Showing posts with label consumer. Show all posts
Showing posts with label consumer. Show all posts

Marketing concept is a new way of thinking about the organization's entire activities.

Definitely, the marketing concept is a new way of thinking about the organization's entire activities. Failure of the three concepts i.e. the production concept, the product concept and the selling concept to achieve the organizational goal forced the organizations where they went wrong. They found business slogan of "We sell what we make" inappropriate to deal the competitive marketing environment. They integrated the buyer variable in the marketing decision making and changed the business slogan to "We make what we can sell."

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Meaning and Features of Marketing


The marketing concept is the guiding philosophy by which organizations that have adopted a marketing orientation coordinate their activities and evaluate their success. In its fullest sense, the marketing concept is a philosophy of business that states that the customer's want-satisfaction is the economic and social justification for an organization's existence. The concept is based on the notion that the main task of the organization is to know the needs, wants and value of the target market, and then, delivering products that satisfy those needs and wants.

The major principles listed below comprise the essence of what the 1950s has become known as the marketing concept.
  1. Focus on target marketing: Organization cannot operate within one brand market and satisfy every need of the customers. So now the organization needs to focus on target market that is a group of customers whose needs can be satisfied.
  2. Consumer orientation: The marketing concept views the customer's wants and needs as primary. Through its marketing department the organization gathers market information to determine what to produce and how it should be marketed.
  3. Integrated marketing efforts: Based on the marketing information that has been collected, the organization puts together a marketing offering that includes the product, together with its price, promotion and distribution. Every department in the organization is integrated in this effort by a unified marketing orientation.
  4. Resulting profit: The effectiveness of the process as a whole is determined by the profit yardstick. When costs are deducted from sales, the resulting profit is what remains. This profit, as a percent of assets, is called return on investment (ROI). The assets represent all of the organization's capabilities (marketing, production, personal and the like) in serving the market. ROI (Return On Investment) as a sign of probability measures whether it is in the company's best interest to pursue business in one area or another.

Since its emergence in the 1950s, the concept has been continually redefined by the many changes in the marketing environment and in society at large. The concept was born out of the awareness that marketing starts with the determination of consumer wants and ends with the satisfaction of those wants. The concept puts the consumer both at the beginning and at the end of the business cycle. It stipulates that nay business should be organized and the marketing function, anticipating, stimulating and meeting customer's requirements. The customer has to be the center of the business world. A business cannot succeed by supplying products and services that are not properly designed to serve the needs of the customers. It proclaims that "the entire business has to be seen from the point of view of the customer." In a company practicing this concept, all departments will recognize that their actions have a profound impact on the company's ability to create and retain customers. Every department and every worker and manager will 'think customer' and 'act customer'. For the implementation of the marketing concept requires a complete alternation of the organizational goal and structure, internal marketing, change in authority and responsibility, relationships and a careful planning of the marketing mix.

Thus, the above explanation proves that the marketing concept is a new way of thinking about the organization's entire activities. If you have any such statements to prove marketing concept is a new way of thinking about the organization's entire activities, feel free to write comments on the post.
When an organization moves from the selling concept to the marketing concept, some strategic changes are required. It means some factors are needed for successful implementation of marketing concept in the organization. The most important factors are as follows:
  1. Top management concept: All levels of management should be supportive for the marketing concept. Top management should give the financial support to adopt the marketing concept easily in an organization and marketing department should be given facilities and authority to implement the marketing concept.
  2. Information system: Effective marketing information system should be established in an organization to determine customer’s need and satisfaction. Through the external system producer can collect one of the customer comments about the product and service. On the other hand, internal information system of the organization i.e. communication between marketing and other department should be effective to implement the marketing concept.
  3. Organization restructure: To implement the new marketing concept in the organization, organization structure should be changed appropriately. For effective implementation of the marketing concept, the marketing personnel should be involved in top level management.
  4. Appropriate marketing: To implement marketing concept, appropriate marketing functions should be done. Product should have good quality, price and promotion should be effective. Without meeting the market needs, marketing concept cannot be applied in an organization.
  5. Authority and responsibility: To motivate the marketing personnel, related authorities and responsibilities should be given to them. Marketing personnel give positive feedback, if they are given appropriate authority and responsibilities.
  6. Human resource management: For the implementation of the marketing concept, human resource department should be given the necessary training to become customer oriented and direct all the activities towards customer needs and satisfaction because the trained employees will be motivated to do the job and capability will be increased.
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Methods of Sales Promotion, Trade Promotion, Consumer's Promotion

Methods of sale promotion create demand and increase sale volume of goods. There are various methods of sales promotion. The important methods can be divided into three classes for easy study as follows:

1. Consumers' Promotion Method


While selling or distributing any product of any company, first priority should be given to the interest and satisfaction of the customers. The producer should think the consumers as the monarch of the market. They also should be stimulated to buy goods or services. Success can be achieved only if they are attracted. To attract the attention of the consumers, the following methods should be applied:

a) Free sample

Newly introduced products can be given as gift to the consumers when they come to buy any goods. Similarly, if the customers buy certain amount of product, certain amount/units of new products can be given as gift. New products can also be distributed to the customers free of price through post, shop, or any other means keeping with other goods. In order to bring new products in market, the customers can be distributed even if the customers do not buy any. Although costly, this method becomes very effective for sales promotion.

b) Coupon

Any type of evidence can be provided to the customers who buy goods from the seller. It is called coupon. If the customers go to the same shop to buy goods in nature, the seller may give any kind of gift or discount. Trade mark also can work as coupon. Such type of coupon becomes more effective for established products in market. This coupon can be kept into packets of products. It also can be distributed while the customers are buying goods. This method encourages the customers to make repeated purchase order.

