CHAPTER 2
CHAPTER 2 PRODUCT IN THEORY AND PRACTICEWHAT IS PRODUCT?Is the object the exchange process, the thing which the producer or supplier offers to a potential customer in exchange for something else which the supplier perceives as of equivalent or a greater value.THREE BROAD CATEGORIES OF DEMAND EFFECTIVEPOTENTIALLATENTEFFECTIVE DEMANDIs the kind of demand in which economist are primarily interested and my be defined as demand backed up by purchasing power
LATENT DEMANDMay be thought of as one which the consumer is unable to satisfy, usually for lack of purchasing power POTENTIAL DEMANDMay be said to exist where a consumer possesses purchasing power but not currently buying.
ASSUMPTION ABOUT COSTUMER DEMAND The costumers wants remain unchanged throughout
S/he has fixed the amount of money available
S/he one of many buyers
S/he knows the price of all goods, each of which is homogeneous
S/he can, if s/he wishes spend their money in very small amount
S/he acts rationallyTHREE BROAD FACTORS HAVE GENERAL INFLUENCE ON DEMANDDEMOGRAPICSBUYER BEHAVIORAVAILABILITYCLASSIFICATION OF CONSUMER GOODSCOVENIENCE GOODS Those consumer goods which the customer purchases frequently, immediately and with the minimum of effort e.g. chocolate, pens, shoe repair.
SHOPPING GOODS Those consumer goods which the costumer in the process of selection and purchase characteristically compares on such bases as suitability, quality, price and style, e.g. cosmetics, TVs hairstyle. SPECIALITY GOODS Those consumer good on which a significant group of buyers are habitually willing to make a special purchasing effort, e.g. house, car, holiday
FOUR SPECIFIC PROBLEMEx post definition and circular logic : Product are classified ex post and classification theory gives no hint about how to classify new products or how to change existing product.
The problem of induction : Experiences with similar or existing products give few guides to appropriate or optimum strategy
Fussy sets : Product classification of the same product differs according to the nature of the consumer and at different times for the same consumer
Generalizability of scheme : Application of a classification scheme requires the specification of all physical market and social context.THE GROWTH OF BRANDING MAY BE ATTRIBUTED TO MANY FACTORS INCLUDING : The growth of mass production and consumption Improved transportation and communicationAdvance in packagingIncreased literacy and the growth of advertising
New types of retail outletImproved standards of livingThe development of laws to protect trademarksBRAND BUILDING IS SEEN ESSENTIAL TO : Build stable , long term demand Add the value looked for by customerDevelop a sound basis for future growth and expansionMaintain the interest of intermediaries, specially retailersCreate a reputation as an organization that people will want to develop relationships with.SEVERAL IMPORTANT POINTS IN BRANDINGBrand can take many forms and are not just namesBrand are not restricted to physical productsMost importantly, successful brands confer a sustainable competitive advantage the corollary being that unsuccessful brands have precisely the opposite effect.CHARACTERISTICS OF A BRAND NAMEA form of identification or badge of originA promise of a certain level of consistency in performanceReassurance as to the authenticity and authenticity and performance of the productAn indicator of the essential properties or attributes of the product. THE GLOBAL TOP TEN BRAND NAMES /SOURCE BUSINESS WEEK 1.Coca -Cola6. Nokia2. Microsoft7. Disney3. IBM8.McDonalds4.GE9. Toyota 5.Intel10. MarlboroCHARACTERISTICS OF A PRODUCTRELATIVE ADVANTAGECOMPATIBILITYCOMPLEXITYDIVISIBILITYCOMMUNICABILITYTHE BUYGRID ANALYTIC FRAMEWORK BUY CLASSESNEW TASKMODIFIED REBUYSTRAIGHT REBUYTHE BUYGRID ANALYTIC FRAMEWORK FOR INDUSTRIAL BUYING SITUATIONSANTICIPATION OR RECOGNATION OF A PROBLEM ( NEED) AND A GENERAL SOLUTION 2 .DETERMANATION OF CHARACTERISTICS AND QUALITY OF A NEEDED ITEM3. DESCRIPTION OF CHARACTHERITICS AND QUANTITY OF A NEEDED ITEM4. SEARCH FOR AND QUALIFICATION OF POTENTIAL SOURCES
5. ACQUISITION AND ANALYSIS OF PROPOSAL6. EVALUATION PROPOSALS AND SELECTION OF SUPPLIERS7. SELECTION OF ORDER ROUTINE8. PERFORMANCE FEEDBACK AND EVALUATION
