Veterinary Marketing PDF

# Veterinary Marketing ## Definition of Marketing - The process or technique of promoting, selling, and distributing a product. - An aggregate of functions involved in moving goods from producer to consumer. **By application of this definition on Veterinary Marketing, it will be defined as the...

# Veterinary Marketing ## Definition of Marketing - The process or technique of promoting, selling, and distributing a product. - An aggregate of functions involved in moving goods from producer to consumer. **By application of this definition on Veterinary Marketing, it will be defined as the process of transferring of livestock products such as meat, milk, and eggs from producers to consumers.** - Marketing as a discipline involves all the actions a company undertakes to reach to customers and maintain relationships with them. - Transferring the products to customers ultimately ensures profitability. ## The Marketing Concept Relies On Three Key Aspects 1. **What is the Target Market?** - The first step is to determine exactly which the target market is. - This can be done by Market Research and deciding which target market will give the best returns. 2. **What are the Needs and Demands of the Target Market?** - A further step in market research. - The consumer preferences study will help the firm determine the needs and demands of the target market thereby helping the firm in deciding their strategies. 3. **What is the best strategy to apply?** - In this step, the firm decides what strategy it needs to adopt. - The firm should determine what kind of value it should create and deliver. ## Marketing Mix (4 P's) - It is the combination of various elements of marketing classified under four heads - **Product** - **Place** - **Promotion** - **Price** ## 1 - Product - A product is the key element of any marketing mix - It refers to a physical product which a consumer needs and is ready to pay for it. - Physical products include tangible goods like drugs. ### The decisions concerning the product may be related to: - Product attributes - Branding - Packaging and labeling - Product support service - Product mix ## A - Product Attributes - Refer to the quality, features, and design of the product. - A product should serve the purpose for which it is made, in terms of utility and quality. - In a competitive market, products are differentiated on the basis of certain features or design. ## B - Branding - In a competitive market, many products are sold by brand names. - Brand is an identification of the product. - It plays an important role in the creation of demand. - While branding a product, it should be ensured that the name is simple, easy to read and pronounce, and if possible it should have an appeal. ## C - Packaging and Labeling - Packaging means putting the products in suitable containers or packets such as tin, plastic jar etc. - Packaging should be protecting the product and easily handled. - Sometimes, the container may have its own usefulness. - For instance, mineral water is available in a plastic bottle which can be reused after consuming the water. - Certain polythene and plastic are not considered good as packaging material from the environment point of view. - Their usage should be avoided. - Labeling serves the purpose of indicating the contents, weight or measure, instructions for use, price, name of the producer, date of manufacture, and expiry etc. - The information on the label is essential for various reasons. - For example, the date of expiry in case of medicines, and the date of manufacture in the case of eatables, prevent the sale of products which may prove harmful. - The purpose of a package is to protect the product from spoiling and keep it clean until it is opened by the consumer. - Many producers overlook the importance of product packaging, but this is the first thing consumers see. - When the package is appealing, customers are more likely to buy it. - as long as the anticipated quality is there, consumers will be satisfied. - The size and type of package will depend on knowing what the consumer will accept for each type of product. - Consumers are more likely to buy smaller food packages of items that are used occasionally. - They will buy large packages of items used frequently and in a relatively short time if the product remains safe to use during this period. - Most plant and animal products must be packaged appropriately to be preserved: canned, smoked, cooked, dried, or frozen. - The type of processing will determine the length of time the product can be safely used from the time processed. ## Product Life Cycle (PLC) - Every product has a life cycle, which is a period of time from appearance of product in market till disappearance. - During the period of the Product Life Cycle, sales are not constant; there are variations in levels of demand, profit, and amount of competition in the Market. - The product life cycle concept helps marketing managers to plan alternate marketing strategies to address the challenges that their products are likely to face. ### Stages of the Product Life Cycle - **Development** - **Introduction** - **Growth** - **Maturity (Saturation)** - **Decline** ## 1 - Product Development Stage - Investing lots of money to develop a new product ## 2 - Introduction - Launch into the market - Sales and profit grow but very slowly - Barley have any profit as it takes time to earn back the money spent in the development stage - Spending lots of money on promotion and advertising - Big brands invest lots of money at this stage to increase brand awareness - It takes time to convince new users to buy a product. - Retailers may not want the new product on their shelf. - Spending lots of money to get the product on their shelf. ## 3 - Growth - Sales and profits are growing more rapidly - Consumers are accepting the product - Start working on repeat purchase. - At the end of this stage, profit begins to slope down as competitors enter. ## 4 - Maturity - The market becomes mature - Very high competition - May take part in hard promotion/price reduction. - May stay in the maturity level. ## 5 - Decline - Both sales and profit decline ## 2 - Pricing - Price is the amount charged for a product or service. - It's paid by consumers for the benefit of using any product or service. - Price fixation is an important aspect of marketing. - Pricing decisions of a company are affected by internal and external factors. ### Internal Factors - Cost of the product - Marketing objectives - Marketing mix strategy - Strategy - Organization for pricing ### External Factors - Nature of market or demand for a product - Competitors' costs and price