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Meaning of Sales Promotion


c) Premium or gifts

Giving gift or selling goods at discount price is called premium or gift method. This increases sales volume. Giving steel cups, glasses and spoons for buying Horlicks, Boost, giving glasses for buying beer, giving polish for buying shoes etc. are the some of the examples of this method.

d) Price-off/discount

Sometimes or in certain season, the target customers can be attracted by announcing price off / discount in market price. This kind of discount / price off should be advertised through effective media. Discount of price in goods on the occasion of Vijaya Dashami, Tihar / Deepawali, etc. are the examples of price off or discount.

e) Consumers' contest

Consumers can be drawn in contest by giving questions to the customers through any national or local newspaper and asking them to send correct answers of the questions. The customers should win the contest applying their creativity and intelligence. In this way, the first, second and third position holders can be distributed price free gifts, free travel coupon, hotel facility etc. On the other hand, lottery can be distributed to the customers buying certain amount of goods. The lotteries are made public each month and the winners are distributed prizes. This is called consumer contest method. This method becomes effective in sales promotion.

f) Decoration and display

Consumers are attracted by displaying or decorating or showing goods to them at the places where they gather. Short introduction or explanation of the products also is given to the customers at systematically held display or exhibitions. On such occasion, products may be distributed free of price from which the customers know about the quality, utility, features etc. of the goods. This method stimulates the customers to buy goods as soon as possible.

2. Trade Promotion Method


The trade promotion method is called intermediary promotion method. For increasing sale volume the channel members such as wholesalers, retailers, dealers etc. should be encouraged. The following methods can be used for trade promotion.

a) Free goods

Goods can be distributed free of price if the customers buy goods in certain quantity within certain time. This method gives additional encouragement to wholesalers, retailers, traveling sellers to buy goods. It also encourages intermediaries/middlemen to keep more inventories.

b) Allowance

The middlemen or intermediaries who sell goods in more than determined quantity can be encouraged by giving allowances. Similarly, cash allowance, or facilities are provided for advertising, decorating and conducting different promotional activities. This facility motivates intermediaries/middlemen to deal/sell goods. This is supposed as strong method of trade promotion.

c) Gifts

Immediately after buying any goods/product, gift is given to the buyer or intermediary. Even by giving small gifts, the middlemen can be encouraged to sell or deal in goods. Diary, calendar, ball-pen, wall-clock, key-ring, lighter, glass, cup, T-shirt, astray etc. are the examples of such small gift. This also increases sales quantity.

d) Price-off/reduction

Price off every product / goods is fixed in market price list. But price may be deducted from the list temporarily to encourage the middlemen to buy goods. Generally, this method becomes suitable in unfavorable season.

e) Credit facility

Regular and sincere middlemen can be provided credit facility. Such facility motivates them to buy goods. This also plays an important role in bringing/introducing new products in market. Because of credit facility, each middleman tries to increase inventories.

3. Sales for Promotion Method


Every company appoints representatives or sellers in order to make selling effective. Sales volume can also be increased by encouraging or motivating them. The company can get success in increasing sales and earning more profit. Proper arrangement of incentive should be made to create pleasant and suitable environment for motivating employees to work sincerely. They can be mentioned in short as follows:

a) Bonus and commission

Sellers can be given commission on the basis of sales quantity / volume. The seller, who can sell more quantity or volume than others, gets cash commission. Similarly, if any seller sells more volume than a certain limit, additional amount can be given as reward or bonus or commission. This increases interest of the sellers to sell more quantity of goods for getting more bonus or commission.

b) Sales contest

The sellers should be given encouragement or motivation for selling maximum quantity of goods. For this, sale contest should be organized or conducted. Clear criteria should be fixed to take part in such contest. The sellers who get success in such contest should be given attractive reward. Such program greatly contributes to sales promotion.

c) Gifts

Sales can be promoted by giving small goods of low prices to the sellers. Even if such goods may be cheap, they are useful in household use. Sale employees can be provided reward such as pen, watch, diary, calendar, lighter, T-shirt etc. to the sellers.

d) Promotional kits

Besides this, all the sellers can be given catalogue; brochure and other information about goods can be provided. The concerned sellers need to know about the goods intended to sell. Similarly, sellers should also be encouraged by displaying some models of goods.

e) Sales meeting

Sellers should be given clear information about company's policy and programs. For this, the top level management should call sales meeting. Through the same meeting, important information can be given to all the concerned sellers, by which they get motivated and encouraged to bear more responsibilities and perform works successfully.
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Sales Promotion: Short Term Encouragement / Stimulation for Attraction of Potential Customers

Meaning of Sales Promotion


Short term encouragement/stimulation used to create demand for the goods intended to sell is called sale promotion. This is an important element of promotion mix. In this competitive environment, its importance and popularity has been increasing daily. Sales promotion plays an important role to attract potential customers.

Various methods such as free sample distribution, rebet, coupon, price reduction, gift, decoration, fair, premium, display etc. can be used. Some producers keep cash prize into packets of goods.

The meaning of sale promotion can be clearly understood from the definitions given by experts and writers as follows:
According to Prof. William J. Stanton, "Sales promotion refers to demand stimulating device designed to supplement advertising and facilitate personal selling."

 

According to American Marketing Association, "Sales promotion refers to those marketing activities other than personal selling, advertising and publicity that stimulate consumer purchasing and dealer effectiveness such as display, show and exposition, demonstration, and various non-recurrent selling efforts not in the ordinary routine."

 

According to Prof. Philip Kotler, "Sales promotion consists of a diverse collection of incentive tools mostly short term, designed to stimulate quicker and/or greater purchase of particular product/services by customers or the trade."

 

The above mentioned definitions make it clear that various ways or methods that are devised to create demand for goods or services is called sales promotion. All the short term ways or methods devised for creating demand are called sales promotions. It works as the bridge to link advertisement and personal sale. Sales promotion also helps wholesalers and dealers.

