological and economic conclusions.
Consumer decision involves the
choice of product, brand, dealers,
purchase quantity, purchase timing etc. Buyer makes a decision through various
selection and rejection process which are mainly affected by buyer
characteristics.
Factors influencing consumer behaviour
I. Cultural Factors :-
1. Culture :-
Culture is the most
fundamental determinant of a person's wants and behaviour. A growing child
acquires a set of values, perceptions, preferences and behaviour through his or
her family and other key institutions. The interest in various products will be
different from culture to culture.
2. Sub culture :-
Each culture consists of
smaller sub-cultures that provide more specific identifications and
socialization for its members. Sub cultures include nationality, religions,
social groups and geogrpahical regions. Marketers often design products to the
needs of sub -culture groups.
3. Social Class :-
Social classes are
relatively homogeneous and enduring
devision in a society which are hierachcally ordered and whose members share
similar values, interest and behaviour. Social classes show distinct product
and brand preferences in such area like clothing, home furnishings, automobiles
and leisure activities.
II. Social Factors:-
1. Reference groups:-
Many groups influence a
persons behaviour. A person's reference
group consist of all the groups that have a direct or indirect influence
on the person's attitude or behaviour. Groups having direct influence on a
person are called membership groups. Group influence is strong for products
that are visible to others whom the buyer respects.
2. Family :-
Family member constitute
most influential primary reference groups. Parents, children, wife etc
influences the buyers behaviour. Family can be considered as the most important
consumer buying organization in a society. Purchase can be of three types - Husband dominant, wife dominant and equal
participation.
3. Roles and Status :-
A person participates in
many groups through out his life. The persons position in each group can be
defined in terms of roles and status. each role carries a status. A role
consists of the activities people are expected to perform according to the
persons around them. Marketers are aware of status symbol and potential of each
product and brand.
III. Personal Factors :-
1. Age and life cycle stage :-
People consume goods and
services over their lifetime. The consumption is based on the life cycle stages
of each individuals. Marketers pay a close attention to changing life cycle
circumstances and changing stages.
2. Occupation :-
A person's occupation
affects the goods and services bought by him. Marketers try to identify occupational groups that have
interest in their products and services.
3. Economic circumstances
Product choice is
greatly affected by a person's economic situations. This consist of their
spentable income and savings and assets.
4. Life style
Life style is the person's pattern
of living in the world. It is expressed in the person's activities, interest
and opinion. (AIO)
5. Personality and self concept:-
Personality influence
product and brand choices. A person uses products according to his self concept
and self image.
IV. Psychological Factors:-
1. Motivation :-
A person has many needs
at any given time. Needs are satisfying according to the person's priority and
interest. According to Maslow's Need Heirarchy Theory a person fulfills his
needs in a series like basic needs, safety
needs, social needs, esteem needs and self actualization needs.
Satisfying the needs reduces the felt tension with the unfulfillment of a
particular need.
2. Perception :-
Perception is a process
by which an individual selects organizes
and interprets information inputs to create a meaningful picture of the world.
Marketers must take into account the different perception of the same objects.
3. Learning :-
Learning involves
changes in an individual's behaviur arising from experience. Learning theory
teaches marketers that they can build up demand for a product by associating it
with strong drives and providing positive reinforcement . A consumer learns
from the purchase of every product, every time and the feed back of this
purchase determines the next purchase.
4. Beliefs and attitudes:-
A belief is a
descriptive thought that a person holds about something. People carry different
befiefs and make up different product images. These beliefs may be based on
knowledge, opinion or faith. An attitude describes a person's enduring favourable or
unfavourable cognitive evaluations emotional feelings and action tendancies
towards some object or idea. People have attitude towards almost everything -
religion, politics, cloths, music, food and so on.
Stages in the buying decision process
Consumer passes through five stages
namely problem recognition, information search, evaluation of alternatives,
purchase decision and post purchase behaviour.
1. Need or problem Recognition :-
The buying process
starts when the buyer recognizes a problem or a need. A need can be aroused by
an external stimulus or any other case. A person passing through a bakery seas
baked cake and this stimulate his or her hunger. Marketers should develop
marketing strategy that trigger consumer interest.
2. Information Search :-
An interested consumer
will be inclined to search for more information. Consumer then goes into active
information search where he learns about the needed product and he moves from
limited problems solving to extensive problem solving. The main sources of
information include;
a. Personal
sources like family friends, relatives, neighbours etc
a. Commercial
sources like advertising, sales persons, dealer, displays etc.
c. Public
sources like mass media, consumer rating organization etc.
d. Experiential
sources like handling the product, examining and using the product etc.
Through
gathering information consumer learns about competing branches and their features.
3. Evaluation of Alternatives:-
Consumer processes the
competitive brands and their information and makes final information of value.
Consumer is looking for a bundle of attributes with varying capacities of
delivering the benefits and satisfying the needs. Consumer carries an attitude
towards the brand alternatives through an evaluation procedure. This is
based on brand beliefs and images.
