Market structure

Consider the selection of a family car. The initial suggestion might come from the oldest child — he or she would be the initiator; a friend or colleague might advise the family on the kind of car to buy — he or she would be the influencer; the husband could be the one to choose the make while the wife might have a definite opinion regarding the car's style — they would be the deciders; the husband may well be the one actually to buy — the buyer; the wife might end up using the car more than her husband — she'd be the user.

A company needs to identify who occupies these roles because they affect product design and advertising message decisions. The car manufacturer in this case might be wise to include all the above participants in an advertisement.

The more complex buying decisions are likely to involve more buying participants and more buyer deliberation. There are three types of buying behaviour.

Routine response behaviour occurs when consumers buy low-cost, frequently purchased items. They know a lot about the product class and major brands and they have fairly clear brand preference. The goods in this class are often called Low-involvement goods. A household detergent would fall into this category. Marketers of products that consumers buy routinely have two tasks. First, they must satisfy current customers by maintaining consistent quality, service and value. Second, they must try to attract new buyers — break them out of the routine of buying competing products — by introducing new features and using point-of-purchase displays and price discounts.

Buying is more complex when buyers confront an unfamiliar brand in a familiar product class. Limited problem-solving is involved when the consumer is fully aware of the product class but is not familiar with all the brands and their features. Buying a tennis racket might fall into this bracket. Marketers must design a communication programme that will help buyers understand the company's brand and give them confidence in it.

Sometimes buyers face complex buying decisions for more expensive, less frequently purchased products in a less familiar product class in these situations, buyers use extensive problem-solving to find out about the product class and the brands available. Buying a new stereo system might fall into this category. Marketers of products in this class need to help buyers learn about important buying criteria and persuade them that their brands rate high in terms of important features and benefits.

 

CONSUMER RIGHTS (Защита прав потребителей)

 

In their role as consumers, ordinary EU citizens are key players in the Union’s new frontier-free single market. The Union has in fact incorporated as the basis of its consumer policy the protection of the five fundamental rights which lie at the heart of national policies. These are:

• The protection of consumers’ health and safety.

Only products, which will not endanger health or safety, may be put on the market. This means setting safety requirements providing full information about potential risks, protecting consumers against physical injury.

• The protection of consumers’ economic interests.

There is for example a general ban on misleading advertising and unfair terms in contracts with consumers.

• Consumer rights to information and education.

Consumers need to be put in a position where they can make an informed choice among goods and services offered. This includes objective information on the features and price of the items available. Consumers also require proper information about their efficient and safe use.

• The right to redress.

Consumers have the right to receive advice and help when seeking redress for faulty products or for injury or damage resulting from the use of goods and services. There need to be simple, affordable and rapid procedures for settling complaints and claims.

• Consumer representation and participation.

Representatives of consumers need to be present in decision-taking procedures on issues of concern to them at local, national or EU level. At Union level, this covers not only specific consumer issues but also other relevant policy areas like food laws, transport, competition policy, financial services, environment and the like.

When the Union adopted its first consumer program in 1975, it focused on the practical application of the five principles. As a first result, a number of directives were adopted over the next 10 years covering among other things the safety of cosmetic products, the labelling of foodstuff, misleading advertising, consumer rights in door-step selling, product liability and the provision of consumer credit.

 

DISTRIBUTION AND SALES

Words and Expressions

buy retail – покупать в розницу

buy wholesale – покупать оптом, осуществлять оптовые закупки

commission – комиссионное вознаграждение

customer facilities – сервисное обслуживание потребителей

customer services – выполнение заявок клиентов

direct selling – продажа без посредников

distribution – распределение, распространение

distribution channels – каналы распределения

distribution costs – издержки обращения

distribution network – распределительная сеть, сеть распространения

diverse – многообразный, разнообразный, разнотипный

diversity – разнообразие; многообразие; разнородность

household products – хозяйственные товары

link – (связующее) звено; звено цепи, связь

lorry – грузовой автомобиль, грузовик

mass-produce – вести массовое производство

perishable – скоропортящийся

perishables – скоропортящийся товар/груз

Public Relations – связь с общественностью (пресса, потребители, клиенты и т.д.)

retail – розничная продажа , розничный торговец

retail buying – покупка товаров в розницу

retail buyer n retail chains – розничные магазины, принадлежащие одной компании

retail outlet – розничная торговая точка

retailer n = retail dealer – розничный торговец

retailer – розничный, продающий в розницу

sales force – продавцы, работники торговых предприятий, торговые агенты

sell goods wholesale – продавать товары оптом

sell retail и – продавать в розницу

storage – хранение, база, склад, хранилище

storage costs – складские издержки

trade fair – ярмарка

warehouse – товарный склад

warehouse – помещать в склад; хранить на складе

wholesale – оптовый

wholesale n = wholesale business – оптовая торговля

wholesaler – wholesale dealer – оптовый торговец оптовик

 

The term "distribution" is not confined to the physical distribution of goods from the producer to the consumer, e.g. road and rail transport. In the business context it also refers to the distribution channels, i.e. the sort of retail outlets that the goods and services are sold in.