Objectives of Sales Promotion


Generally, activities of sale promotion are conducted to expand/amplify sales. There may be various reasons and objectives for sale promotion. The main reasons or objectives are:

1. To attract new customers


Sales promotion activities should be conducted to attract attention of new customers. There are many methods to attract attention of the customers. Among them free sample distribution, coupon, price deduction, decoration are some of the examples. Such activities attract customers' attention. They may even give up / change the brand they have been using and get stimulated / encouraged to choose other new brand goods.

2. To introduce new product


The second objective of sales promotion is to introduce or present new products to the market. Bringing new product in market is very challenging and difficult task. It becomes difficult to sell new products in markets only using advertisement, personal sale and publicity or propagation. So, effective activities should be conducted for sales promotion. Sample display, presentation, trade fair etc. should be held to introduce or bring new product in the market. If new products are brought in market, they can face competition to some extent.

3. To encourage greater purchase volume


Sales promotion activities should be able to increase sales volume. The third objective of sales promotion is to increase sales volume and encourage customers to purchase more quantity. As different methods and tools of sales promotion encourage customers they become ready to buy and use greater volume of goods. Only when such situation is created, sales promotion becomes effective.

4. To educate the customers


Goods may remain in different conditions. Further improvement can be made by adding up some new features only after the products reach the maturity stage. This is called product modification. While adding new features to the products, quality and prices also are changed. So, customers should also be given full information about it. The same task is called educating the customers. Hence, sales promotion has the objective to educate customers.

5. To maintain selling stability


Sales quantity / volume remains changing for one or the other reasons. Sales may get fluctuation according to season or time. Greater volume of goods can be sold out in favorable season and less volume in unfavorable season. But, the sales volume can be maintained same even in unfavorable season by using tools of promotion, due to which selling stability remains for long. If stable sale is maintained, both the seller and buyer sides can get benefits.

6. To increase seller's inventories


The sales promotion activities increase the sales volume. When the sales volume increases, the wholesalers and retailers also should increase their inventories. Sellers become ready to increase inventories, provide facility, reduce price by purchasing goods even in unfavorable season. As a result, the inventories increase automatically.

7. To increase brand awareness

Sales promotion should make clear what products have been given brand name and their quality. In this way, to increase brand awareness in customers is also another important objective of sales promotion. Sample presentation, display, trade fair, etc. also greatly help to increase awareness.

8. To make better store display


Sales promotion inspires / encourages the retailers to make better display of goods in their shop. Nowadays, the producer of Lux soap, Bond Cigarette etc. have encouraged the retailers to display them in a beautiful way so that the customers may buy. They announce different prizes including cash, motorcycle and color television to customer.

9. To push new item


Sales promotion also encourages the sellers and channel members for sale of newly introduced products. So, they purchase new brand products from producers and urge or appeal the consumers to buy them.

10. To attract new channel members


Efficient new channel members are needed to sell any new product. Sales promotion encourages such new members to deal in such products. As a result, the market gets expanded and distribution management strengthened due to addition of new persons, channel-members or organizations. In this way, a competition among many channels members in selling products takes place through which the efficiency increases.
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Meaning of Promotion and Its Objectives in Marketing

Meaning of Promotion

Promotion provides sufficient information to the consumers of target market about the features, quality, price and place of availability of goods. Promotion is taken as an important element of marketing mix. Marketing experts may give valuable suggestion to producers to produce goods, according to the interest, wants and needs of the customers by studying and researching markets.
After producing such goods prices, also should be determined. Doing only these activities, the goods should not be distributed; the target customers also should be given necessary information about such goods. Giving information to the target customers about the products is called promotion. Promotional activities create demand for goods. This promotion includes the activities such as personal sale, advertisement, sales promotion and propagation.

Promotional activities make a flow of information about products and persuade the customers to buy the products. Such type of function is also known as the marketing communication. This makes the potential customers know about the products or services. Effective communication persuades the customers to buy the products. These types of promotional activities also create demands as it explains necessity to the customers. So, this can also be defined as the art of creating demand. Different writers and experts have defined promotion; important definitions are given as follows to make its meaning clearer:

Prof. Philip Kotler has defined promotion as, "Promotion includes all the activities the company undertakes the communication and promote its products to the target market."

 

Prof. William J. Stanton has defined it as, "Promotion in the element in an organization marketing mix that serves to inform, persuade and remind the market of the organization and or its products."

 

E. J. McCarthy has defined promotion as, "Promotion is any method of informing, persuading or reminding consumers, wholesalers, retailers, users or final consumers about the marketing mix of product, place and price which has been assembled by the marketing manager."

The above mentioned definitions make it clear that promotion is one of the important tools of marketing. It creates demand in target markets and gives information to the customers about products. Promotional activities should be conducted to give information, make believe, motivate or persuade, influence, and remind the customers about products. Such activities greatly as well as positively affect sales and distribution of the products. So, nowadays, almost all the business companies or firms conduct promotional activities attractively. So, the modern age is also called the age of promotion.

Objectives of Promotion


Promotional activities give information, make believe, remind the customers of target markets about the products. Some important objectives are formed to conduct such activities effectively. The important objectives are:

1. Informing


At first the promotion aims to make flow of information to consumers about products. It provides information about features, benefits, price, utility, etc. of the products to the customers, wholesalers, retailers, consumers etc. Such information creates positive attitude in all customers towards the products. This also makes aware the potential customers and intermediaries. Promotion also provides buying alternatives to the ultimate users. So, the objective of providing information is given first priority.

2. Persuading


Producers should make customers believe in their products for expanding their markets. The second important objective is to make the customers believe in the products. Customers do not get motivated only by giving simple information about the products. It is compulsory to make the customers believe in products. For this, they should be made known about the quality, feature, price, utility etc. of the products. Trust can bring changes in behavior, feeling, thought, attitude and trend of the customers. Only then the customers are motivated to buy products of the newly promoted brand. The customers are not affected by any substitution goods due to the flow of impressive information of the promotion of the new brand goods.

