Chapter 14 - Types of Market

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Chapter 14Chapter 14

TYPES OF MARKETTYPES OF MARKET

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1. Definitions1. Definitions

Fast Moving Consumer Goods (FMCGs)Fast Moving Consumer Goods (FMCGs)

yy

Are the goods which are bought relatively frequently,at low cost, for immediate consumption.

yy With high reliance on re- purchase.

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2. Consumer Markets2. Consumer Markets

2.1 Fast Moving Consumer Goods (FMCGs)2.1 Fast Moving Consumer Goods (FMCGs)

Features:Features:

yy GGoods or services which are bought relativelyoods or services which are bought relatively

frequently e.g. daily newspaperfrequently e.g. daily newspaperyy Low price and low risk purchasesLow price and low risk purchases

yy Impulse purchase such as a chocolate bar or check outImpulse purchase such as a chocolate bar or check out

countercounter

yy Basic items such as bread and teaBasic items such as bread and tea

yy Minimal purchase effort to satisfy basic needs, soMinimal purchase effort to satisfy basic needs, so

they will readily accept alternative brands.they will readily accept alternative brands.

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2. Consumer Goods2. Consumer Goods

2.2. Consumer goods2.2. Consumer goods

Consumer goods may be classified as follows:Consumer goods may be classified as follows:

yy Convenience goods e.g. weekly groceriesConvenience goods e.g. weekly groceries

yy Shopping goods e.g. furniture or washing machinesShopping goods e.g. furniture or washing machines

yy Specialty goods e.g.Specialty goods e.g. jewelleryjewellery or more expensiveor more expensive

items of clothingitems of clothing

yy Unsought goods e.g. items that are found inUnsought goods e.g. items that are found in

catalogues that arrive in the post (goods you did notcatalogues that arrive in the post (goods you did not

realize you needed)realize you needed)

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2. Consumer Markets2. Consumer Markets

2.3.2.3. NonNon--personal promotion and personal sellingpersonal promotion and personal selling

There is a general relationship between nonThere is a general relationship between non--personal promotion and personal selling acrosspersonal promotion and personal selling across

the classes of products which is demonstrated inthe classes of products which is demonstrated in

the course book model.the course book model.

Refer to page 378 for detailsRefer to page 378 for details

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2.3.2.3. NonNon--personal promotion and personal sellingpersonal promotion and personal selling

Level of

promotion

Non-personal promotion

Media advertising

Sales promotion

PR

Direct marketing

Wholesale and distributor selling

PR

Media advertising

Personal selling

FMCG Consumer

durables

Industrial

consumables

Industrial

durables

Classes of product6


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3. Business to Business Marketing3. Business to Business Marketing

3.1 Classifications3.1 Classifications

B2B used to be known as the industrial goods market. They may be classified asB2B used to be known as the industrial goods market. They may be classified asfollows:follows:

(a)(a) Capital goodsCapital goods such as factor assembly line(b)(b) AccessoriesAccessories such as PCs

(c)(c) Raw materialsRaw materials such as plastics, metal, wood, foodstuffs, chemicalssuch as plastics, metal, wood, foodstuffs, chemicalsand so on.and so on.

(d)(d) ComponentsComponents such as headlights in Ford cars or the Intel microchip inmost PCs

(e)(e) SuppliesSupplies such as office stationery, cleaning materials and the like

(f)(f) Business servicesBusiness services such as facilities management or consultancy

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3.1 Classifications3.1 Classifications

Special attributes of buyingSpecial attributes of buying behaviourbehaviour::

(a) Buyers are not spending their own money

(b) The buying decision making unit (DMU) may involve manypeople.

(c) Decision making may take a long time.

(d) The customer base is often small and easy to identify.

(e) Average order values and quantities are higher than inconsumer markets.

(f) Personal contacts and relationships are often a key part ofthe buying decision.

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3.2 Products3.2 Products

Industrial products are distinctive:

Conformity with standardsConformity with standards

Technical sophisticationTechnical sophistication

High unit valuesHigh unit values

Irregularity of purchaseIrregularity of purchase

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3.3 Characteristics of industrial markets3.3 Characteristics of industrial markets

Three kinds of economic activities have been defined:

Primary or extractive industriesPrimary or extractive industries e.g. agriculture, fishing,mining and forestry

Secondary or manufacturing industriesSecondary or manufacturing industries includemanufacturing and construction

The tertiary sectorThe tertiary sector include the service industries

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3.4 Marketing for the industrial sector3.4 Marketing for the industrial sector

Well coordinated activity, around a common, market-

oriented mission. Marketing management can:Act as catalysis within the firmsAct as catalysis within the firms

Inform technical management about marketInform technical management about market

trendstrends

Monitor competitive activityMonitor competitive activity

Inform corporate planning decisionsInform corporate planning decisions

Direct R&DDirect R&D

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(Contd.)

They are not simply concerned with customers, but in linking and

coordinating various activities within the firm.

Special practices

Reciprocal tradingReciprocal trading

Joint venturesJoint ventures

ConsortiumsConsortiums

Project managementProject management

Turnkey operationsTurnkey operations

LicensingLicensing

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3.5 Target marketing3.5 Target marketing

Be easier to identify than

consumer market segments

because more data isdata is

readily availablereadily available

Information is published in

government statistics

Distribution statistics (such as

giving turnover and number

of establishments)

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3.5 Target marketing3.5 Target marketing

Product

Elements of service

Pre-sales service: technicaladvice, quotations,

opportunities to see products

in action and free trials.

After-sales service: JIT

delivery, service andmaintenance and guarantees.