4. Purchase Decision:-
In the evaluation stage
consumer forms preferences among the
various brand choices. Purchase decision is based on two factors.
a. Attitude
of others
b Un
anticipated situational factors .
In executing a purchase
decision, a consumer makes brand decision, dealer decision, quantity decision,
timing decision and payment method decision.
5. Post Purchase behaviour :-
After purchasing a
product a consumer may detect a defect.
Buyer satisfaction is a function of the closeness between his expectation and the product performance. If the product performance falls
below customer expectation customer is disappointed. If it meets expectation
customer is satisfied . If it exceeds expectation customer is delighted.
After purchasing the product any
consumer may detect a few problems and consumer will expects some level of
satisfaction and dissatisfaction. This
will influence the subsequent purchase behaviour of the consumer. Marketers
should make necessary steps to minimise post purchase dissatisfaction.
Customers value Satisfaction
Customer delivered value is the
difference between total customer value and total customer cost. Total customer
value is the bundle of benefits customers expect from a given product or
services.
Seller must assess the total
customer value and total customer cost associated with the offer of each
competitor.
Customer Satisfaction
Satisfaction is the level of a
person's self stage resulting from comparing the product practical performance
in relating to person's expectation. A consumer could experience three levels
of satisfaction depending on the difference between expectation and
performance. They are dissatisfaction, satisfaction and delight. Depending on
the results whether it is negative, positive or highly positive.
Companies use the following methods
to measure how much satisfaction they are creating:
1. Complaint and suggestion systems:
A customer centered
organization will make it easy for its customers to deliver suggestions and
complaints. These information flows provide the companies with many good ideas
and enable them to act more rapidly to solve the problems.
2. Customer satisfaction surveys:-
Studies show that one
out of every four purchases makes dissatisfaction and less than 5 percentage of
the dissatisfied customers will complain. So it is essential to conduct surveys
among the consumers to know their problems.
Retaining Customers
Companies need to pay close
attention to their customer tallying in rate and undertake steps to reduce it.
A company would lose hundred customers a week and gain another hundred
customers and sales can be made satisfactorily. But customer turnover is costly
and it is more profitable to retain all hundred customers and acquire no new
one. It is essential to create loyal customers and customer life time has to be
increased for continuous purchase. A
loyal customer makes repeat purchase and are less attentive to competitors
product. A need for customer retention is based on the theory of giving
emphasis to relationship rather than transactions.
Customer profitability is the basis for creating relationship with a
customer. A profitable customer is a person, household or company that yields a
revenue stream over time, exceeding by an acceptable amount over the company
cost stream of attracting, selling and servicing that customer. A company
should develop a long lasting relationship with the profitable customers. So
relationship marketing is a process through which customers are retained for a longer time and here
company personnel work on increasing their social bonds with customers by
learning their individual needs and wants and individualizing and personalizing
their service. This turn their customers in to clients.
Marketing Mix
Product :-
A product is anything that can be
offered to the market to satisfy a want or a need. It can be physical goods,
services, persons, places, organizations ands ideas.
Levels of Product
These are five levels of a product.
They are potential product, augmented product, expected product, basic product
and core benefit. Core benefit is the first level and potential product is the
last level.
1. The most
fundamental level of a product is core benefit ie. the fundamental service or
benefit that a customer is really buying
eg.: In a hotel when a guest is hiring a room he is buying rest and
sleep.
2. The second
level market turns the core benefit into a basic product . Thus the hotel room
include a bed, a table, a chair,
bathroom etc.
3. At the third
level marketers prepare an expected product. eg: a guest expect a clean bed, working lamps and a clean bathroom
etc.
4. At the fourth
level a marketer prepares an augmented product. Here they offer customers
beyond the expectation of customer. A hotel can augment its product by
including a remote control T.V, fresh flowers, telephones and room services.
5. At the fifth
level stands the potential product which is designed for future. This gives
surprise and delight to the customers.
Product
Classification
1. Non-durable
goods
2. Durable goods
3. Service.
Customer
goods:-
a. Convenience goods :-
1.
Staples, 2. Impulse goods, 3. Emergency goods
b. Shopping goods:-
1.
Homogeneous products 2. Hetrogeneous products
c. Speciality goods
d. Unsought goods
a) Convenience
Goods:-
They
are goods that the customer usually purchases frequently, immediately and with
minimum effort.
e.g.
newspaper, cigarettes, soaps etc
Convenience
goods can be classified into staples, impulse goods and emergency goods.
Staples are goods that the consumer purchase on a regular basis.
e.g. tooth
paste, soaps etc.
Impulse
goods are goods purchased on an impulse
e.g.
magazines, fancy articles etc.
Emergency
goods are goods purchased when a need is urgent.
e.g.
umbrella during a rain.
b. Shopping
Goods :-
Shopping goods are goods the customer in the process
of selection and purchase compares on such basis as quality, price,
suitability, style etc.
e.g.
furniture, clothing etc.
