Коммерция и маркетинг

Product Life Cycle

The conditions a product is sold under will change over time. The Product Life Cycle refers to the succession of stages a product goes through.

The product life cycle goes through many phases and involves many professional disciplines and requires many skills, tools and processes. Product life cycle is to do with the life of a product in the market with respect to business/commercial costs and sales measures.

The stages in the Product Life Cycle

Market introduction stage:

• cost high,

• sales volume low,

• no/little competition,

• competitive manufacturers watch for acceptance/segment growth losses,

• demand has to be created,

• customers have to be prompted to try the product.

Growth stage:

• costs reduced due to economies of scale,

• sales volume increases significantly,

• profitability,

• public awareness,

• competition begins to increase with a few new players in establishing market prices to maximize market share.

Mature stage:

• costs are very low as you are well established in market and no need for publicity,

• sales volume peaks,

• increase in competitive offerings,

• prices tend to drop due to the proliferation of competing products,

• brand differentiation, feature diversification, as each player seeks to differentiate from competition with “how much product” is offered,

• very profitable.

Decline or Stability stage:

• costs become counter-optimal,

• sales volume decline or stabilize,

• prices, profitability diminish,

• profit becomes more a challenge of production/distribution efficiency than increased sales.

Profit

Profit generally is the making of gain in business activity for the benefit of the owners of the business. In economics, a firm is said to be making a normal profit when total revenues equal total costs. These normal profits then match the rate of return that is the minimum rate required by equity investors to maintain their present level of investment.

An economic profit arises when its revenue exceeds the total cost of its inputs.

All enterprises can be stated in financial capital of the owners of the enterprise. The economic profit may include an element in recognition of the risks that an investor takes. It is often uncertain, because of incomplete information, whether an enterprise will succeed or not. This extra risk is included in the minimum rate of return that providers of financial capital require, and so is treated as still a cost within economics.

“Normal profits” arise in circumstances of perfect competition when economic equilibrium is reached. At equilibrium, average cost equals marginal cost at the profit-maximizing position. Since normal profit is economically a cost, there is no economic profit at equilibrium. In a single-goods case, a positive economic profit happens when the firm’s average cost is less than the price of the product or service at the profit-maximizing output. The economic profit is equal to the quantity output multiplied by the difference between the average cost and the price.

Positive economic profit is sometimes referred to as supernormal profit or as economic rent.

The social profit from a firm’s activities is the normal profit plus or minus any externalities that occur in its activity. A polluting oil monopoly may report huge profits, but by doing relatively little for the economy and damaging the environment. It would exhibit high economic profit but low social profit.

Retailing

Retailing consists of the sale of goods or merchandise, from a fixed location such as a department store or kiosk, in small or individual lots for direct consumption by the purchaser. Retailing may include subordinated services, such as delivery. Purchasers may be individuals or businesses. In commerce, a retailer buys goods or products in large quantities from manufacturers or importers, either directly or through a wholesaler, and then sells smaller quantities to the end-user. Retail establishments are often called shops or stores. Retailers are at the end of the supply chain. Manufacturing marketers see the process of retailing as a necessary part of their overall distribution strategy.

Shops may be on residential streets, or in shopping streets with few or no houses, or in a shopping center or mall, but mostly found in the central business district. Shopping streets may or may not be for pedestrians only. Sometimes a shopping street has a partial or full roof to protect customers from precipitation. Retailers often provided boardwalks in front of their stores to protect customers from the mud. Online retailing, also known as e-commerce is the latest form of non-shop retailing (cf. mail order).

Shopping generally refers to the act of buying products. Sometimes this is done to obtain necessities such as food and clothing; sometimes it is done as a recreational activity. Recreational shopping often involves window shopping (just looking, not buying) and browsing and does not always result in a purchase.

Most retailers have employees learn facing; a hyperreal tool used to create the look of a perfectly-stocked store (even when it’s not).

What is a Wholesaling?

Wholesaling is defined as the activities involved in selling to organizational buyers who intend to either resell or use for their own purposes. A wholesaler is an organization providing the necessary means to: 1) allow suppliers (e.g., manufacturers) to reach organizational buyers (e.g., retailers, business buyers), and 2) allow certain business buyers to purchase products which they may not be able to otherwise purchase.

While many large retailers and even manufacturers have centralized facilities and carry out the same tasks as wholesalers, we do not classify these as wholesalers since these relationships only involve one other party, the buyer. Thus, a distinguishing characteristic of wholesalers is they offer distribution activities for both a supplying party and for a purchasing party.

In most countries in the world, a strategic role in fruit and vegetable marketing is played by one or two central wholesale markets. The wholesale market constitutes the basic source of supplies for retailers in the largest cities and their surrounding districts, and for wholesalers supplying retailers in more distant centers. It also serves as the main outlet for nearby growers and, through transporter/traders and commission agents, for those producers further afield. Such a market is also the main centre for the sale of imported produce and that to which exporters in other countries send their produce. At the wholesale market, supply and demand find an equilibrium price and this becomes the mayor determinant of prices in the area.

Competition

Merriam-Webster defines competition in business as “the effort of two or more parties acting independently to secure the business of a third party by offering the most favorable terms.” According to microeconomic theory, no system of resource allocation is more efficient than pure competition. Competition, according to the theory, causes commercial firms to develop new products, services, and technologies. This gives consumers greater selection and better products.

Three levels of economic competition have been classified:

1. The most narrow form is direct competition (also called category competition or brand competition), where products that perform the same function compete against each other. Sometimes two companies are rivals and one adds new products to their line so that each company distributes the same thing and they compete.

2. The next form is substitute competition, where products that are close substitutes for one another compete. For example, butter competes with margarine, mayonnaise, and other various sauces and spreads.

3. The broadest form of competition is typically called budget competition. Included in this category is anything that the consumer might want to spend their available money on. For example, a family that has $20,000 available may choose to spend it on many different items, which can all be seen as competing with each other for the family's available money.

It should also be noted that business and economical competition in most countries is often limited or restricted. Competition often is subject to legal restrictions. For example, competition may be legally prohibited as in the case with a government monopoly or a government-granted monopoly. Tariffs, subsidies or other protectionist measures may also be instituted by government in order to prevent or reduce competition. Depending on the respective economic policy, the pure competition is to a greater or lesser extent regulated by competition policy and competition law.