3. Reminding


Different business firms product different types of products. Various kinds of goods appear in markets. In such situation, the customers should be reminded of the information once given. They may be confused in reminding because of different goods in the markets. All the customers may not have such memory power to remember brand of the goods. On the one hand, such situation exists, and on the other hand, many competitors try to divert customers' attention to other side. So, the customers should also be given regular information, information about the organization/firm and goods together. While providing such information about price, quality, utility features, and benefits etc. of the products also should be given to the customers.

4. Reassuring / assuring


The fourth objective of promotion is to give assurance to the customers. They express concern whether their decision has become right or wrong. Their problems should be solved through very simple way. In such situation, assurance should be given by making clear about the benefit of the product. Such assurance gives positive strength towards buying decision. It removes or minimizes their dissatisfaction or confusion. This develops a feeling in the customers that their buying decision is rational and the product is the best. It also plays an important role to maintain image and prestige of the company.
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Retailers: Meaning and Roles of Retailers || Buying goods in huge quantity from producers and selling out them in small quantity ||

Meaning of Retailers


The buyers who buy goods or services for selling them to final consumers are called retailers. Retailers are the last step of distribution channel. In the lack of it, functions of producers and wholesalers cannot be effective. Retailers are the business intermediaries. They work as the bridge between wholesalers
and final consumers. Retailers deal in small quantity. However, their total business transaction becomes very much. In French language, retailer means ‘to cut into small pieces’. It also makes clear that the function of buying goods in huge quantity from producers and selling out them in small quantity is called ‘retailing’. Every retailer sells goods or services to ultimate consumers in small quantity.

Different marketing experts and writers have defined retail trade and retailing. The important definitions are given as follows:

Prof. Philip Kotler has defined retailing and retail trade as, “Retailing includes all the activities involved in selling goods or services directly to the final consumers for their personal or non business use.”

 

Prof. William J. Stanton has defined it as, “A retail or retail store in a business enterprise that sells primarily (over one half of store sales volume) to household consumers for their non-business use.”

 

E. Jerome McCarthy has defined it as, “Retailing is selling to final consumer products to householders.”

 

Condiff and Still have defined retailing and retail trading as, “A retailer is a merchant or occasionally an agent whose main business is selling directly to the ultimate consumers.”

 

Such retailers are the different types. On the basis of business operation, they can be divided mainly into two classes as full service retailers and out-store retailers. Similarly, on the basis of the sales volume, retailers can be divided into two classes as large quantity selling retailers and small quantity selling retailers. In the same way, on the basis of dealing in goods, retailers can be divided into three classes as simple/general business product retailers, product line retailers and special retailers. Similarly, on the basis of ownership, retailers can be divided into four classes as independent store, consumer store, chain store and contract store.

Retailers provide various services. They supply goods or services by purchasing them from wholesalers to final consumers at right place and at right time when demanded. They also provide information about quality, utility and operation methods of the goods or services to the consumers. Besides, the retailers provide important information to wholesalers about market demand, consumers’ wants and purchasing power. From this, the wholesalers can take right decisions easily about what products should be sent to retailers or distributed, what products should be postponed from supplying.


Role of Retailer


The task of sending / distributing goods or services to different parts and places of any country is done by retailers. This task also takes responsibilities to improve people’s life standard and provide necessary services and facilities to the society. In addition to this, retailers’ have an important role in the development of national economy. Retailers have important role in distribution channel for the following reasons:

1. Efficiency in distribution


Retailers become efficient in their business. Retailing performs distribution more skillfully and efficiently than producers and wholesalers. Distribution of goods through retailers takes lower cost and the number of transactions becomes small. Retailers fully know about how to provide goods or services to all their customers, by which wholesalers get great help in distribution.

2. Market information


Retailers live in direct contact with consumers. They establish long and deep relationship with the consumers. So, retailers give all information to producers and wholesalers about the need, priority, wants and interests etc. of the consumers. Besides, they also give information to the producers and wholesalers about the activities of competitors, their products, price, promotional strategy etc. On the basis of the market information, the producers produce new goods. The retailers also collect information from producers and wholesalers and send them to consumers. This task benefits both two sides.

3. Financing


Retailers keep on selling goods even in small quantity every time. Hence, some amount of money is collected from continuous sale. Such cash amount can be paid to the wholesalers according to the right time, due to which both the wholesalers and producers become successful in financial management. The retailers also get ownership of the goods by purchasing them. As they get ownership of the goods, they also bear the risk.

4. Contact with consumers


As the retailers sell goods or services to consumers, they remain in close contact with them. They establish long and deep relationship with the consumers. The customers trust retailers more than the producers and wholesalers. So, the producers and wholesalers do not need to keep direct contact with consumers. This also makes clear about the importance of the role of retailers in the distribution system.

5. Selection facility


Retailers sell various goods produced by many producers. They purchase goods from producers and wholesalers and keep them in their own shop. The consumers get chances to buy such goods from the retailers’ shop whichever they like. The retailers in super markets, departmental stores, shopping centers etc. give ample chance to the customers to select goods.

6. After sale service


Retailers should also give all information about services what they can provide to the customers after sale of the goods. Retailers should make the customers believe that they can also get after sale service, for example, free repairing, instruction about the method of use, simple repair, how to keep the goods safe etc. After such services to be provided are ensured, the customers trust the retailers, due to which the sale quantity increases.

7. Sales of new products


Producers may produce different types of new goods. Retailers make flow of description and information about quality, features, utility and weaknesses of the new goods. On the basis of the same, the customers buy new products. In the lack of retailers, it becomes very difficult to get entrance to markets for the new goods. In this way, the retailers play a great role in selling new goods in markets.

8. Consumer satisfaction


Retailers know about the interests, wants, needs and purchasing power of their customers. They also know what goods they need what they demand at what time and season etc. and satisfy them by providing wanted goods. In the lack of retailers, it becomes very difficult to get such facilities for the consumers. In this way, the retailers keep the customers always happy and satisfied.