They can be
classified into two types :-
1. Homogeneous shopping goods and
2
Heterogeneous Shopping goods
c. Speciality goods :-
Speciality goods are goods with unique
characteristic and brand identification
for which a significant group of buyers are habitually willing to make the special purchasing effort.
e.g.
Consumer taking special efforts to buy
premium brand like Vanhusen shirts, Tayota cars etc.
d. Unsought
goods:-
Unsought
goods are goods that the consumer does not know about or know about, but
doesn't normally think of buy.
e..g. Smoke
detectors, products from insurance corporations, cemetry plot etc.
New
Product Developments
Development of new product is the
toughest stage in the manufacturing industry. There is a saying "Great
ideas need landing gears as well as wings". By new product, it includes
original product, improved products, modify products and new brands the firm developed
to its on R and D ( Research and Development) wing. The stages involved in the
new product development process is given by a blocks schematics.
1. Idea
Generation :-
New
product development starts with search for ideas. The main idea generating techniques
are attribute listing, brain storming, need or problem identification etc.
New product ideas can come from main sources like customers, competitors,
employees, top management, scientists etc. A company can gather good ideas by
organizing properly.
2. Idea
screening :-
The
purpose of idea generation is to create a large number of ideas. But in this
stage the purpose is to reduce the number of ideas to attractive practicable
few. In screening ideas the company must avoid two types of errors.
a. A go
error occurs when the company permits a poor idea to move into development and
commercialization.
b. A drop
error occurs when the company dismisses a good idea. The purpose of screening
is to drop poor ideas as early as
possible.
3. Concept development and testing :-
A product idea is a
possible product that the company might
offer to the market. But a product concept is an elaborated version of the idea
expressed in meaningful consumer terms.
In this stage concept is made about positioning of the product and this concept
is tested with an appropriate group of consumers. The concept can be presented
symbolically and physically.
4. Market Strategy and development :-
In this stage company
anayises market size, structure and behaviour , product positioning, market
share and profit goals. The second part of marketing strategy outlines price,
distribution strategy and marketing budget. Third part describes long run sales
and profit goals.
5. Business Analysis :-
This contains estimating
total sales and revenue and making a projected cash flow statements for a few years.
6. Product Development:-
If the concept passes the business
test it moves to R and D and the concept is developed into a physical product.
R and D department will develop one or more physical versions of the product
concept. Developing a successful prototype can take days, weeks, months, or
even years . When the prototypes are ready they must pass through rigourous functional and
consumer test.
7. Market testing:-
A product after
functional test and psychological performance is ready for a market test. In
testing a consumer product company estimates four variables i.e a trial, first
repeat, adoption and purchase frequency. Test marketing is the ultimate way to
test a new product. In test marketing management faces several questions.
1. Howmany
test cities
2. Which
cities
3. Length
of test
4. What
information to collect
5. What
action to take.
8. Commercialization :-
Market testing gives
enough information to decide the launch of a product. When, where and to whom
are to be decided if the company goes with commercialization.
Product Life Cycle
PLC is an important concept which
provides insight into a products competitive dynamics.
Stages in the
product Life cycle :-
Product life cycle figures distinct
stages in the sales history of a product.
To say that a
product has a life cycle we ascertain four things ;
a). Products
have a limited life
b). Product
sales passes through distinct stages - each passing different challenges to the
seller.
c). Profit
rise and falls at different stages of the PLC
d). Product
requires different strategies in each stage of a life cycle.
The sales
history of a typical product is following an 'S' shape curve.
This curve is typically divided into
hour stages known as introduction, growth, maturity and decline stage.
1. Introduction stage :-
This is a period of low
sales growth as the product is introduced in the market. Profits are
non-existent in this stage, because of the heavy expenses of product
introduction.
2. Growth stage :-
This is a period of
rapid market acceptance and substantial profit improvement.
3. Maturity stage :-
It
is a period of slow down in sales growth because a product has achieved , accepted by most
potential buyers. Profit may become
declined because of increasing marketing expenditure to defend the
product against competition.
4. Decline stage :-
In this period sales
show a downward drift and profit decreases.
Product Mix(Product Assortment)
A product mix is the set of all
product lines and item that a particular seller offers for sales to buyers. A
company's product mix will have a certain width, length, depth and consistency.
Width refers to how many product line the company carries. Length of product
mix refers to total number of items in
its product mix. Depth of product mix refers to how many variants are offered
of each product in the line.
Hindustan Lever Ltd. Product Mix
Detergents Soap Toothpaste Shampoo Cosmetics
 |
Product line :-
A product line is a group of
products that are closely related because they perform a similar function; are
sold to the same customer group, are moved through the same channel or make up a particular price range,
product lines tend to length over time.
A company can enlarge the length of its product line in two ways.