offers - Other environmental factors like economy, government's policies etc. ## 3 - Place - Place is another important element of the marketing mix. - Once the goods are manufactured, packaged, priced, and promoted, they must be made available to the consumers. - Thus, the place is related to channels of distribution (marketing channels) and physical distribution. ### Channels of Distribution - **Channel 1:** Manufacturer --> Consumer - **Channel 2:** Manufacturer --> Retailer --> Consumer - **Channel 3:** Manufacturer --> Wholesaler --> Retailer --> Consumer - **Channel 4:** Manufacturer --> Wholesalers --> Jobers --> Retailer --> Consumer ## 4 - Promotion - Promotion refers to using methods of communication with two objectives: - Inform the consumers about a product. - Persuade consumers to buy the product. - In the absence of communication, consumers may not be aware of the product and its potential to satisfy their needs and desires. - Various tools of communication form part of the promotion mix. - Companies must decide which tool(s) should be used for larger sales and in what proportion. - The tools should be combined. - These decisions are known as promotion-mix decisions. - There are four components of promotion-mix, i.e., advertising, personal selling, sales promotion, and publicity. - Thus, promotion mix is a company's total communication programs which consist of different tools which are used to achieve the company's marketing objectives. ### Marketing Mix - 4P's | | Promotion | Product | Place | Price | | ----------- | -------------------------------------------------- | -------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------- | | | Sales Promotion | Features | Channels | Price strategy | | | Advertising | Quality | Market Coverage | Pricing | | | Public Relations | Branding | Assortment | Allowances | | | Direct Marketing | Packaging | Location | Discounts | | | | Services | Inventory | Payment terms | | | | Warranties | Transport | | ## Market Structure (Forms of Market) - **Introduction:** The market is a structure or a place where buyers (demand) and sellers (supply) meet either directly or indirectly through dealers or intermediaries. Some markets are local; others are national or international. ### The Forms or Types of Market Structure - **Perfect Competition** - **Imperfect Competition** - **Pure Monopoly** - **Monopolistic Competition** - **Oligopoly** ## 1 - Perfect (Pure) Competition - It is a market form in which there are a large number of sellers and buyers of a homogeneous product. - There is freedom of entry into and exit from the industry, and all firms in the industry are price takers. - Uniform price prevails in the market, and buyers, and sellers possess perfect knowledge of market conditions. ### Features of Perfect Competitive Markets 1. **Large number of firms.** - The basic condition of perfect competition is that there are large numbers of firms in an industry. - Each firm in the industry is small. - A single firm cannot influence the price of the product by reducing or increasing its output. - An individual firm takes the market price as given and adjusts its output accordingly. - In a competitive market, supply and demand determine market price. - The firm is price taker and output adjuster. - In the milk production, farms are usually small; they are especially small compared to the size of the entire market for milk. 2. **Large number of buyers and sellers.** - The number of buyers and sellers is so large under perfect competition that each buyer and seller comprises a small part of the market. - So they cannot influence the market price and output in the industry. - The demand put by a buyer is so small that he cannot influence the market price of the product by his individual action. 3. **Homogeneous product.** - The product being sold under perfectly competitive market is homogeneous in nature. - Every seller sells the same kind of product, or that there is no product differentiation in terms of brand names, packaging, etc. - Consequently, a single price prevails in the market, and firms need not incur any advertisement costs or selling costs. - i.e., It is not possible to make a distinction between the milk of one farm and another. 4. **The firm is a price taker.** - The firms in perfect competition have no power over the price; they have to sell at the going market price. - The firms in perfect competition are said to be price takers. - If a firm attempts to raise the price by the smallest possible amount, customers would not buy from it because they could buy the same product from other firms. - Lowering the price is also not necessary because the firm can already sell all its output at the going price. 5. **Free enter and exit from the industry.** - There are no barriers or restrictions to enter or exit from a market in perfect competition. - This condition assures that no firm will dominate the market and affect other firms. 6. **Availability of information and technology.** - We mean that all buyers and sellers have complete information about the price of the product and of the inputs used to produce it. - The buyers know all they need to know about product characteristics. - And that all producers have equal knowledge of production techniques. 7. **Non-price action** - Non-price actions such as advertising, service after sale are not necessary in perfect competition because the firm can already sell all its output at - the going price, and incurring additional expense would only make it unprofitable. 8. **The horizontal demand curve is also the marginal revenue of a firm in perfect competition.** - The marginal revenue, or additional revenue from one more unit sold, is just equal to the going price, which is shown graphically by the demand curve itself. - Note that the average revenue is also the demand curve, and total revenue is an up sloping straight line. 9. **No transportation charges and costs.** - There are no transport costs for carrying the product under perfect competition because if we add transport costs to the price of the product, the identical products of different sellers will have different prices at different places depending upon the transport costs - Examples of competitive markets: dairy, fish and poultry industries. ## 2 - Monopolistic Competition - "Monopolistic competition is a market structure in which there are a large number of small sellers selling differentiated but close substitute products". - It resembles perfect competition in that there are many small firms and easy entry and exit, but under monopolistic competition, the various firms' products are differentiated from one to another. ### Features of Monopolistic Competition 1. **Large number of sellers (firms)** - Monopolistic market has a large number of sellers of a product but each seller acts independently and has no influence on others. 