Many industrial products and services are sold directly to the consumer or user, e.g. aircraft and lathes. Most consumer products are usually distributed through retail organizations. By tradition many manufacturers sell their products to a wholesaler who warehouses the goods until they are required by the retailer. This so-called full chain of distribution offers advantages to both the manufacturer and retailer. The manufacturer can mass-produce the goods, get the money for the goods straight away, and does not have to worry about storage and distribution costs. The retailer can order goods from the wholesaler and does not-have to worry about holding large stocks. The full chain of distribution has disadvantages for the manufacturer and the retailer. The wholesaler does not have any particular incentive to promote the sale of the manufacturer's goods, and the retailer will have to pay a higher price for the goods from the wholesaler than if they were bought directly from the manufacturer. Some industries have cut the "middle-man" (wholesaler), and the manufacturer sells directly to the retailer. In other industries the wholesaler may sell the goods directly to the customer and no retailer is involved. Finally, the manufacturer may sell directly to the customer without a wholesaler or retailer being involved.

Full Chain of Distribution

This tends to be used when the producer makes a limited range of products, storage costs are high and the product is perishable.

No Wholesaler

The wholesaler is eliminated in industries where the producer makes a number of standard products that it sells to similar kinds of retail outlets. Frozen-food firms and large bakeries tend to have their own distribution network and their own fleet of delivery lorries.

No Retailer

There has been a growth in the case of wholesalers, which sell directly to the general public. These large discount stores sell furniture and other household products in warehouse-style buildings with relatively poor customer facilities. Mail order companies such as Great Universal Stores, where local selling agents run a catalogue for orders, are a good example of distribution without a retailer. These local agents work on a commission basis and deal with the ordering of goods and the means of payment.

Direct Selling

Direct selling to the customer is typically found in the sale of services, e.g. insurance and double glazing. In the case of industrial products such as chemicals and manufacturing machines, firms generally employ a full-time sales force to try and sell products to other firms. Such sales teams may be organized on a regional basis, with specific areas of the country to cover, e.g. North West, East Midlands and South Wales. The sales team is a very important part of the marketing function. Although its major role is to sell the company's product, it may also be source of important market research information, e.g. salesmen can find out customers' reactions to products and can find out their future requirements. They can also find out what competitors are doing and supply this information back to the company. The sales team may also be the first link that a customer has with the company, and so the presentation of a good image may be important.

Retail Outlets

There are various retail outlets through which manufacturer can decide to sell a product. In 1984, it was estimated that there were 343,153 retail outlets controlled by 230,787 organizations – which indicates that the vast majority are "one-shop" operation.

Organizing the Sales Force

When deciding the problem how sales effort is to be organized three main approaches may be used:

1. Organize geographically. Consequently, there may be a Midwest, a Southern, a New England, and a West Coast district or region. Most firms organize in this way.
2. Organize by product. When a firm has diverse products that require specialized technical or applications knowledge, it may be necessary to organize the sales force according to major product categories.
3. Organize by customer. Where a firm faces rather diverse types of customers, organizing by major customer categories leads to better servicing and understanding of customers' needs. Consequently a firm may have a separate sales force for calling on retail chains, on department stores, on wholesalers, and on certain industrial and contract customers.

Selling Jobs

Today, selling furnishes employment for many. Selling jobs are so dissimilar as to require a diversity of competence, education, and special skills and training. The newsboy is a salesperson as is the auctioneer and the stockbroker. The number of persons engaged in selling is about 6 million, and this is some 30 times as many as employed in advertising.

Here are some job titles of selling jobs: Sales engineer, Account executive, Communications consultant, Sales consultant, Area manager, Industrial representative, Industrial account manager, Marketing representative, Customer service representative, Key account supervisor, General agent, Executive representative, Territory manager, Field representative. The variety of titles of selling jobs proves that most sales jobs involve a maximum of creativity and a minimum of routine.

Many of these people work behind the scenes, virtually unknown by the average consumer, as they sell to industrial, wholesale, and retail buyers and purchasing agents.

Public Relations and Customer Services

Public Relations (PR) is sometimes a separate department outside the marketing function. PR can be defined as the attempt to present an acceptable and favorable image of the company to the general public. This can be done in a number of possible ways: advertising, sponsorship, involvement in charity work, exhibitions and trade fairs, press releases and conferences.

Customer Service is slightly different from PR in the sense that the company here is concerned with keeping the customer happy and satisfied. Areas that are important in good customer relations include: servicing and repair, after-sales service (installation, maintenance and spare parts), guarantees, enquiries and complaints. Having sold a product to the customer, Service Department must see that the consumer is content with the product. A dissatisfied consumer may be later sale lost and bad publicity.

 

THE FINANCIAL OBJECTIVES OF THE BUSINESS

 

Finance is central to the operation of any business. More or less every activity a business undertakes will require some form of funding. Finance is needed to rent or buy premises, to purchase capital equipment, to hire labour and to obtain raw materials. Therefore, without finance a new business could not be set up and an existing business could not continue to function.