Be custom-built

Be tested to laid down

conditions

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Industrial marketing mix differs from the marketing mix for consumer

products. Industrial products:

are not packaged for resaleare not packaged for resale

prices tend to be negotiated with the buyerprices tend to be negotiated with the buyer

distribution tends to be more directdistribution tends to be more direct

promotional mix tend to restrict advertising to trade magazinespromotional mix tend to restrict advertising to trade magazines

much more reliance is placed on personal selling.much more reliance is placed on personal selling.

Use exhibitions and demonstrations to quite a high degreeUse exhibitions and demonstrations to quite a high degree

when promotion their products.when promotion their products.


3.6 Marketing mix differences3.6 Marketing mix differences

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ProductProducty Pre-sales services may involve technical advice, quotations,

opportunities to see products in action and free trials

y After-sales service will include just-in-time delivery, service and

maintenance and guarantees.

y products will also be custom-built to a much greater degree than

for consumer marketing mixes

yPacking will be for protection rather than for self-service.



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PricePrice

Be a function of buyer specification

Negotiable



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Marketing mix differences (contd)

Promotion

Personal selling is very important in business to business

marketing.

Partnership approach

Types of media, direct mail

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Marketing mix differences (contd)

Place (distribution)

Business to business channels:

Manufacturer business buyer

Manufacturer Agents Business buyer Manufacturer Business distributor Business buyer

Manufacturer Agents Business distributor Business buyer

On-time delivery can be an extremely important

requirement in industrial markets

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AreaArea BusinessBusiness--toto--business marketingbusiness marketing Consumer marketingConsumer marketing

1 Purchase motivation Multiple buying influences

Support company operations

Individuals or family need

2 Nature of demand Derived or joint demand Primary demand

3 Emphasis of seller Economic needs Immediate satisfaction

4 Customer needs Each customer has different needs Groups with similar needs

5 Nature of buyer Group decisions Purchase by individual or

family unit

6 Time effects Long-term relationships Short-term relationships

7 Product details Technically sophisticated Lower technical content

8 Promotion decisions Emphasis on personal selling Emphasis on mass media

advertising

9 Price decisions Price negotiated Price substantially fixed

10 Place decisions Limited number of large buyers, short

channels

Large number of small

buyers

Complex channels

11 Customer service Critical to success Less important

12 Legal factors Contractual arrangements Contracts only on major

purchases

13 Environmental factors Affect sales both directly and indirectly Affect demand directly

Differences between b2b and consumer marketing

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Definition:Definition:

A not for profit (NFP) organization can be defined asan organization whose attainment of its prime goalis not assessed by economic measurements (BPP,2004,pg.387)

Or

NFP organization conducted by organizations andindividuals that operate in the public interest or that

foster a cause and do not seek financial profits.(udel.edu, accessed 2009)

e.g.: charities, statutory bodies offering publictransport, hospital, university etc

4. Charity and Not4. Charity and Not--ForFor--Profit MarketingProfit Marketing

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4.2 Objectives of NFP marketing

NFP marketing initiatives are aimed at achieving a

particular response from target markets (e.g.

donors, volunteers) rather than achieving a profit

objective.

NFP often deal more with services and ideas more

than products. e.g. educational services, health

services

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Requirements of NFP organization

NFP organization need to be open and honest

about allocation of funds raised

Efficiency and effectiveness in the use of donated

funds

Maintain good relationships with donors and

volunteers from the general public.

Lobby local and national government and businessfor their support.

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4.3 Marketing mix issues in NFP

The role of extended marketing mix (people, process,

and physical evidence ) is very important in NFP

organizations in which:

Appearance: need to be business like rather than

extravagant

Process : is increasingly important

People : need to offer good service and be caring

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Marketing mix issues in NFP contd

Distribution channel: often shorter with fewer

intermediaries than in the profit marketing sector

Promotion: is usually dominated by personal selling,

direct marketing is growing while advertising islimited

Pricing: financial price is not a relevant concept,

while opportunity cost is more relevant

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Marketing mix issues in NFP cont

Statistics that use to judge whether non-quantitative

objectives have been met may be related to:

Product mix

Financial resources Size of budgets

Number of employees

Number of volunteers

Number of customer services

Number and location of facilities

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yy GoGovernvernment marketsment marketsyy Reseller marketsReseller markets

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4. Charity and Not4. Charity and Not--ForFor--Profit MarketingProfit Marketing


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5.1 Government markets

The governmentoffers a huge opportunities for manycompanies

Most of that companies rely on the government marketMost of that companies rely on the government market

for a large portion of their salesfor a large portion of their sales Defence contractors are key example, but governments

also buy for schools, highways, hospitals, housing andinformation technology projects

Example: A hospital purchaser of food has to search fora vendor whose food meets minimum quality standards,but whose prices are low.

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Like consumer and industrial buyers, government buyers areaffected by environmental and other factors

Unique influence: Scrutinised by outside observers

Government buyers are accountable to the public

The seller must identify key decision makers and understandthe buyer decision process

Total government spending is generally determined by budgetconsiderations

With product specifications being carefully set out,differentiation is not a marketing factor.

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5.2 Reseller markets

Definition:

The reseller market is all the individuals andorganisations that resell or rent bought-in goods

to others. TheyThey areare essentiallyessentially purchasingpurchasingagentsagents forfor theirtheir ownown customerscustomers.. Most goodthat are produced pass through some kind ofreseller, such as a retailer or supermarket

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Reseller buyer behaviour:

Rather similar industrial buyer behaviour

Buy products and brands that they think willappeal to customers

This affects what suppliers they choose, and theprice they are prepared to pay

Buying is a specialised function in organisationssuch as supermarkets

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Factors:

Anticipated resale price and margin

Appeal of the product to the customer

Proposed marketing plan and advertisingsupport

Reputation of the selling company

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Chapter 14 - Types of Market

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