Текст книги "Marketing and Pricing"

Trading range is a collection of all the machine, and proposes the firm for the sale of goods and services. Considering such summation, you can select individual groups of products that are similar in their characteristics in consumer or designed to meet the identified need. These groups are called goods of the assortment group.

The set of all product groups of goods is determined by the so-called product range.

The product range is a group of goods that are closely related to each other because of the similarity of their function, either by virtue of the fact that they are sold to the same customer groups, or through the same types of retail establishments, or in the same price range.

The product range is characterized by: the breadth, depth, saturation, harmony, as well as: the structure of assortment, completeness assortment; resistance range; renewability range.

Breadth of product lines indicates the amount of the proposed product lines (product lines). The number of such groups is directly related to the amount allocated to the segments of the market.

Depth range is the number of species and varieties of goods within the groups and subgroups in the range of the company.

Saturation product range is the total number of produced sales units in all assortment groups.

The harmony of the commodity nomenclature is the degree of proximity between the goods of various product groups in terms of their appointment to the requirements of the organization of production, promotion and distribution channels.

Structure of the range is the ratio of groups, subgroups, species, and time-short-sighted in the assortment of goods store. It is characterized by indicators of latitude (macrostructure) and depth (microstructure).

Completeness range is the actual availability of goods in the trading company approved assortment list.

Stability range is the uninterrupted presence in the sale of goods by type and species stated in assorted-element list.

Updatable range is the replenishment the varieties of goods in accordance with the policy of the company product line.

Manager of product lines, first of all, has to adopt a decision on the breadth of the range, which is influenced by the company’s goals. For a wider range typically seek those companies that are willing to present themselves in the market as providers of complete product assortment of commodities, seeking to increase their market share and ensure the growth of the market. The company who is interested in obtaining a high short-term income, in contrast, typically has narrowed assortment, consisting of individual commodities.

Managers of product lines tend to add to it new products in order to use excess production capacities, or to perform the demand of their own employees and distributors to expand the range to better meet the buyers’ requests, either because the company is necessary to expand the range of products offered to increase sales and profits, respectively.

However, with the addition of new products, increases the individual items of expenditure: on the design and decoration work, to maintain stocks of goods in warehouses, to retool production capacity, the processing of orders, transportation, and cost of the promotion of new products to the market.

4. The process of developing new products and planning their life cycle

The new product is a product, service or idea that is perceived by some potential customers as new. Development of a completely new product gives rise to significant managerial and ethical issues associated with high risk. Especially important is output of new products for markets with strong competition.

In order to achieve tangible success, the goods should be more than just a new one. He has to look for new ways. The organization may get a new product in two ways: through the purchase of the company, patent, licenses, know-how or by its own design of a new product.

New product development is the creation of original products, improving of products and their modernization, the development of new brands of products through its own R & D organization.

The process of creating a new product consists of the following steps:

1. Idea generation is the systematic search for ideas about new products. The search for new ideas is mainly based on internal sources of the organization (in the department of new technology, in the service of research and development, in the marketing department, etc.), studying the views of consumers, competitors, suppliers and distributors, consulting organizations, the exhibitions and a variety of publications, the use of special methods for generating ideas.

2. Selection of ideas is an analysis of all of the ideas about a new product in order to weed out unpromising one at the earliest stages of develop-processing. As a result, the organization selects ideas about a possible product that it can offer the market.

3. Developing the concept of product and its testing is the idea of a new product which is transformed into the concept of the product, which is tested on a group of target consumers for the purpose of determining the extent of its appeal. The concept can be presented to customers verbally or in the form of illustration.

4. Development of marketing strategy is defining the marketing strategy of the original to market with a new product. Here the size, structure and nature of the new product is described.

5. Business analysis is the assessment of anticipated costs and profits for their organization.

6. The development of the product itself is the transformation of the concept of new product in the material product. Objective is to ensure that the concept of the product can be brought to the stage of working of the sample.