The most important objectives of any business are:

Survival. This is the most fundamental objective of all businesses. In order to ensure survival there must be enough money flowing into the business to finance the necessary day-to-day expenditure, e.g. purchasing raw materials, paying employees' wages and so on. This type of expenditure is current expenditure and will normally be financed from current income, that is the money generated from the sale of the business's goods or services.

Growth and Development. While survival is the fundamental short-run objective of the business, in the long run businesses are concerned with growth and development. Old machinery must be replaced with more modern technology to maintain and increase efficiency in order for the company to remain competitive. Growth allows the firm to diversify its product range and open up new markets. With growth come the benefits of economies of scale and a more secure position in the market. To pursue these objectives the business requires capital finance.

Survival and growth and development are obviously closely related. A business, which does not develop and grow, will encounter problems in the long run in maintaining its market share and its survival may be threatened. These objectives determine how a business uses financial resources, often referred to as a business's application of funds.

 

Sources of Funds

Closely related to how money is used by a business is how it is obtained, i.e. the various sources of funds. Sources and application of funds are closely related because generally the most important factor in deciding the method of obtaining the finance is the reason the finance is required. Sources of funds can also be summarized under two broad headings.

Internal Finance. This refers to the money a business generates from its own assets. Internal finance can be obtained from the following sources:

1. Careful management of the business's income and expenditure. This is known as the cash flow of the business. It needs to be carefully monitored to ensure there is enough money flowing into the business to meet current commitments.

2. The profits from the previous trading activities of the business. Some of the profits will be distributed to the owners of the business as a return on their investment. However, it is usual to reinvest part of the profits in order to allow the business to expand. Reinvestment is a very important source of finance for capital expenditures.

3. The sale of the business's assets. Often the finance required for new assets can be partly obtained by selling older equipment. The business may also sell assets to a third party under an agreement, which allows the assets to be retained in return for an agreed rental. This sale and lease back generates finance for the purchase of new assets at the cost of increasing the businesses current expenditure.

External Finance. External finance refers to the injection of funds from outside the business. Essentially this type of finance can be obtained from two sources.

1. Borrowing money. All businesses borrow in order to finance a whole range of business activity. Materials can be bought on credit to help finance current expenditure and loans are obtained from many sources to help purchase new assets.

2. Extending ownership. This means attracting finance from people outside the business who are prepared to invest in its future. However, in the long run the business will have to make enough profit to give a return on this investment or the investors are likely to wish to withdraw their money and invest it elsewhere.

Therefore, financial decisions are concerned with both sources of funds and the application of these funds. In larger businesses this financial planning and decision making is the responsibility of the Finance Department.

The staff employed in the Finance Department under the guidance of Finance Director are concerned with three principal tasks:

• Monitoring when the money is coming in and going out.

• Monitoring where it is coming from and going to.

• Monitoring how much is following backwards and forwards.

These various tasks are carried out by Financial Accountants, Management Accountants, Financial Analysts, who are responsible for preparing the financial accounts of the business, budgeting and giving advice on the advisability of new investment proposals.

In order to undertake these functions effectively, accurate and up-to-date financial information is needed. Therefore the collection, presentation and evaluation of financial data are central to the work of the department.

 

application of funds	использование денежных средств
borrowing n	ссуда; заем; кредит
budgeting n	составление сметы; составление бюджета
business's assets	корпоративные/общие средства, активы корпорации
capital expenditures	капиталовложения
capital finance	основной капитал
cash flow	движение денежной наличности
current expenditure	текущий расход
current income	текущий доход
development n	развитие, расширение
economies of scale	экономия, обусловленная ростом масштабов производства
encounter	наталкиваться (на трудности и т. п.), столкнуться (с трудностями)
external finance	внешнее финансирование, внешние источники финансирования
finance n	финансы (деньги или другие ликвидные ресурсы); доходы; финансовая система; финансовое дело; финансирование
finance v	ассигновать, финансировать, выделять средства, вкладывать деньги; заниматься финансовыми операциями
financial account	финансовый счет; финансовый отчет
financial resources	денежные ресурсы
fund n	фонд, капитал
funding n	субсидирование, финансирование
growth n	развитие, рост
in return for	в оплату за
injection of funds	вложение капитала
internal finance	внутреннее финансирование
loan n	заем, ссуда
meet commitments	выполнять обязательства
monitor v	осуществлять текущий контроль
premises n pl	недвижимость, здание с прилегающими постройками и участком земли
reinvest v	реинвестировать, снова помещать (капитал); снова инвестировать
reinvestment n	повторное инвестирование
rental n	сумма арендной платы; рентный доход
return on investment	прибыль на инвестированный капитал
sale and lease back	продажа и обратная аренда (продажа оборудования с условием получения его обратно в аренду на определенный срок)
short-run objectives	краткосрочные цели
sources of funds	источники капитала
survival n	выживание
trading activities	торговая деятельность
wages n	заработок, доход, вознаграждение
withdraw	брать назад