9. Home delivery service


Retailers promptly implement their customers’ order. Nowadays, the customers demand goods or services even through telephones. The retailers provide home delivery services to the customers who have no time or remain busy. Such facilities are also provided to the physically unable customers. Such simple and special activities have made the retailers more important in distribution system.

10. Seasonal goods


Retailers can well identify the wants and needs of the local customers. So, they also know about what kinds of goods in what season their customers want and provide them seasonal goods. For example, they provide warm clothes, jackets etc. in cold season and thin in hot seasons, coffee in cold seasons and cold drinks in hot season, umbrella, raincoat etc. in rainy season. So, retailers play very important role in distribution system.
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Channel System and Channel Structure in Marketing || Producer, Wholesaler, Retailer, Agent, Ultimate Consumer, Consumer Channel ||

Channel System


Goods are produced to use/ consume. Goods should be distributed from production place to sale center. Right channel is needed to carry goods to right place at right time. The way used to distribute goods/ products is called channel. All the elements present in this channel are called channel system. Intermediaries, industrial buyers, ultimate consumers and channel member manage conflicts and play important roles. This type of channel system does production, whole selling and retailing functions. This channel system is categorized in different classes as follows:

1. Vertical Channel System


Vertical channel system integrates different types of intermediaries. This type of channel system performs producing wholesale and retailing functions. Such channel system can be classified as follows:
  1. Corporate system: Company’s own excessive channel works in corporate vertical system. It does all the works from production of goods or services to selling to final consumers. All the channels involved in distribution are integrated under single/sole ownership. The business firms which want to keep control over distribution channels use this system.
  2. Administered system: In this system, one company controls channel co-ordination activities. So, the company does not have formal organizational structure. In other word, this system is conducted under the leadership of any one channel member.
  3. Contract system: Members of vertical channel are independently involved in this system on contract. The members involved in this system conduct programs of distribution channels. The works of channel members are formally divided which are also controlled through co-ordination.

2. Horizontal Channel System


In this system, different channels jointly and mutually integrate the available man power and programs. In this way, if different organizations and intermediaries work together, this is called horizontal channel system. Among the members of such system, some may produce goods and others may distribute. This type of mutual work may be practiced at production level. This system can also be used at the wholesaler and retailer level.

3. Multi channel system


A company may use several channels to provide goods or service to the customers. In this way, if many channels are involved in distribution, it is called multi channel system. Producers may directly supply their products to final consumers. They can also sell their products through wholesalers and also through retailers. In this way, the producers may use multi channel to distribute their products according to suitability.


Meaning of Channel Structure


In simple meaning, the way to supply products from production place to consumers is called distribution channel. Structure of distribution channel may be different according to the nature of product and environmental elements. Whatever may be the channel structure, it works as a good bridge between producers and consumers. This type of distribution channel may be direct or indirect. In direct channel, the producers supply their products to the consumers by themselves. In indirect channel, the products are supplied to the consumers through intermediaries or distributors. Such indirect channel can be classified into three types as follows:

Single level channel: In this channel one retailer works.

Two level channel: In this channel two intermediaries, the wholesaler and retailer, work.

Three level channel: In this channel three intermediaries work. They are wholesalers, jobber and retailer.

Levels of Distribution Channel


Channel Structure for Consumer Goods


Personal or daily uses product is called consumer goods. According to product nature, size and price, the firm can be used as direct or indirect channel. In indirect channel, the products are supplied to the consumers through agents, wholesalers and retailers. Producer, agents, wholesalers and retailers directly participate in the channel structure for consumer goods. The following four levels are involved in the channel structure of consumer goods.

Channel Structure for Consumer Goods


1. Producer → Consumer Channel


The channel in which no any intermediaries are involved between producer and consumer is called producer – consumers channel. As no any intermediary is needed between the two sides, it is called zero level channel. In this type of distribution channel, the producers themselves supply goods to the consumers. In other word, producer does all the works to distribute produced goods directly to the customers. In such channel, it is necessary to have direct contact and talks between producer and customers. This channel is very cost effective / economical. But the producer should be physically, financially and intellectually able to distribute produced goods.

Technological goods such as television, deck, computer, automobile, machines and machinery goods are distributed through direct channel. Similarly, this channel is used to distribute perishable goods, such as milk, fruits, fish and meat, etc. Door to door service facilities such as mail, order, TV selling, exhibition arcade, telemarketing etc. are forms of direct distribution channels.

Wants and interests of consumers can be easily identified through such direct channel. To perform this task, no any added or extra expense is needed. But, as management for all the tasks should be looked after by producers themselves, it needs capital. Besides, it becomes very difficult for the producers to have direct contact with all the customers.

2. Producer → Retailer → Consumer


In this channel, one intermediary business holder is involved. This is the shortest indirect channel for consumer goods. This is also called single / one level channel. In this channel, retailers remain in between producers and consumers. Consumer goods reach retailer from producers and consumers from retailers. There may be a large number of retailers. Perishable goods such as fruits, vegetables, eggs, milk etc. are distributed through this channel. In this channel, the producers do not need to keep direct personal contact with consumers. Goods are sold out in high quantity with low distribution cost. Channel store, departmental store, super market, discount houses, big mail order houses and cooperative organizations are involved in the single / one level channel.

3. Manufacturer → Wholesaler → Retailer → Consumer Channel

Two intermediaries, wholesaler and retailer work in this channel. So, this channel is also called two – level – channel. This distribution channel becomes longer than one / single level channel. In practice, most of goods reach market through this channel. Goods can easily reach even any market segment where there are many wholesalers and innumerable retailers. The producer / manufacturer does not have direct contact with retailers and consumers but only with wholesalers. As distribution function widens very much through this channel, there remains possibility of large amount sale. But it takes more distribution cost. This channel is used to distribute groceries, medicines, food stuff, hardware, goods, etc.