1. Line Stretching :-
Every companies product
line will cover a certain part of the total product range. Line stretching
occur when a company lengthens its product line beyond its current range. A
company can offer low price, average price, high price and very high priced
items. They can offer economic goods, standard goods, good products and
superior product quality wise. Stretching can be done downward, upward or both
ways. Companies in the lower end market try to enter the high end. Companies located in the higher level market
stretches downwards. Companies serve in the middle market stretches both ways.
2. Line Filling Decisions :-
A product line can also
be lengthened by adding more items with in the present range of the line. There
are several motives for line filling like for additional profits, satisfy
dealers who complain about lost sales, because of missing items in the lines,
trying the utilize excess capacity and trying to make the company a full line
company.
Brand Decisions
Branding is a major issue in product
strategy. Developing a branded product requires a great deal of investments,
especially for advertising, promotion and packaging. But it is a fact that
power lies with branded companies.
Definition :-
American Marketing Association
defines a brand as "a name, term, sign, symbol or design or a combination
of them intended to identify the goods or services of one seller or group of
sellers and to differentiate them from those of competitors."
A brand is essentially a seller's
promise to constituently deliver a specified set of features, benefits and
services to the buyers. A brand can convey up to six level of meaning.
1. Attributes :-
A brand first brings to
mind certain attributes
2. Benefits :-
A brand conveys a
product functions or emotional benefit.
3. Values :-
The brand also says
something about producct values.
4. Cultures:-
This may additionally represents certain culture of the
company offering a product.
5. Personality :-
A brand can also project
the type of personality.
6. Uses :-
A brand suggest the kind
of consumer who buys or uses the product.
Brand Equity
Brand equity is the amount of power
and value of a particular brand in the market place. It is measured by the
degree of brand awareness, brand preferences and brand loyalty attached to a particular
product. A high brand equity provides a number of competitive advantages to a
company. As an asset a brand name needs to be carefully managed. So that its
brand equity doesn't depreciate. This requires improving the products quality,
brand awareness, skillful advertising , excellent trade and consumer service and other
measures.
Packaging and labelling Decisions.
Packaging is defined as the
activities of designing and producing the container or wrapper for a product.
The container or wrapper is called the package. The package might include up to
three levels of material.
1. A
primary package
2. Secondary
package
3. Shipping
package or Tertiary package
Package can play
a minor role or a major role according to the nature of the product delivered.
Many marketers are called packaging as the fifth 'P' after product, price,
place and promotion.
Decisions must be made on additional
packaging elements such as size, shape, materials, colour, text and brand mark.
After the packaging is designed it must be tested.
Labelling is a part of packaging
which perform several functions. Label may be a simple tag attached to the
product or elaborately designed graphic that is a part of the package - Label
might carry a brand name and other necessary information. the label identifies
the product., grade the product, describe the product and promote the product.
Marketing mix
Marketing mix is the set of
marketing tools that the firms uses to pursue
its marketing objectives in the target markets. It consists of the
following four major activities usually referred to as elements of marketing
mix:
1. Product :-
Activities related to
the product, service, or idea to be offered.
2. Price :-
Activities related to price to be charged for the product,
service o idea.
3. Promotion :-
Activities related to
promotion of the product, service or idea.
4. Place:-
Activities relating to distribution of the product, service
or idea(physical distribution or channels or distribution)
Mc Carthy proposed the four factors
classification of different marketing activities.
Services
A service is any activity or benefit
that one party can offer to another that is essentially intangible and doesn't result in the ownership of
anything. its production may a mayn't be ties to a physical product.
1. Intangibility:-
Service intangibility
means that service cannot be seen, tasted, heard, felt or smell before they are bought. People
undergoing service cannot see the result before the purchase. To reduce the
uncertain thing buyers looks for signs
of service quality
2. Inseparability :-
Service inseparability
means that service cannot be separated from the provider; whether the providers
are people or machine. Providers client interaction is a special features of
service marketing.
3. Variability:-
Service variability
means that the quality it services depends on who provides them as well as when
, where and how they are provided. Services are variable according to the
employers, machine, place, and time.
4. Perishability:-
Service perishability
means that services cannot be stored for later sale or use.
Pricing
Price is the amount of money charged
for a product or service. It is the sum of the value that consumers exchange
for the benefits having or using the product or services. Price is present
every where around us in forms like rent
for an apartment, fee for a doctor, fare for a taxi or bus, interest for money
in a bank, premium for insurance, toll for pathway etc.
Price is the only element in the
marketing mix that produce revenue. All other elements result cost but price is
the only one element which can be charged quickly.
Needs of pricing decisions
1. Ensuring return on investments
2. Achieving desired market share
3. Preventing competition
4. Maximising profit
5. Stabilising the price
Essentials of a sound
pricing policy
1. Selecting the pricing objective :-
Goals setting is an
important task on the part of the management to perform any job efficiently.
Pricing is not an exception to it. Before fixing the price the management
should decide the objectives of pricing . The main objectives includes target
return, profit, stability in price, market share.
