Marketing and Channel Selection - Small Business

Marketing and Channel Selection

Before any production/ service is offered for sale to market, several decision need to taken in regarding marketing. Ex: price of product has to determined, the methods of marketing has been identified and the channels of distribution have to be worked out.

Marketing

Market : it is a place where the sellers and buyers assemble to exchange their products for money and vice versa.Concept has been change time to time.

Traditional concepts:

Early days, „marketing ‟ includes activities involved in the flow of goods and services from production to consumption.

Modern Concepts:

Due to changes of customers, behaviour concepts are also changed customers started to buy the goods or services that were more beneficial to them in terms of quality, price, satisfaction, durability, look and so on. The benefits to the consumers may be tangible and intangible.

The new approach relies on to produce the goods or offer services that satisfy the customers ‟ demands.

Traditional approach focus on the needs of the sellers (Buyers Beware).

Modern approach focus on the needs of the buyers. (sellers beware).

Problems of Marketing of small industries:

Competition with modern section Lack of sales promotion

Weak in bargaining power

Market Assessment:

Demand forecasting

Demand refers to willingness and ability of customers to buy products or services. When we consider this definition for all the potential customers having both willingness and ability to buy a product it is termed as “total Market”

There are number of techniques available for forecasting dmand.

Survey Method Statistical method

Leading indicator method

Market Segmentation:

Market segmentation is the sub- dividing of a market into homogeneous subsets of customers, where any subset may conceivable be selected on a market target to be reached with a distinct marketing mix.

Basic of Market segmentation

Geographic variable Demographic variable Education variable

Income variable

Marketing Mix:

Marketing mix classified the four factor under 4 P‟s vie Product, Price, Promotion, Place.

“Marketing mix is the tailoring the product its price, its promotion and distribution to reach the target customers”.

Brand

A brand is 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.

Brand mark is a symbol or mark used fr the purpose of identification of the product.

Packaging

Packaging is an art science and technology of preparing goods for transport and sales.

Pricing Policy

Price is the money that customers must pay for a product or services. Pricing the product is something different from its price.

Salient features:

Pricing cover all marketing aspect like the item- goods and service. Mode of payment, methods of distribution, currency used etc. pricing may carry with it certain benefits to the customers like free delivery, guarantee, installation from after sales servicing.

Pricing refers to different prices of a product for different customers and different prices for the same customers at different times.

Factors affecting prices:

Economic and non- economic

1.     Product characteristics

2.     Product cost

3.     Objectives of the firm

4.     Competitive situation

5.     Demand for the product

6.     Customers behaviour

7.     Government regulation

Pricing methods / policies

Cost plus method

Total cost + profit = selling price. Total cost includes fixed cost + variable cost. Profit refers to margin.

Skimming Pricing:

It suitable for a product introduced is innovative and innovative and it used mainly by sophisticated group of customers. High price is usually promoted by heavy promotion. Recover the cost with in a shorter period of time.

Penetration Pricing:

It is Contrary to skimming to attract more customers are very particular for price and which product is an items of mass consumption. Under this policy, the price of the product is set at lower level of penetrate into the market.

Market rate policy

This policy adopts the prevailing market rates for determining the price of the product. Unusually this policy used for unbranded products like oils, couriers, tailoring, repairing.

Variable price policy:

The price of the same product varies from customers to customers depending upon the situation prevailing in the market.

Resale price Maintenance

The manufacturer of the product fixes prices of the whole seller and retailer. The retailer price of the product like drugs and detergents are printed on the package. Retail price is fixed somewhat higher to meet of the cost of inefficiency retailers not selling the goods timely.

Distribution Channels / Methods of Marketing

A channel of distribution or marketing channels is the structure of intra-company organisation units and extra-company agents and dealers, wholesale and retails through which a commodity, product or service is marketed.

In view of number of intermediaries of the product channels it can be classified into three.

Zero level Channel  producer to consumer

One level Channel   Producer   retailer  consumer

Two level Channel   producer   whole seller   retailer   consumer.