4. Producer → Agent → Wholesaler → Retailer → Consumer Channel

The longest channel to distribute goods to the final consumers is this three – level channel. In this channel, there are three intermediaries such as agents, wholesalers and retailers between producer / manufacturer and consumers. The goods reach the hands of consumers through agents, wholesalers and retailers respectively. Mostly the international and global companies use this channel. Such companies produce goods in huge quantity. Sale quantity of goods increases through three – level channel. But it takes high sales cost.

Different experts and scholars of marketing have prepared different types of structures of distribution channels. Marketing scholar William J. Stanton has suggested that five / fifth type distribution channel also can be used. This structure is as follows:

Channel Structure of Final Consumer Goods


Channel Structure for Industrial Goods


The goods used in order to produce any new goods are called industrial goods. Direct or indirect distribution channel can be used according to the nature, size, design, price etc. If it is to use indirect distribution channel, goods reach the users through agents and industrial distributors. Producers, agents, industrial distributors and industrial users are directly involved in the channel structure of industrial goods. Specially, there are three levels in channel structure of industrial goods. It is presented in the figure as follows:

Channel Structure of Industrial Goods


1. Producer → Industrial User Channel


This channel is also called direct channel or 0 level channel. In this channel no intermediaries are found between producer and industrial user. This channel has become very popular for industrial goods. Heavy machines and raw materials are distributed through this channel. In this channel the producers themselves identify industrial users, sign contract and supply goods. As this is also direct channel used for industrial goods, its distribution cost becomes cheap, but skilled seller is needed as he/she has also to play intermediary’s role. The seller should be experienced, efficient and have technical knowledge.

2. Producer → Distributor → Industrial User Channel


As only one intermediary works in this channel, it is called one/single level channel. In this channel, industrial goods come to distributors from producers and reach the industrial users. This channel is very popular and is suitable for the goods such as photocopy machine, auxiliary equipment, operation supply, air conditioner, computer etc. This distribution channel becomes more expensive then direct channel. The distributors of industrial goods acquire specialization in dealing industrial goods. Otherwise, dealing in industrial goods becomes impossible.

3. Producer → Agent → Distributor → Industrial User Channel


This is the longest and popular channel. In this channel, agents and distributors work between producers and industrial users. So, this level is also called two level channel. Here agents mean representatives of producer. Agents take the responsibilities to supply goods to distributors. This channel is used for cheap industrial goods for mass distribution. As the way of distribution is long, distribution cost also gets high in proportion. The producer distributing industrial goods can select other distribution channels. The alternative channel is represented as follows:

Alternative Channel for Industrial Goods
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Distribution: Meaning, Objectives and Importance of Distribution || Act of Supplying the Products to the Target Market ||

Meaning of Distribution


Production and sale center do not remain at same place. Distributors are needed to supply production to the consumers/customers. Production of goods or services becomes meaningful only if they are supplied to the consumers/customers. So, the activities performed for supplying the products to the target markets on the whole is called
distribution. Distribution creates time utility, place utility, ownership utility of products. Management of product storing creates time utility whereas exchange creates ownership utility. Management of good transport system creates place utility. Distribution management satisfies customers’ wants by supplying necessary goods to them and heightens their lifestyle.

Products have no utility at production place. Their utility increases immediately after they have been taken to consumption places. For example, publishers have no use of books, but when they reach among readers and students their utility increases. Similarly, suppliers provide means of productions and work as bride between producers and target markets by supplying products. Distribution includes the tasks of distribution channels and physical distribution. Distribution channels of marketing provide products to customers whereas physical distribution transports products to warehouses and target markets. Both these functions are the important channels of distribution.

The task of carrying finished goods to target markets is called physical distribution. This includes the important functions such as transport management, warehouse management, stock control, product management, order scanning etc. In the lack of distribution, marketing becomes lame/ crippled. To make physical distribution clearer, different definitions given by different experts and writers can be presented as follows:
According to Prof. William J. Stanton, “Physical distribution consists of all activities concerned with moving the right amount at the right product to the right place at the right time.”

 

According to S.A. Sherlekar, “Physical distribution is an important marketing function describing the marketing activities relating to the flow of raw materials from the suppliers to the factory and the movement of finished goods from the end of production line to final consumers or users.”

From the above mentioned definitions, it becomes clear that physical distribution provides distribution channels and supplies products to the target consumers. Physical distribution is task or the function of supplying products from production place to the final consumers or industrial users at the right time they demand for. Mostly, transport and storage/warehouse related functions are emphasized in physical distribution.

Marketing channel is also called distribution channel. They way which is used to supply products to the consumers is called marketing channel. As the channel carries water to the farm from its origination, the distribution channels carry products to markets or consumers from place of production. So, distribution channel can be taken as the pillar of marketing.

To make the marketing channel much clearer, the following definitions have been presented:
According to Prof. William J. Stanton, “ A channel of distribution (sometime called a trade channel) for a product is the route taken by the title to the product as it moves from the producers to the ultimate consumers or industrial users.”

 

Accordint to Prof. Philip Kotler, “ Distribution channel as the set of firms and individuals that take title or assists transferring title to the particular goods or services at it moves from the producers to the consumers.”

From the above definitions, it becomes clear that marketing channel is a simple as well as an easy way through which products reach the target markets. Proper channel should be used for distribution according to the nature of products or service. Generally, distribution channel of industrial goods become short. But channel of consumer goods becomes long.


Objectives of Distribution


Distribution, in marketing, has narrowed the world market and makes it very easy. Any product can be easily delivered/ supplied to every geographical place or region at any time if demanded by customers. No any producer has to fret over how to distribute the products. Distribution management takes all the responsibilities to distribute any goods produced by any producer to any place at proper time. The distribution management also decides which goods of what nature should be distributed through what channel to which place and at what time. So, the main objectives of distribution management which discharges such important responsibility are as follows:

1. Minimization of total cost


Producers produce various goods. A lot of expense needs to distribute them. The producers may give responsibility to any channel to distribute. Channel management may deliver products to a certain place at minimum cost for distribution. While distributing products in such way, many channels may involve in it. The function of distribution can be completed at minimum cost calculating the average labor of persons or groups spend on it. So, distribution channel sets the objective to minimize the total cost.