7. Test marketing is a test of the product and marketing program in real market conditions. During test marketing following methods are used: a standard test of the market, closely controlled market, simulation testing the market.

8. Commercial production is a full-scale production and sales of a new product in the selected market. At this stage the manufacturer must choose the right time to market, consistency, and volume it activities in different markets, the most effective methods of distribution and promotion of a product, develop a detailed operational plan for marketing activities.

Each product in the market is living a certain time. Sooner or later it is ousted from the market by another, more perfect product. In this regard, it is introduced the concept of product life cycle.

The life cycle of the product is the time of the initial appearance of the product on the market until the end of its implementation in the market. (Not to be confused with the up-manufacturing life cycle, including research and development, implementation in production, the actual production, use, and disposal of production.)

The life cycle is described by the change of volumes of sales and profits over time and consists of the following stages: the start of sales (implemented on the market), growth, maturity (saturation), and the recession.

The implementation phase for the market is characterized by a slight increase of the volume of sales, and may be losing money because of the high initial cost of marketing, small volumes of production of the product and its untapped production properties. Stage of sales growth is characterized by rapid growth in sales, due to the recognition of the product by consumers, while increasing profitability, the relative share of the costs of marketing as usually falls, prices are constant or slightly falling. At the stage of maturity the sales growth slows down and even begins to fall, as the product has acquired the majority of potential customers, increasing competition; marketing costs usually increase may decline in prices, profits will stabilize or decline. With the upgrading of the product and / or market segments may extend this stage. The decline is manifested in a sharp decline in sales and profits. Modernization of the product, low prices, increased marketing expenses may only prolong this stage. Attention is drawn to the fact that the maximum profit comparing with maximum sales is displaced in the direction of the initial stages of the life cycle. This is due to an increase in costs to maintain sales in the later stages of the product life cycle.

The concept of life cycle is applicable to a class of product (mobile phone), the type of product (cordless), a specific brand of product (cordless telephone con – specifically the firm). The greatest practical interest has the study of the life cycle of a particular brand of product. The concept is also applied to such phenomena as style (clothes, furniture, art and other) and fashion. At different stages of the life cycle various marketing strategies are used.

THEME 5. DISTRIBUTION POLICY

Under the distribution in the marketing system one should understand the activities directly related to the physical movement of goods produced by the manufacturer to the consumer and providing the consumer the right to own goods.

Therefore, the main objective is to ensure the distribution of right products traffic at the right place at the right time, with the least possible costs. But how to ensure the most effective fulfillment of this goal.

The most appropriate solution of this problem is the selection of channel members who specialize in the implementation of various distribution functions and can provide high efficiency and effectiveness of the functioning of the channel distribution.

Distribution channel is the way in which goods move from producers to consumers. Thanks to it, long discontinuities in time, place and ownership are removed, separating products, services from those who would like to take advantage of them.

In all cases, the presence of channels of distribution must provide the fulfillment of a number of functions:

study of demand, supply and goods on the market;

the selection, sorting and the formation of the most acceptable to the buyer deliveries;

promotion of products on the market;

finalization of the goods in accordance with the needs of the market;

establishing and maintaining contacts with existing and potential customers;

funding for producers;

distribution of risk associated with the potential loss in delivery and sale of goods;

storage of goods in warehouses, delivery of goods to the places of sale;

the creation of user-friendly shopping environment.

All of these features are inherent in three common characteristics: they absorb the deficit resources, they can often be made better because of specialization, they can be performed by different channel members. If some of them are performed by the manufacturer, their costs are rising, respectively, and, therefore, the price should be higher. When some of the functions are transferred to middlemen costs and, consequently, producer prices are reduced. Intermediaries in this case have to charge an additional fee to cover their costs for the organization works.

However, they have one important rule: in the process of implementation of these functions, the new value is created, and all costs associated with their implementation further fall in the value of the goods is established, thereby increasing its price.