2. Determining Demand:-
In modern concept of
marketing consumers are influenced by
the price. The value of a particular product to the buyer is the main
consideration. If the consumer feels that the value of the product is worth the
price he will buy otherwise he will refuse to buy. Hence the demand of the
product and pricing are co-related.
3. Establishing cost:-
Cost set the floor for
the price that the company can charge for its product. Company want to charge a price that both covers all its cost
for producing, distributing and selling the product and expect fair rate of return
for its effort and risk. A company's cost may be an important element in its
pricing strategy. Cost takes two forms -
variable cost and fixed cost.
4. Analyse competitors price, cost, offer
etc :-
These are the external
factors affecting the companies pricing decision. Competitors cost, price,
offer and their reactions are very important to a company. A consumer who is
considering a particular brand will consider the price of other brands also.
hence marketers while fixing prices for
their products should first consider the competitive conditions prevailed in
the market. They should consider competitors cost, price and their offer.
5. Selecting the pricing method:-
Company set the prices
by selection of the general pricing approach that includes one or more of these
three set of factors. They are product cost, consumer perceptions of the
product value and the other external and internal factors. There are three
approaches namely cost based approach, buyer based approach and competition
based approach.
6. Selecting the final prices:-
In selecting the final
price companies must consider additional factors including psychological
factors, marketing mix, companies
pricing policies etc. while fixing the final price, interest of various parties like producers , middlemen
and consumer should also be considered. The price should be fixed in such a
fashion to give fair return to the producers, a good profit margin to the
middlemen and a nominal price to the consumers.
New Product Pricing Strategies
When new products are introduced it
may appeal many people as novel items. the new products are hard to be priced
especially with a right price. Wrong pricing will definitely lead to product failure. For setting a price
of a new product there are two options available;
1. Skimming pricing method :-
Many companies who
invent new product initially set high prices to skim revenues layer by layer
from the market. They charge the highest
prices giving the benefit of its new products.
After an initial sales slow down, they lower the price to catch the next price
sensitive layer of customers. Skimming
makes sense only under certain conditions. First the product quality and image
must support its higher price. Second the cost of producing should be low to
get the advantage of charging more.
2. Market
Penetration Pricing:-
Rather than setting a
high initial price to skim off small but profitable market segments, Some,
company set a low initial prices in order to penetrate the market quickly and
deeply to attract a large number of buyers quickly and win a large market
share. Here the company should build a large plant to make it cost of
production as low as possible. They charge low prices to attract high volume.
Several producers favour a lower price. If the market is high price sensitive,
a low price producers a high market growth.
Price quality strategies
|
Price
|
|||||||
|
High
|
|
Medium
|
|
Low
|
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|
Product
Quality
|
Premium strategy
|
1.
|
Premium strategy
|
2.
|
High Value Strategy
|
3.
|
Superb-value strategy
|
|
Over changing strategy
|
4.
|
Over charging Strategy
|
5.
|
Medium Value Strategy
|
6.
|
Good value Strategy
|
|
|
Low
|
7.
|
Rip off strategy
|
8.
|
False Economy Strategy
|
9.
|
Economy Strategy
|
|
A
company that plans a new product faces a product positioning problem. It must
decide where to position the product in terms of quality and price . Figure
shows nine possible price quality strategies.
Product mix Strategies
The strategy for setting a product's
price often has to be changed when the product is a part of product mix. In
this case firm looks for a set of pieces that maximise the profits on the
total product mix. There are five common
product mix pricing situations:-
1. Product line pricing:-
This is the method of
setting up price steps between the products in the product line. The price
steps should take into account ; cost differences between the various products,
customer evaluation of their features and competitors prices.
2. Optional product pricing :-
Many companies use this
type of pricing offering to sell optional or accessory products along with the
main products eg. car buyers may choose to order power stearing, power windows,
air conditioners , special rear view mirrors etc. In this case automobile
companies have to design which items to increase in the base price and which to
offer as options. The economy model is without many comforts and convenience.
3. Captive product pricing:-
This is the method of
pricing for products that must be used along with a main product such a film
for a camera, blades for a razor. Producers of main products often price them
low and set high price on the supplies.
4. By product pricing:-
This is the methods of
setting a price for by products in order to make the main product more
competitive. In producing petroleum products, chemicals etc there are often by
products. If the by products have no value and if getting rid off them is
costly this will affect the pricing of the main product. Using by product
pricing the manufacturer will seek market for these byproducts and should
accept any price that covers more than the cost of storing and delivering them.
5. Product Bundle Pricing:-
This is a method of
combining several products and offering the bundle at a reduced price. Price
bundling can promote the sales of products but the combined price must be low
enough to get them to buy the bundle.
e.g. Season
tickets from railway, theaters, price package from hotels offering food
accomodation, entertainment etc.