2. Making the goods available


Effective distribution channel makes arrangements for easy availability of any goods. Any goods or services demanded by customers become available at any place and any time. If goods are available when demanded, sale quantity of such goods increases on the one hand and healthy competition with competitors can be easily faced on the other. In this way, distribution channels always have the objective to maintain the availability of the products regularly.

3. Regular supply of goods


Any business firm or producer can give the responsibility of distribution for channels. Then the distribution channel manages regular supply of goods. In other word, distribution channel delivers right product at the right time and right place to buyers. So, all the customers of target market do not feel the lack of goods. Thus, distribution channel sets objective to render crucial services of regular supply of goods.

4. Transfer of product ownership


The distribution function also fulfills the process of ownership transfer. For any product documents/papers should also be given together with product by signing a contract. Ownership of some other goods should be handed over, in presence of government authority, with documents by completing every legal process and requirement. Only after formally transferring ownership, the goods can belong to the buyer or customer. So, distribution channels also take responsibilities to transfer ownership of goods.

5. Promotion of goods and services


Effective distribution channel also promotes goods or services. Distributor reaches target market taking goods from production center. After reaching target market, the distributor gets chances to show the goods to customers. Customers become very happy to see and know about the goods. They also can ask about the product if anything unclear. They become acquainted with the product after the distributor gives true information and answers to them about the products. In this way, distributor has the target to promote the product or service of the producer.


Importance of Distribution


In the lack of distribution, products become meaningless. Distribution has very important role in marketing. The importance has been mentioned in short as follows:

1. Utility of the product


In marketing, distribution creates utility of goods/ products. If the products are not carried to the consumption place, no any benefit or utility can be obtained from them. Mainly transportation, storage and exchange are involved in distribution. Transportation creates place utility of the product by carrying wanted goods to the right places. Storage creates product utility of time by storing and providing goods at the time when wanted. Similarly, exchange creates ownership utility of goods by transferring ownership. By different activities, it becomes clear that distribution motivates customers by creating place utility, time utility and ownership utility.

2. Need satisfaction


In this competitive business age, at first the needs of customers should be studied and understood. Then goods should be produced accordingly. The distribution meets/satisfies the needs of the customers by supplying the right goods to right place at right time. If there is no proper arrangement of distribution, needs/ wants of the customers cannot be satisfied at right time. Distribution plays an important role to heighten the life style of customers. This function should compulsorily be conducted by carrying goods from production place to the selling centers.

3. Employment and occupation


Distribution is one of the important tasks of marketing. This provides job or employment to many persons. Distribution plays an important role in providing employment opportunities to the people. Many persons get employment by involving in wholesale business, retail business, agents, intermediary, etc. A large number of people have adopted it as their occupation. Similarly, transport, banking and insurance have provided job to large number of people. Distribution has been found successful to provide job to a large number of people in the industrial and developed countries. In the developing country like Nepal, distribution has provided job opportunities to a lot of people.

4. Means of production


The producers need means to produce different goods. Raw materials, machines and machinery parts, big machines and equipment, production function, supply etc. help in production. Besides this, it also provides necessary financial resource to conduct production function effectively. Without means of production, production function becomes meaningless, and in the absence of it, marketing itself becomes worthless.

5. Financing


Several intermediaries are involved in distribution function. They manage financial resources themselves for distribution. Besides this, they also manage financial resources for extra warehouse and stock. So, the producers need not make financial arrangement for distribution and creating distribution channel. Hence, the producers do not need to invest stock financial resources. Produced goods change in cash immediately. So, no any difficulty arises in managing financial resources for market research, production of new goods, development of goods and other functions.

6. Communication


Distribution function establishes contact between producer and customers. So, distribution works as link between the two sides. Producer makes flow of message about products, price, promotion, etc. to the customers through the persons or groups of person involved in distribution. Through the persons involved in distribution, they also get feedback about competitors, environment change etc. Hence, it becomes clear that distribution function also works as a means of communication.
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Label | Meaning, Objectives, Functions, Types of Label | Product Strategies in Nepal

Meaning of Label


The information or notice about product, producers and its seller written or pasted on the product or its pack is called label. In other words, after packaging any product, meaningful and short description should be written. This called label. For this, a suitable leather piece, paper piece, or a tag is pasted or hung on the pack writing or printing information or notice about the product on it.
Goods are produced for consumers. They have also the right to know about the products. so, how to use the product, how to keep it safe, what is its mix, when was it manufactured, when is its expiry date, up to when can it be used etc. should be given on label. Such tag or label helps the consumers in its use and its production company to promote it.

Labeling plays an important role in business world. Some products are such that they invite dangers if they do not contain correct and true information. So, the producers should compulsorily give tag writing necessary information on all the products. Specially, if labeling is not given on medicine and poisonous products, unexpected dangers and crisis may ensue. True informative labeling is also compulsory for many other different reasons. This provides necessary as well as valuable information about quality, brand, features, etc. of the product.

Different writers and experts have defined labeling of products. Among them the following are very important:

According to Prof. William J. Stanton, “Label is the part of a product that carries verbal information and manufacture’s identification. Labels can perform both informative and promotional functions.”

 

According to Pride and Ferrel, “Labeling is used on package to provide instruction, contents, certification and manufacture’s identification. Labels can perform both informative and promotional functions.”

Good labeling also makes clearer about the contents / composition and percentage of the ingredients of the products. The above mentioned definitions also make it clear that the short information given on packs is called labeling. This gives important information about the product. In this age of business competition, labeling may become more fruitful. Even these simple arguments make us realize the importance of labeling. Besides, labeling also makes buying and selling easy and convenient.


