File - the notes of comk class

Characteristics of market
There are two broad classifications of PRODUCTS:
According to consumer’s shopping habits and use or nature – consumer products & industrial
According to durability &tangibility – durable products & non-durable products & services
Consumer and Industrial Product
 Consumer Product is those goods which are meant for the consumption or final use of
consumer or house hold. These are the product which is used without further commercial
processing. In the other word, consumer goods are meant for personal and non-business use.
E.g. - Shampoos, Biscuits etc.
 Industrial Products are those goods which are used by business buyers as input for further
commercial processing. E.g. - Raw material, spare parts, supplies and equipment or
machinery etc.
Durable and Non Durable Products
Both, consumer and industrial products can be further classified as durable and non-durable
 Durable Products are those tangible products that last longer or can be put into repeated
use. E.g. - Refrigerator, Kitchen utensils clothing etc
 Non-Durable Products are those which get exhausted with a single or few uses. EgFood items, soft drink, paper, soap, paste etc... .
Companies selling mass consumer goods and services such as soft drink, tooth paste, television sets, and
air travels spend a great deal of time trying to establish a superior brand image . This requires getting a
clear sense of their target customers and what needs their products will meet, and communicating brand
positioning forcefully and creatively. Much of a brands strength depends on developing a superior
product & packaging and backing it with promotion and reliable service. Customer markets decide on
features, quality level, distribution coverage, and promotion expenditures that will help their brand
achieve a number-one-or-two position in their target market.
Consumer goods are sold where there is existence of people with a desire to buy and who have
sufficient money to pay for the goods. The whole population in the world is termed as consumers
present or potential. Hence the market for the consumer goods is widespread. Therefore, the
manufacturers employ the services of middlemen like wholesalers, retailers, agents to work on
behalf of them.
Consumer goods are bought in small quantities and at frequent intervals. This is because(a) Majority of consumers are poor.
(b) These goods are readily available at convenient points.
(c) Unnecessary locking up of capital .
(d) Risk of deterioration.
Consumers of these products are not fully aware of the details of goods sold in the market. They
depend on the seller’s advice as he is a confused person. This is mainly because:
(a) Variety of competitive products exists in the market.
(b) The consumers have no time to study the market.
(c) Sellers are adopting aggressive advertising.
Since consumers are buying for self-satisfaction or gratification, personal considerations & views
dominate their decisions making as what to buy & where to buy. The considerations could be
services of a seller, convenience of buying, income, standard of living, price, quality, etc.
Consumer goods have a wide choice to distribute. They areManufacturer – Consumer
Manufacturer – Retailer – Consumer
Manufacturer – Wholesalers – Retailer – Consumer
Manufacturer – Agents – Wholesalers – Consumer
Manufacturer – Agent – Retailer – Consumer
1.Convenience goods:
These are those goods that are frequently, immediately and bought with minimum effort at short
notice by the consumers. Example: toothpaste, grocery,
Convenience goods can be further divided into:
(a) Staples goods: These are those products that consumers purchase on regular basis. For
e.g.: Ketchup, toothpastes, etc…
(b) Impulse goods: These are those products that are purchase without any planning or
research efforts. For e.g.: magazines, candy bars, ice creams etc.
(c) Emergency goods: These are those goods that are purchased when a need is urgent.
E.g.: umbrellas during a rainstorm, boots and shovels during the first winter snowstorm.
2.Shopping goods:
They are those goods where consumers like to shop around to find the best features and price for the
product. They devote considerable time in making selection of those before they buy.
Shopping goods are bought only after the buyer compares the products of more than one store or looks at
more than one assortment of goods before making a deliberate buying decision.
Shopping goods can be further divided into:
(a) Homogenous goods: These goods are similarly in quality but different enough in price
to justify shopping comparisons. E.g. different models of Nokia phones or different t
models of Toyota cars etc.,
(b) Heterogeneous goods: These goods differ in product features and services that may be
more important than price. E.g clothing furniture etc.,
3. Specialty goods:
These products have unique characteristics and brand image identification for which a sufficient
number of buyers is willing to make a special purchase effort. e.g. branded wrist watches such as
Omega, Longinus etc., or cars like Lamborghini, Roll-Royce, Audi etc.,
4.Unsought goods:
These are those goods that the consumers do not know about or do not normally think of buying, like
smoke detectors.