General Pricing Approaches
1. Cost plus pricing or mark-up pricing:-
This is the simplest
method where price is obtained by adding a standard mark up to the cost of the
product. Mark up price is given by the formula:
Mark up price =
Mark up pricing
is more popular since sellers are more certain about their cost than about
demand.
2. Target return pricing:-
Here in the firm, price
is determined as the price at which the product will break even or make the
target profit. A target return is fixed based on the investment made. This
given by the formula
Target return
price = Unit
Cost +
3. Buyer based pricing:-
A number of companies
are basing their prices on the products
perceived value not mainly on the cost of the product. Perceived value
pricing uses buyer perceptions of value as the key to pricing.
4. Competition based pricing:-
Here the firm bases its
price largely on competitors price, with less attention paid to its own cost or
demand. The firm might charge the same, more or less than its major
competitors. Competition based pricing is done in cases like going rate pricing and sealed bid pricing.
Price Adjustment Strategies
Companies usually adjust their basic
prices to amount for various customers differences and changing situations.
there are seven price adjustment strategies.
1. Discriminatory pricing:-
Companies often adjust
their basic price to allow for difference in customers, products and locations.
In discriminatory pricing the company sells a product or service at two or more
prices even though the difference is not based on cost.
2. Psychological pricing:-
In using psychological
pricing sellers consider the psychology of prices and not simply the economics.
When consumer can't judge quality because they lack the information skill,
price becomes an important quality signal. Even small differences in price can
suggest big difference consider a
product at 300 rupees compared to another priced at Rs. 299.95. The actual
price difference is only five paise. But the psychological difference can be
much greater.
3. Promotional Pricing:-
With promotional pricing
companies will temporarily price their
product below list price and sometimes even below cost. Super market and
department stores will price a few products as "Loss leaders". To
attract customers to the store in the hope that they will buy other items at
normal prices. Special event pricing, rebates, longer warranties, low interest
financing, free smaples are certain techniques to reduce the consumers price.
4. Value pricing:-
Marketers have adopted
value pricing strategies offering just the right quality and good service at a
fair price. In many cases this had introduced less expensive versions of the
same brand name products.
5. Geographical Pricing:-
A company must decide
how to price its products to customers located in different parts of the
country. Zone pricing and freight absorption are the two popular method used to
price the product at different location.
6. International Pricing:-
Companies that market
their products internationally must decide what prices to charge in the
different countries in which they operate. This depends on many factors like
economic condition, competitive situations the particular state regulations and
other marketing systems.
7. Discount and allowance pricing:-
The price adjustment
based on early payment of bills, volume purchased, functions carried out etc
are called discount and allowances.
A cash discount is a price reduction
to buyer who pay their bills promptly.
A quality discount is a price
reduction to buyer who buy large volume.
A functional discount or trade discount is offered by the sellers
to trade channel members who perform certain functions such as selling,
storing, record keeping etc.
A seasonal discount is a price
reduction to buyer who purchases goods or services out of season.
Allowance are another type of
reduction from the list of price. eg.: Trade in allowance are price reductions
given for turning in an old item when buying a new one.
Price Changes
Price changes may be either a price
cut or a price increase.
Price Cuts :-
Price cuts are normally resorted under the following circumstances:-
1. To utilise the excess capacity of the
plant
2. During declining market share to
prevent losses.
3. To dominate the market by putting a low
price.
4. During the periods of economic
recession and depression.
Price increases
:-
Price increases may be initiated
under the following situations:-
1. A price increase during cost inflation
2. Over demand by customers
Buyer's Reaction to Price Changes
While considering a price change which
may either be a price cut or a price increase, the customers and
competitors reactions are to be
carefully considered by the firm;
1. Reactions to price cuts:-
A price cut may be interpreted by
the buyers in the following ways:
a. The product
is going to be withdrawn and a new model is to be introduced by the company.
b. The product
is defective and is not moving well
c. The firm is
having financial problem.
d. The firm
mayn't withstand in the market to supply future parts.
e. The price
will come down even further and the company will have to wait for some more
time.
f. The quailty
has gone down.
2. Reactions to
price increases:-
A price
increase may be interpreted by the buyers in the following ways;
a. The product
will sell away like a hot cake and mayn't be available if it is not purchased
soon.
b. The product
is worth buying even at an increased price.
c. The seller is
greedy and is taking advantage of buyers.
Competitors
Reaction in Price Changes
I. Reactions to
price cuts:-
Competitors
reactions are as follows;
1. The company
is trying to steal the market.
2. The company
is performing poorly and trying to promote its sales.
3. The company
wants the whole industry to reduce
prices to stimulate total demand.
II Reactions to
price increases:-
A price increase may be interpreted
by the competitors as follows:
1. The company
wants to earn more money through increased sales
2. The company
wants to become the market leader.