Objectives of Label


Label provides description of the products to the customers. Label presents information about features, quality, utility, price and using method of the product. So, label also has its own importance and objectives. The main objectives are as follows:

1. Information to customers


Labeling and packaging are closely connected. Label provides necessary information to customers. It helps the concerned sides to good identification of products. The main objective of labeling is to provide more and more information about the product to all its customers.

2. Social significance


Label has the objectives to provide both informative and promotional information to the society of its target markets. Products produced for certain society should be supplied to markets or sale centers only after giving correct/true label. Any medicines or poisonous products to be distributed to certain society should also contain words of warning and caution. In this way the labeling increases social importance.

3. Consumer protection


Labeling should also pay special attention to customer’s welfare and protection. If components, composition or ingredients, utility, weight, price etc. of the products are mentioned on label, there does not remain any dangers or confusion for customers. If the weight is different due to some accidental reasons, the customers can get legal remedies. So, labeling protects consumers.


Functions of Label


Label should give important and short information to the customers about the quality and feature of products. Label should be so informative that the consumers can get every information about quality, features, size, get up, using method, etc. by reading the label. Besides, label plays some other important roles. The main functions of label are as follows:

1. Identification


Label gives short identity of the product. It also gives intrinsic value of the product. So, the customers decide to buy the products being clear by looking at the labeled identity.

2. Grading


Labelling divides products in different grades. For example: some one type of products can be divided as A, B, C, D grades. They can be classified as A, B, C, D grades on the basis of quality of the products. Classified in this way the customers can decide to buy any class products they like.

3. Description


Label of the products provides different descriptive information about the products. In this modern age, most of the products are given descriptive label. In fact, this type of labeling has been proved to be very useful to the consumers. Nowadays, the following things should be included in descriptive labeling.
  • Manufacturer’s name,
  • Product composition,
  • Manufacturing date,
  • Using methods,
  • Expiry date,
  • Quality of product


4. Promotion


Label of product helps to promote the product. The product is decorated with attractive design, figure or make up. This attracts the customers and entices them to buy it. Labeled product plays the role of advertisement. In this way, label provides promotional help to the producer, or distributors, or sellers. So, low standard label should not be used. It adversely affects sale.


Types of Label


Products can be labeled with methods. There are specially four types of labeling. They are classified in four categories as follows:

1. Brand label


Brand and label are two different activities. However, in some condition, they may be used together. If only brand of the product is used in packaging of the products, such label is brand label. Close Up toothpaste, Dettol, Puja Soap, Diyo Soap etc. are the examples of brand labeling. As brand itself does the works of label, it charges low cost. It does not affect price of the product. This also simplifies to recognize by both sellers and buyers and to sell and buy.

2. Grade label


Products may be of different classes, groups, and grades. The label used to give true information about the products is called grade label. This type of label indicates the quality of the product through sign, symbol, letter, or word, or number. While using such label, brand name of the product should also be used. As it reflects the grade, taste, and quality of the products in markets, it helps buyers to buy according to their capacity.

3. Descriptive label


Descriptive label provides information about features of the products. Nowadays, this type of labeling is used in most of the products. Descriptive labeling is used in the products which become difficult to give grade. In the eye of consumers, descriptive grading becomes useful. Manufacturer’s name, product ingredients, manufacturing date, expiry date, quality of product, method of use etc. are mentioned in this type of grading.

4. Informative label


The label which gives instruction and information about the product is called informative label. Necessary instruction is given to take care of and about the use of the product. Such information and instructions become very useful to the customers. So, most of the customers give priority to informative label. Mostly brand name, manufacturer’s name, address, packaging date, expiry date, retail price, instruction for special care, etc. are given in this type of label. Similarly, weight, necessary caution in using the product etc. are also mentioned on the label.


Product Strategies in Nepal


Different producers or companies produce different goods in Nepal too. These products as in other countries enter the life cycle. It becomes very difficult for the Nepalese products to compete with the other products in quality, features, shape, size utility, etc. in markets. Even in such fierce competition, other products are
also produced besides agricultural products. Products of some companies can be mentioned as example. Nepal Liver Limited produces Pepsodent Toothpatse, Lux Soap, Vim Soap, Sun-silk Shampoo, etc. Himal Electric Company produces Bulbs, Fan, Toster, Cooler, etc. Royal Drug Limited produces
Cetamol, Nediquen, Amjeet, R.D. Sole, Jeeven Jal, Fenodin, and other medicines.

Rajesh Metal Crafts Limited produces Roofing Tin, Chaudhary Group produces WaiWai Noodles, Big MiMi Noodles, LG Television etc. Pokhara Noodles Private Limited produces Jo Jo Noodles, Swostik Oil P. Ltd produces Soyabean oil, Nebico Pvt. Produces Thin Ararot Biscuits, Golden Battery Industry produces Tiger and Yasima Battery. In the introduction period when such products enter in the product life cycle, one needs strategy to fix low prices compared to the foreign products. But, if there is lack of competition in market more price can be fixed.

For the products which have entered the development stage, design, features, quality etc. should be changed if possible. Along with this, a strategy should be adopted to enter new market segments. At this stage of the product, efforts should be made to include new distribution channels. But, the Nepalese companies may lack economic resources and expert manpower due to which they may be compelled to postpone such strategies.

Efforts of market expansion should be made for the products which have reached maturity stage. At such stage, the customers who want to use products late should be attracted towards the marketed products. Similarly, promotional activities should be conducted to attract customers who use the products only on some occasions. Strategies for improvement of the products should be searched out. This increases sale of the products. But the Nepalese producers have to face difficulties to find new customers, enter new market segments and improve quality of the products.

At the stage of decline of the products, researches and studies should be conducted to identify the weakness of the products. Production of such goods should also be closed in time. On the other side, investment in promotional activities also should be gradually decreased/ minimized. In such situation, rare products can have chances to continue in markets. So, products should be brought again to markets only after improving their quality, features and utility. Otherwise, market competition cannot be faced. Nepalese products are facing challenges and fierce competition with Chinese and Indian products.

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