Free Q&A Marketing Management Essay Sample

Seasonal discounts are discounts that are offered by the seller to the buyers during certain times only. The discounts are therefore periodic and last for a short time. They are used by the seller to boost sales since customers will but more now. Seasonal discounts are also offered on goods that are slow moving during certain times in the course of the year. The discounts serve to encourage customers to buy more. Commodities that are weather dependant are mostly affected by these discounts. Traders sell these goods during certain times for instance during the rainy season, gumboots are sold more. When the rain stops however, the seller has to try his best to provide the seasonal discounts so that the gumboots sell faster.

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Quantity discounts are discounts that are offered to customers depending on the quantity bought. Higher quantity discounts are offered to traders who buy more while fewer discounts are offered to buyers who purchase less. This type of discount is offered to encourage bulk buying. It is also the basis of the economies of scale whereby traders who buy more goods are given greater discounts. A trader who buys one thousand bags of cement is likely to a greater quantity discount than o ne who sells fewer bags.

The value of trade fairs refers to the significance attached to having trade fairs. Trade fairs are occasions when goods are displayed to customers for viewing and buying. During trade fairs, traders are allowed to explain what they offer to sellers and the price at which they do this. Trade fairs help companies as they try to market their products. This is because at this time, the seller is able to meet the customer face to face. Demonstrations can also be done now and as such customers are convinced to buy.

The demand of a commodity affects its pricing. When the demand for commodities is very high, there is likelihood that the cost of that commodity will also be high. This is because the demand curve which slopes from left to right will meet the supply curve at a higher price level. The manufacturers also take the increased demand to their advantage and may increase the profit margin.

The supply of commodities also affects its pricing. When supply of commodities is high the price is likely to go down. This is because each of the sellers will be competing to supply goods at low prices to counter the competitor. This will be the same for each seller thus the price of the commodities will go down.

The profit margin also influences prices. When a high mark up or margin is set on the cost of sales and the sales level respectively, this affects the price of the commodity. The commodity is likely to cost more. When a low profit margin is required however, the commodity costs less. The margin refers to the ratio of profits to the sales level. The figure of margin is therefore greatly dependant on the level of sales. If the profit margin increases the sales figure must go up to maintain the same margin. This means increased costs of commodities.

The cost of production also influences pricing. When the production costs are high, this is passed on to the final consumer so he or she has to pay highly for the same. When the costs of production are low however, the commodity will cost less. The profits of a product are set on the costs of production pus the costs of operation. The added cost on this reflects the profit margin. This is the reason why most companies focus on reducing costs of operation as much as possible. In so doing, the companies not only maximize profits but also take care of the final consumer who pays less for the products.

 The product, price, place, promotion, physical layout, provision of customer service and processes are what the 7ps stand for. This is important in a market situation that is competitive and that has many players. The seller must focus on all of these if beating his or her competitor is anything to go by. The Toyota Company competes with several other companies like Mercedes, Nissan, Mitsubishi and many others. It must therefore put into consideration each of the P’s stated above to stand tall in the presence of all these competitors.

The product - Companies must focus on quality of products as well as their safety. This means that the company must produce products that meet customer needs. The customers must be satisfied that the goods they are having are quality in that they will meet their needs. Customers must be in a position to satisfy the wants they have.

Place- the products must be placed in the market that is relevant to ensure that customers buy them accordingly. The most convenient market should be selected such that customers buy goods as much as possible.

Promotion - It is important for all companies to advertise the products they are having. The business must engage in extensive marketing for the same.

Physical layout - the business must be laid out in such as way that is attractive to customers. The fronts and method of partition must be attractive also.

Provision of service - The services offered to customers must be such as to meet their needs. The services offered must also be high quality services such that all customers will not complain.

Processes- Customers must ensure good pass the required processes so that they become quality finished products. Customers must be such as to be satisfied at the end of it all.

