Lecture 14 - Types of Market

8/6/2019 Lecture 14 - Types of Market

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Chapter 14:

TYPES OF MARKET


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I. Definitions


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Fast Moving Consumer Goods

(F

MCGs) Are the goods which are bought relatively

frequently, at low cost, for immediate

consumption.

With high reliance on re- purchase.


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Consumer durables

Are complex, purchase in frequently at

relatively high cost and are expected to

last a long time.

Buying behavior: extensive searching,

product comparison and reliance on new

information.


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Industrial consumable

Are product which are used up in the

manufacture of goods.

But do not become an integral part of them Products have: very low purchase

importance, poorly differentiation, are

often unbranded, rely heavily on good

distribution services.


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Industrial durables

Are product which are normally high

capital cost, complex and high technical.

There is low frequency of purchase which

requires high level approval and very often

protracted negotiation.


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Business- to- Business (B-to-B)

Refer to all business activities which are

directed primarily at non- domestic market.

Including product for industry, commerce,

trade, distribution, professional outlets and

individuals in such business.


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II. Consumer markets

Fast-moving consumer goods (FMCGs)

Consumer goods

Non-personal and personal selling1


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Fast- moving consumer goods (FMCGs)

This market has the following features

-The goods that they are tangible products or

intangible services are bought frequently

-Low priced therefore are low risk purchases

-These goods are the subject of an impulse

purchases

-Many of the goods in this category are basicitems

-Purchases will tend to make a minimal effort

to satisfy the basic needs that FMCGs meet.


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Consumer goods

Definition of consumer goods:

are bought from retail stores for

personal, family, or household use Consumer goods are known as industrial

goods


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Consumer goods may be classified

some elements

- Convenience goods

-Shopping goods

-Specialty goods

-Unsought goods


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Convenience goods

are items that buyers wan to

buy with the least amount of effort.

Most are nondurable goods of

low value.

Since convenience goods are notactually sought out by consumers,

producers attempt to get as wide a

distribution as possible through

wholesalers.

There are two subcategories:Staple items

Impulse items


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Convenience goods contd

Staple convenience goods are

basic items that buyers plan to buy

before they enter a store.

Eg: milk, bread, and toilet paper.

Impulse convenience goods are

purchased without prior planning.

Eg: candy bars, soft drinks, and

tabloid newspapers.


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Shopping Goods

are purchased only after the buyer

compares the products of more than one

store or looks at more than one assortment

of goods before making a deliberate buying

decision.

These goods are usually of higher value,bought infrequently, and are durable.

Price, quality, style, and color are typically

factors in the buying decision.

For example: televisions, computers,

lawnmowers, bedding, and camping

equipment.

Marketing strategies include the heavy

use of advertising in local media such as

newspapers, radio, and television.


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Specialty Goods

are items that are unique or

unusual at least in the mind of

the buyer.

Producers and distributorsprefer to place their goods only in

selected retail outlets which have

ability to provide a high level of

advertising and personal selling.

For example: wedding dresses,

antiques, fine jewelry, golf clubs


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Unsought goods

These are goods that buyers

did not realize they needed.

For example: cemetery plots,

life insurance.


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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

Industrialconsumables

Industrialdurables

Classes of product

Non-personal promotion and personal selling


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III. Business to business

marketing

Business-to-business used to be

known as the industrial goods market


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Classification

Industrial goods may be classified:

Capital goods

Accessories Raw material

Components

Supplies Business services

microchip


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Products

Industrial products are distinctive:

Conformity with standards

Technical sophistication High unit values

Irregularity of purchase


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Characteristics of industrial

markets

Primary or extractive industries

Secondary or manufacturing industries The tertiary sector includes the service

industries


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Marketing for the industrial

sector The marketing manager within the

organisation:

Act as catalysis within the firms

Inform technical management about market trends

Monitor competitive activity

Inform corporate planning decisions

Direct R&D


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(Contd.)

Special practicesReciprocal trading

Joint ventures

Consortiums

Project management

Turnkey operations

Licensing


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Target marketing

Be easier to identify

than consumer

market segmentsbecause more data is

readily available

Information is

published in

government statistics

Distribution statistics


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Marketing mix differences

ProductElements of service

Pre-sales service:

technical advice,quotations, opportunitiesto see products in actionand free trials.

After-sales service: JIT

delivery, service andmaintenance andguarantees.

Be custom-built

Be tested to laid down

conditions


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(contd)Price

Be a function of buyer specificationBe negotiable


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(contd)Promotion

Personal selling is very important in business to

business marketing.

Partnership approach

Types of media, direct mail


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(contd)Place (distribution)

Business to business channels:

Manufacturer business buyer

Manufacturer Agents Business buyerManufacturer 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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Area Business-to-business marketing Consumer 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


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IV. Charity and

Not-for-profit marketing


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Definition

A not for profit (NFP) organization can bedefined as an organization whose attainment ofits prime goal is not assessed by economicmeasurements (BPP,2004,pg.387)

Or NFP organization conducted by organizations

and individuals that operate in the public interestor that foster a cause and do not seek financial

profits. (udel.edu, accessed 2009) e.g.: charities, statutory bodies offering publictransport, hospital, university etc


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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 ofdonated funds

Maintain good relationships with donors

and volunteers from the general public.

Lobby local and national government and

business for their support.


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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 cont

Distribution channel: often shorter withfewer intermediaries than in the profitmarketing sector

Promotion: is usually dominated bypersonal selling, direct marketing isgrowing while advertising is limited

Pricing: financial price is not a relevantconcept, while opportunity cost is morerelevant


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Marketing mix issues in NFP cont

Statistics that use to judge whether non-quantitative objectives have been met may berelated 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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V. Other markets

Govenrnment markets

Reseller markets


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Government markets

The government offers a huge opportunities for many

companies

Most of that companies rely on the government market

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

also buy for schools, highways, hospitals, housing and

information technology projects

Example: A hospital purchaser of food has to search for

a vendor whose food meets minimum quality standards,

but whose prices are low.


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Like consumer and industrial buyers,government buyers are

affected 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 understand

the buyer decision process

Total government spending is generally determined by budget

considerations

With product specifications being carefully set out,

differentiation is not a marketing factor.


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Reseller markets

Definition:

The reseller market is all the individuals and

organisations that resell or rent bought-in goods

to others. They are essentially purchasingagents for their own customers. Most good that

are produced pass through some kind of

reseller, 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 will

appeal to customers

This affects what suppliers they choose, and the

price 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 advertising

support

Reputation of the selling company

Lecture 14 - Types of Market

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