1)Regularly unsought goods:-existing products that consumers do not want now
although they may eventually buy them. Eg-Life insurance, Lawyer’s service in
preparing a will etc.
) New unsought goods:-Products that are totally new and unfamiliar. . Eg- Encyclopedia,
Air Purifier, smoke detectors etc.
Classification of Industrial Goods:a) Materials & Parts
1. Raw Materials- these are the basic commodities such as logs, ores, sand, sea, products such
as fish, shrimps, oysters that are processed only as needed for safe, convenient
and economical transport handling to reach the next processing stage or the
place of end use. Raw material becomes part of final product losing original
2. Manufactured/component materials and parts- these are the items that have already undergone
processing to meet buyer specifications. Component parts are ready items to
be assembled into a final product. The examples are car batteries, tyres, tubes,
bulbs, small motor castings and the like. On other hand, component materials
require further processing. Thus, paper, cement, glues, fibre may be needed in
b) Capital Items
1. Installations- these are expensive capital items that do not become part of the final product but
are expanded, depleted or worn-out during years of use. These include plants,
buildings and other custom-made standard major equipment. These are
immovable once installed.
2. Equipment’s- these comprise of tools and equipment’s or instruments and appliances that
facilitate production of office activities such as lift-trucks, trolleys, drills,
spanners, exhaust-fans, jacks, pincers, hammers, pliers, saws, type-writers and so
on. Like installations, these are capital items that do not become part of the final
product, but they are usually inexpensive and short-lived than the installations.
Mostly these are movable.
c) Supplies & Business Services- Supplies include items of repairs, maintenance and operation.
These are less expensive items and are continually used up and these do not become part of the
final product. These supplies may be factory supplies.
Examples of factory supplies are greases, glues, belt- fasteners, paints, nails nuts and bolts, oils,
cotton waste, wash room suppliers.
Examples of office suppliers are papers, pens, clips, pencils, carbons, inks, refills, lubricating
oils, tags, cleaners
Industrial goods market consists of manufacture transport agencies; mining companies, public utilities,
construction of the industries, banks, and insurance agencies etc. these factors distinguish the industrial
market from market of manufactured goods.
(a) GEOGRAPHICALLY CONCENTRATED – The units engaged in produced of similar products are
not scattered widely over a geographical area. For e.g. Belgium, Kolhapur, Bangalore, Bombay units
demand automobiles spare parts as the motor building units are located.
(b) LIMITED BUYERS – The extent of the market is quite limited. This is because the industrial goods
are durable and are purchased only when they wear out or because they are obsolete. Since the buyers are
limited, the manufacturers have developed techniques for locating the buyers of particular industrial
goods. The manufacturers have found direct marketing as the best suited channel for distribution of
industrial goods.
(c) LARGE INDUSTRIAL PURCHASE – The industrial orders although may be less in number, the
value is very high. Thus, the seller of industrial goods must avoid poor salesmanship, on-competitive
pricing, and uncertainty in delivery of products or indefinite products.
(d) DERIVED DEMAND – The demand for industrial goods depends on the demand of other products
and ultimately the demand of consumer goods.
(e) TECHNICAL CONSIDERATIONS – since, industrial goods are brought and used in business
operations, technical considerations is very important. Here, the buyer’s specific requirements are
important. The products may be manufactured according the instructions and specifications of the users,
this leads to development of special products or modifications of standard products in order to meet
special needs. After sales service are also very important to industrial buyers.
(f) RECIPROCAL BUYING – This is based on the principal – ‘if you buy from me, I will buy from
you’. This is a very common process in the field of industrial marketing. For e.g., Ashok Leyland will buy
tires and tubes from Ceat, if Ceat Company buys trucks from Leyland Company. A sort of barter and
bilateral deal is inserted and encouraged this is done to have assured demand for their own products based
on mutual understanding.