3. The product
represents an usually good value
Factors
Influencing Pricing Decisions
A business
man while setting a price of goods has to consider various factors as given
below:
a. Objective of
business:-
The
objective of the firm are the real deciding factor. There may be different
objectives namely market share, return on investment etc.
b. Cost of the
product:-
It
is one of the most decisive factor since prices will not be less than the cost
of its manufacture. Price will be fixed
in such a way to cover the cost of the product and to get a reasonable profit.
c. Market
demand:-
The
modern concept of marketing which is consumer oriented, consumer influence the
price. Therefore consumer demand is another important factor which influence
the pricing decision.
d. Prices of
competitors:-
Manufacturers
should consider the competitive situations existing in the market. Price should
be fixed either equal to or lower than the price of competitors.
e. Distribution
Channels:-
Another
factor which influences pricing decision is distribution channel policy. Prices
will be directly proportional to the length of the distribution channel.
f. Stage in
product life cycle:-
Pricing
decision varies with the stage in product life cycle. Pricing strategies will
be different in introduction, growth, maturity and decline stages of the product.
g. Promotional
Pricing:-
Promotional
strategy also affects pricing decisions, massive advertisement, promotional
offers ands other similar programmes will probably increase the price of the
product.
h. Buyers
psychology and behaviour
The
effectiveness of relative price as an aid in making sales varies with
buyers psychology and behaviour. Pricing will be different for high fashion
items, industrial products, durable goods and consumer fast moving goods.
i. Government
policy:-
The
rules and regulations regarding pricing policy should be followed strictly when
fixing prices of products.
j. Economic
Environment :-
Pricing
decision is also affected by the strength of the economy. During depression
prices are reduced and during periods of boom prices are increased.
Channels
of Distribution
Meaning and Definition:-
Distribution
is the act of carrying goods or services from the producer to the consumer. It
consists of an operation or series of operations which physically brings the goods
from the producers in to the hands of the final user.
Channel:-
The channel
of distribution refers to the path way taken by the goods as they flow from the
point of production to the point of consumption.
Definition of A.M.A.:-
"A
channel of distribution or marketing channel is the structure of intra company
organization units and extra company
agents and dealers, wholesalers
and retailers through which a commodity, product or service is
marketed".
Cundiff and still :
They
define a distribution channel as " a path traced in the direct or indirect
transler of the title to the product as it moves from a producer to the
ultimate consumer or industrial users".
Factors influencing
the selection of a channel
The
main factors which considerably influence the selection of a channel can be
discussed under the following heads:
1. Distribution Policy:-
The distribution policy
is governed by the intensity of distribution or the exposure of sales.
2. Product characteristics:-
The marketer must
consider the type of the product that means whether the goods are speciality
goods or industrial goods or goods which are used by a limited number of users
or mass consumption goods. Besides they must study the frequency of purchase ,
perishability changes in question the service required etc.
3. Supply characteristics:-
If the number of manufacturers is
small, short channels can be employed on the other hand when the number of
producers is large, a long channel is to be used.
4. Consumer characteristics:-
The characteristics of
customers include their number, geographical dispersion, frequency of purchase,
their acceptability to different selling methods and average quantities bought
by them. These characteristic strongly influence the channel selection.
5. Middlemen characteristics :-
Selection of a marketing
channel is also influenced by the strength and weakness of various types of
middlemen performing various marketing functions, Their number, behavioural
differences, product lines, location et., affect the design of channel.
6. Channel competition:-
Competition between
channel members, completion among channel members and competition between
channels largely influence the selection of distribution channel, wholesaler-wholesaler-retailer,
wholesaler-retailer, producer-retailer, producer-wholesaler type of competition
influence the selection of channel.
7. Company Characteristics:-
Selection of channel is
also governed by the characteristics of the company. Such as soundness size of
the company, product mix, past experience and overall marketing policies.
8. Environmental Characteristics:-
Decisions on distribution channels
are also influenced by the economic conditions and law of the land. When
economic conditions are depressed shorter channels are preferred.
Middlemen (Intermediary)
Definition:-
"A middlemen is one who specialises in performing
operations or rendering services that are directly involved in the purchase and
sale of goods in the process of their flow from the producer to the final
buyers" (A.M.A) They are institutions or business concerns situated in the
marketing channels at points between the producer and the final buyers.
Classification of middlemen
They can be classified into two
kinds:-
1. Agent middlemen
2. Merchant middlemen
I. Agent Middlemen:-
Agent middlemen or functional
middlemen are those intermediates who negotiate purchase or sales or both. But
doesn't take the title of the goods. They are also known as merchantile agents.
the various types of agent middlemen cane be listed as follows:-
a. brokers
b. Commission agents
c. Manufacturers agent
d. Selling agent
e. Auctioners
f. Packing and forwarding agents
g. Export and import agents
h. Purchase agents
II. Merchant Middlemen:-
They are those
intermediates who don't take the title to goods in which they deal and result
them in a profit. Wholesalers and retailers are the two important classes of
merchants middlemen in the distribution of consumer goods. Merchant middlemen
act in their own right and they are independent
agencies who work for profit.