One of the key issues of bringing a product to the consumer is to switch between various types of product distribution channel, sometimes called a marketing channel. A channel of distribution is understood as a number of organizations or individuals involved in the process, making the products available for use or consumption by individual consumers or individual organizations, this is the way in which goods move from producer to consumer. Participants of channel distribution perform the following functions: collect and distribute brand information, stimulate sales, establish contacts, prepare the product under the requirements of consumers (sorting, assembly, packaging), conduct negotiations, transport and store products; finance the function of the channel, assume the risk for the operation of the channel.

Distribution channels can be characterized by the number of channel levels.

Channel Level is any intermediary that performs some work on the approximation of the other goods and rights of ownership to the end purchasers. The number of independent levels determines the length of the channel distribution. The simplest is a direct marketing channel, consisting of the manufacturer’s selling the product directly to the consumer.

Direct selling is implemented by traveling salesman directly to your home, in the offices of clients or on specially organized meetings at home with a group of potential buyers’ (e.g., neighbors, relatives).

Although the channel of direct marketing is the simplest, it is not necessarily the cheapest. In the case of a sufficiently diverse range of produced products, a large number of markets, geographical factors, economic expediency dictates the use of more complex species of distribution channels.

Contrary to popular opinion, the most difficult channels for certain of consumer product may be most effective. When several intermediaries can effectively perform specialized functions, the costs may be lower than in the case where a mediator is responsible for the implementation in many regions. From the point of view of the manufacturer’s, the longer the channel, the more difficult to control its functioning. In a corrupt mafia economy intermediate links in the distribution system can be a source of profit due to higher prices for consumers without creating anything valuable.

Distribution channels are the set of intermediaries who are involved in bringing the goods from the producer to the consumer. Characteristics of canals are the length and width.

Length is the number of intermediaries between the company and consumers; width is the number of intermediaries at each level. Channel width is the number of intermediaries, which are at the same level of the distribution channel.

The main functions of merchandise management are:

• setting goals and objectives of the distribution;

• management of the transportation and storage of goods;

• inventory management;

• analysis of the cost of merchandising.

The basic principles of movement of goods: the use of the shortest paths of movement of goods, the choice of optimal storage conditions; improving the processing chain of goods movement and storage, costs minimization of merchandising, increasing the quality of consumers and customers’ service.

During storage the following problems are solved: where and what types of storage are necessary (regional, local), which stores to use (private or public), what types of stores (automated, specialized, and universal) and of what capacity (large, medium, and small).

When transporting the problem of choice of transport and carrier route and type of transport is solved. The main modes of transport are rail, road, air, pipeline, river, sea.

When choosing a transport the following factors are taken into account: distance, availability of infrastructure, characteristics and quantity of the goods, costs, requirements of customers, etc.).

From an organizational point of view, conventional distribution channels, vertical marketing systems and horizontal marketing systems are released.

A vertical marketing system is the structure of the distribution of the channel in which producers, wholesalers and retailers act as a unified system.

Under the horizontal marketing system the agreement between several organizations of the same level of distribution channel joint actions is understood with the purpose of use in this emerging of new marketing opportunities.

THEME 6. PROMOTION POLICY

With the development of market relations marketing communications become crucial for any business, because to a large extent they determine the economic development and entrepreneurship.

Marketing communications (FOSSTIS, promotion policy, communications policy) are a process of exchange of information between the firm and other subjects of marketing activities for the purpose of improving the performance and activities of the company and its products. Marketing communication differ from communication in a general sense his goal-laziness. The information exchange process is due to a common global goal of view to promote the company and its products.

Promotion is any form of dissemination of messages that create customer loyalty to the company and the community, inform, exhort or reminiscent of its activities or products.

The objectives of marketing communications form a hierarchical system. The main objectives of this system are: the formation of demand and sales promotion.