(g) LEASING INSTEAD OF BUYING – A growing trend in industrial market is to lease out than to
purchase outright basis. E.g. Transport agencies do not purchase courier but use on hire basis. There are 3
important reasons for leasing:-If the equipment offered represents a new discovery.
-If the firm lacks adequate finances or it desires to use the working capital for other purposes.
-If the need for installation is uncertain, the buyers do not want to purchase if it is found unsuitable they
can wisely return it.
(i) INFREQUENT PURCHASE – Since, industrial goods are durable; they are the means of production,
they are purchased rarely. Big installations are purchased only once in many years.
(h) CHANNEL OF DISTRIBUTION – The following channels are used to distribute industrial users
Manufacturers – Industrial users
Manufacturers – Wholesalers – Distributors
Manufacturers – Agent – Industrial users
Manufacturers – Agent – Wholesaler’s – Industrial use.
Services :
Definition of services had been “activities, benefits, or satisfactions, which are offered for sale, or
provided n connection with the sale of goods.”
Professor Philip Kotler defined services as “any activity or benefit that one party can offer to another that
is essentially intangible and does not result in the ownership of anything.”
Features of Service
The features of services create challenges and opportunities to the service marketers. The features are:
a physical product e.g. TV set, potatoes chips, facial cream are visible
and concrete products. It is not possible to see full taste and smell services before they are
bought. A service by nature is an abstract phenomenon it is not a physical object, it has
mental connotations, while selling or promoting the sale of the sale of the service we have to
concentrate entirely on the benefits and satisfaction a buyer can derive after that service.
Banks promote the sale of credit cards by emphasizing the convenience and advantages
derived from possessing a credit card. The burden of selling an intangible product like
services falls mainly on the promotional mix
As the marketable commodity, a service has a high perishability. Time
element assumes unique importance. If service is not used today, it is lost forever. It cannot
be stored nor can it be carried forward. Un-utilized services are economic losses.
For example: A building unoccupied, a person unemployed, credit not
utilized, empty rooms in a 5 star hotel are examples representing
perishable nature of service and business lost forever.
The market for services has wide fluctuations. The fluctuations in
demand can be seasonal or weekly, daily or hourly.
For example: during off-peak hours we need less transport. The use of public transport is
less during the day time and more in the evening tourism is seasonal demand. Some service
experts have come out with several strategies for bringing better match between the demand
and supply of services. Part time employees during peak hours etc.,
personal service cannot be separated from the individual. Some
services are created and supplied simultaneously, dentist, musician, dancer, and other
professionals create and offer services at the same time. Direct sales of many service are the
only channel of distribution. The market for offering personal services is bound to be limited.
A person can sell his service only to limited customers in a day. However, when an institution
is acting as a creator of a service we may have its representatives or agents to sell that service.
Eg. A travel agent may represent and sell the services supplied by a tourist
The quality service offered by the competing firms cannot be
standardized. Even the quality of the output of services sold by one seller cannot be uniform
or standardized.
For example, a technician cannot offer equal quantity of service when he is repairing a number of
television sets. Similarly it is difficult to judge accurately the quality of services. Payment of
price and the quality of the actual performance may not have an actual co relation. Price paid for
service may be too high or too low in relation to actual performance. This is particularly
significant in the case of entertainment and sport service.
Classification of Services:
From a practical point of view Services can be classified into Consumer services and Industrial
Some important Consumer Services are:
 Catering and Entertainment services
 Hotels, motels, flotels and rotels
 Personal care services
 Medical and surgical services
 Household Services
 Educational Services
 Automobile services
Transport services
Communication services
Insurance Services
Financial Service
Personal Security Services
Some Important Industrial Services are:
Financial Services
Engineering Services
Transport Services
Warehousing services
Insurance Services
Advertising & Promotion Services
Office services
Management consultancy services
Marketing Research services
Manpower selection & training
Middlemen services
Communication services