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 Premium Pricing - This refers to the process of keeping the prices of commodities high to form a favorable perception among buyers. Customers usually associate expensive products with high quality. A seller may decide to set the price of leather shoes way above the costs of production. He does this to take advantage of people’s psychology. Consumers know that leather is quality and will therefore invest a large amount of money to purchase the pair of shoes. They will not go for alternative material.

Price Skimming - A marketer sets a high costs at first for his products. This is so until he recovers his sunk costs and before competition starts stepping in. After this, he or she lowers the price of commodities considerably. The sunk costs are the costs that the business person incurred while starting the business. It would be his or her wish to retrieve this amount within the shortest time possible. This is the breakeven point where the revenue equals to the costs of operation. The business person must take advantage and maximize profits during the initial stages. Price skimming is also applied by sellers to have customers’ preference later on. This is because customers will first associate the product with high quality and thus when prices reduce they will want to buy more from the seller

Mark-up pricing - Mark up refers to the ratio of profits to the cost of sales. The higher the profits, the higher the mark up.  The marketer will therefore set his price depending on the cost of sales. A constant percentage is thus added by the seller to the cost of sales to come up with the selling price. A greater percentage means greater burden to the consumer in terms of the selling price. A less percentage however implies that the consumer will actually pay less for the goods and services.

There are several factors that one has to consider in selecting a distribution channel. A distribution channel refers to the route that goods and services follow before reaching the final consumer.  The channels may be of different types depending on the factors discussed below.

One has to consider the nature of the commodity in selecting a distribution channel. The nature of the commodity is in relation to its bulkiness. A bulky commodity will have to follow a very short process since it is cumbersome while transporting. It is therefore advisable that the manufacturer supplies directly to the final consumer or involves just one middleman for it to reach the final consumer.

The nature of the market is also very important. A market that has several middlemen like wholesalers and retailers is convenient for a long distribution channel. Otherwise, where there are few middlemen, the channel of distribution has to be small enough to avoid time wastage. A market that is located within a small area involves the use of direct selling. This is because it is very easy to get to the final consumer

The nature of business is also a factor to consider. Manufacturers who are financially stable can do direct selling since they have the financial resources required for the process to be effected. This is because the money is required to cater for transport requirements now.

The cost of distribution must also be considered at this point. Very short channels in involve costs of storage and distribution to the final consumer. This is for instance in the case of direct selling. Direct selling involves the distribution of goods directly to the final consumer without involving intermediaries.

Availability of storage facilities must also be considered. Manufacturers who choose to supply commodities directly to the final consumer must take into account the storage of commodities. A warehouse is important in this case for storing goods before they are transported to the final consumer. The middlemen may offset these cots.

The channel of distribution must also be reliable. Reliable channels of distribution are required by the manufacturer if he has to consider incorporating middlemen. This is because the middlemen will always report to the manufacturer on the demand in the market. They are in direct contact with the consumer and can therefore be relied upon. A long distribution channel, if reliable will have a positive effect on the business image.

Availability of middlemen is also important for consideration. This is because the middlemen are to be relied upon to complete the process of distribution. A long channel is preferred when they are present. If middlemen are not present however, a shorter distribution channel that may go ahead to call for direct selling will be necessary.

The value of the commodity must also be put into consideration. Commodities that are highly valuable are risky to transport and require very tight security to transport. It would be advisable if the manufacturer supplied the commodities directly to the final consumer without going through several shortcuts. Commodities that are fragile also require a short channel such as direct selling because handling them requires a lot of caution. Very long channels of distribution may cause the goods to break easily.

The intention to control prices of commodities. A short distribution channel is required if the producer wants to control the prices of commodities. This is because when a long distribution chain is involved, commodities are likely to become a bit expensive. Each and every middleman will intend to maximize profits and this may be punitive to the final consumer who will have to pay a lot for the commodities. The commodities will also not have a stable price and this might cause low demand since consumers will be forced to rely on competitors who offer goods at cheaper prices.


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