All communication involves the exchange of signals between the transmitter and receiver using a system codec for recording and interpreting the signals. Figure 8 describes the process through its eight, elements: Transmitter, Coding, Channels, Decoding, Receiver, NOISE (Interference), Feedback, Response.

– Transmitter (individual or organization) is the source of the message;

– Coding is the conversion of ideas symbols, images, pictures, shapes, sounds, tongue and the like;

– Message is a set of symbols transmitted by the transmitter;

– Transmission channels are the means by which the signal is transmitted from the transmitter to the receiver;

– Decoding is the process by which the receiver assigns the meaning of the symbols received from the transmitter;

– Receiver is the target audience;

– Response is the set the receiver’s response after familiarization;

Interference is distortion (or barriers) that arise in the course of communications under the influence of the factors of the medium. Despite the fact that most of the noise is not able to block the communication process completely, they can cause a reduction of the effectiveness of advertising. Therefore, to compensate the effects of interference or reduce this impact, it is important to study them carefully.

The main means of communication, called «complex communication» are: advertising, personal selling, promotion of sales and public relations.

Advertising is a paid form of a one-sided mass communication, starting from a well-defined and sponsor serving as a direct or indirect support to existing companies.

Personal selling is a communication «to the measure of», personal-sided and two-sided (dialogue), in order to induce the client for immediate action, and simultaneously it is a source of information for the firm.

Sales promotion covers all temporal and local activities that complement advertising and personal selling. Its aim is the acceleration and expansion of sales of a particular product.

Public relations are aimed through targeted actions to create a psychological climate of understanding and mutual trust between the organization and its various audiences. Here the objective communication is not so much to sell, as to provide moral support for the action of the firm.

There are four traditional methods of budgeting promotion: assessment of opportunities, as a percentage of sales, compliance from its competitors, according to the goals and objectives.

The method of evaluation of options (the method of calculation «of cash») – the company allocates an amount based on the available opportunities for promotion of goods or services. This method ignores the impact of communications on the volume of sales. As a result of the budget from year to year remains uncertain, making it difficult to plan ahead a market activity.

The budget as a percentage of sales (the method of calculation «as a percentage of total sales») – the company calculates its budget or advance depending on the amount of sales or in % to the price of the goods. Car companies clearly take up in advance a certain percentage of the budget of the proposed price of autos.

The method of matching competitors (competitive parity method) means that the company sets the size of the budget of communications, focusing on competitors’ costs, and believing that it will keep its market segment. However, the resources, the objectives, the ability of firms are so different that the budget for the promotion of one of them is unlikely to meet the needs of the other.

The method aims and objectives (consistent with the aims and objectives) involves the development of the budget through the definition of the objectives of promotion, the tasks that need to be addressed to achieve them, and estimating costs. The amount of these expenses prepares the budget for promotion.

There are economic (trade) and psychological (communication) effectiveness of advertising.

Economic (commercial) advertising effectiveness is determined by measuring its impact on the development of trade. To understand if advertising is effective can be only in case if the increase in product sales occurs immediately after exposure of advertising. It is most likely in cases of advertising of new consumer goods.

The quality and consumer properties, price, appearance, location of trade enterprises, the level of culture of customer service, availability, analogical product or products effect on the sale of goods. To determine how advertising has influenced on the growth of trade, the firm analyzes operational and accountant data.

The effectiveness of advertising is determined by the economic result achieved by the application of an advertising campaign.

Communicative (psychological) effectiveness of advertising determines the effectiveness of ads, called «sampling texts», they can be used before and after ads publication or broadcast on TV and radio. Prior to placing ads advertiser can conduct a survey of consumers on whether they like the prospective ad and whether the treatment is allocated from the mass. After placing ads advertiser can carry out measurements to recall bridges advertising customers or its recognition as he had seen before.

Communicative effectiveness of the psychological effects of advertising on consumers can be determined by observations, experiments, and surveys.