Wholesalers and Retailers
1. Wholesalers:-
Wholesalers means
marketing of goods in relating larger quantities. They are the connecting link
between the manufacturer and retailers.
"Wholesalers buy and resell
merchandries to the retailewrs and other merchants and not to sell in the
significant amiunt to ultimate consumers. Their functions include:-
a. Buying and assembling
b. Warehousing
c. Transporting
d. Financial assistance to retailers
e. Risk bearing
f. Grading and packaging
g. Selling to retailers
2 Retailers:-
Definition by
A.M.A.:-
'Retailing consist of the activities
involved in selling directly to the utimate consumer for personal non-business
use.
Basic
Characteristics :_
1. A retailer generally sells in small quantities.
2. He is the last link in the chain of
distribution.
3. He may buy
the goods from the wholesaler or n\manufacturers either on his own amount or as
an agent for them.
4. His sales
volume is less when compared to the wholesalers where as his profit margin is
high.
Functions
of Retailers
retailers
perform all the functions involved in the process of marketing. They are :-
1. Buying and
assembling of goods from various producers or wholesalers
2. Storing of goods.
3. Risk bearing
4. Transportation
of goods from the godown of wholesalers
5. Grading and
packaging
6. Providing
market information
7. Extension of
credit facilities to the consumer
Types
of Retail Business
|
Hawkers
and
|
|
Peddlers
|
|
Pavement
Shops
|
|
Cheap
jacks
|
|
Market
traders
|
|
Steer
stalls
|
|
Second
had goods dealers
|
|
General
Shops
|
|
Single
line stores
|
|
Speciality
shops
|
|
Small
scale
|
|
Large
scale
|
|
Itinerant
|
|
Departmental
stores
|
|
Super
market
|
|
Chain
shops or multiple shops
|
|
Mail
Order Houses
|
|
Co-operative
Stores
|
|
Hire
Purchase trading organization
|
I. Itinerant Retailers:-
1. Hawkers and Peddlers:-
They move from door to
door in residential locality to sell their goods.
2. Pavement shops:-
They generally arranged
their goods at busy street corner or pavements. e.g. small books shop, pen
dealer etc.
3. cheap jacks :-
Such traders generally hire small
shops and display their goods there.
4. Market traders:-
They sell their goods at periodical
markets, weekly, monthly, and annually.
II Fixed shop Retailers:-
Fixed shop retailers
trade in fixed premises. They may be divided into two sub groups:-
1. Small sale shops
2. Large scale shops
Small
scale Retail Shops
a. Street stall
holders:-
Such stalls
are generally located at a street crossing or in the main street. They are
engaged in setting inexpensive articles of low conversant.
b. Secondhand
goods dealers:-
These
relations deal in second hand goods trade articles include clothes, books,
furniture items and other household items
c. General
stores:-
General
merchants generally start up their shops in residential localities. They stock
a wide variety of goods needed by the local residents.
d. Single line stores:-
A single
line retails carries a brand assortment of goods with in a single merchandise
line.
e. Speciality
Shops:-
They
carry only a part of a merchandise lines with in this restricted range of
offerings he stores a complete assortment of speciality range of products.
eg., shops for kids wear.
Large
Scale Retail Shops
The
important types of large scale retail shops include:-
1. Departmental
stores:-
A
departmental store is a collection of shops under one roof and ownership, each
shop or department specialising in
selling a special range of goods.
Merits:-
a. Convenience to consumer
b. Higher
efficiency
c. Economy in
advertising
d. Economies of
large scale buying
e. Better
services
Demerits:-
a. Higher
investment
b. Lack of
personal touch and care
c. Higher rent
for premises
d. Higher cost
of doing business
e. Excessive
departmentalisation
2. Super
Markets:-
Super market
is defined as "a departmentalised retail store usually handling a variety of
merchandise and in which the sale of goods
much of which is on a self service basis, plays a major role". Thus a
super market is similar to a departmental store dealing in numerous varities of
products. The most distinctive feature
of the supermarket is the absence of salesmen and shop assistants to help the
customers.
Advantages:-
a. Low prices
b. Large volume
of sales
c. Convenient
shopping
d. Economics of
large scale buying
Limitations:-
a. large and
extensive -require more space
b. Unsuitable
for rural areas
c. No personal
contact
d. Need of huge
capital
3. Chain stores
or multiple shops:-
A
chain store system is " a group of stores of essentially the same type centrally owned with same
degree of centralised control of operation" :- Cuntiif and still.
The main features include
1. Standardisation
and uniformity of all shops"-
Shops are
having the same setting and follows the unified practice.
2. Specialisation
of goods
3. Centralised
buying and decentralised selling
4. Limited
variety of goods
Advantages of multiple shops:-
1. Standardised
methods of operation.
2. Low and uniform prices
3. Elimination
of bad debts
4. Elimination
of middlemen charges
Disadvantages:-
1. Lack of
personal attention
2. Rise in
operation cost
3. Limited
services