2. **Products are similar, but non-homogeneous (Differentiation in products)** - The producing firms practice a mini-monopoly over their product. - Product differentiation may be real or imaginary. - Real differentiation is done through differences in the materials used, design, color etc. - Imaginary differences may be created through advertisement, brand name, trademarks etc. - The firms producing similar products in this imperfectly competitive world cannot raise the price of product much higher than their rivals. - If they do so, they will lose much of their sale, but not all the sale. - In case, they lower the price, the total sale can be increased to a certain extent. - How much will the sale increase or decrease by lowering or raising the price will depend upon the product differentiation of the different firms (price maker in narrow range). - If the product of the various firms are very close substitutes of one another and no imaginary or real difference exists in the mind of the buyers, then a slight rise or fall in the price of the product of one firm will appreciably decrease or increase the demand for the product. - If the product of one firm differs from that of other firm (though the difference may be an imaginary one), a slight rise in the price of the product of one firm will not drive away all its customers. - A few buyers may be attracted by the low price of the other rival product but not all the buyers. 3. **Free entry and exit of firms.** - The entry of new firms in the monopolistically competition industry is relatively easy. - There are no barriers for the new firm to enter the product group or leave the industry in the long run. - In the long run, if firms are earning economic profit, this will attract firms into the industry. - Firms will continue to enter until economic profits are zero. - Entering firms produce close substitutes; not an identical or standardized product. 4. **Sufficient Knowledge.** - The buyers have sufficient knowledge about the product to be purchased and have a number of options available to choose from. 5. **Non-price competition.** - In monopolistic competition, the firms make every effort to win over the customers. - Other than price cutting, the firms may offer after sale service, a gift scheme, discount not declared in the price list etc. 6. **Presence of multiple dimensions of competition (Advertisement and propaganda).** - Another very important characteristic of the monopolistic competition is that each firm tries to create a difference in its product from the other by advertising, propaganda, attractive packing., etc. - When it succeeds in its object, the firm occupies almost the position of a monopolist. - It is, thus, in a position to raise-the price of the product without losing its customers. 7. **Sales efforts.** - With heterogeneous products, the sale of the products by the firms needs some sale efforts. ## 3 - Oligopoly - Oligopoly falls between two extreme market structures, perfect competition and monopoly; Oligopoly occurs - when a few firms dominate the market for a good or service. ### Definition of Oligopoly - “It is a market structure characterized by a few firms producing all or most of the output of some good that may or may not be differentiated”. - The term 'a few firms' covers two to ten firms dominating the entire market for a good. - If there are only two firms in the market, the oligopoly is called Duopoly. - Many industries including cement, steel, mobile phones, cars, and beverages etc., are oligopolistic. - Oligopolies may be homogeneous or differentiated. - If firms in an oligopolistic industry produce standardized homogeneous products like steel, the product the industry is said to be producing under pure oligopolistic conditions. - On the other hand, if the firms are producing goods, which are close substitutes for each other, it's called differentiated oligopoly. - Mutual interdependence is greater when products are identical and it is lesser when goods are differentiated. ### The Main Characteristics of Oligopoly 1. **Small number of firms:** Oligopoly is a market structure characterized by a few firms; these handfuls of firms dominate the industry to set prices (price maker). 2. **Interdependence:** All Firms in an industry are mostly interdependent Any action on the part of one firm with respect to output, quality product differentiation can cause a reaction on the part of other firms. 3. **Realization of profit:** Oligopolists firms are often thought to realize economic profits Whenever there are profits, there is incentive for entry of new firms. The existing firms then try to obstruct entry of new firms into industry. 4. **Strategic game:** In an oligopolistic market structure, the entrepreneurs of the firms are like generals in a war. They attempt to predict the reactions of rival firms. It is a strategy game which they play. - Nature of demand curve is negative slope and elastic ### Causes of Oligopoly 1. **Economies of scale:** If the productive capacity of a few firms is large and are able to capture a greater percentage of the total available demand for the product in the market, there will then be a small number of firms in an industry. The firms in the industry with heavy investment, using improved technology and reaping economies of scale in production, sales, promotion, etc., will compete and stay in the market. 2. **Barriers to entry:** In many oligopolies, the new firms cannot enter the industry as the big firms have ownership of patents or control - over the essential raw material used in the production of an output. The heavy expenditure on advertising by the oligopolistic industries may - also be a financial barrier for the new firms to enter the industry. 3. **Merger:** If the few firms in the industry smell the danger of entry of new firms, they can merge and formulate a - joint policy in the pricing and production of the products. The joint action of a few big firms discourages the entry of new firms into the industry.. 4. **Mutual interdependence:** As the number of firms is small in an oligopolistic industry, therefore they keep a strict watch of the price charged by rival firms in the industry. The firm generally avoids price war and tries to create conditions of mutual interdependence. ## 4 - Monopoly - Monopoly can be described as a market situation where a single firm controls the entire supply of a - product which has no close substitutes. ### The Characteristics of Monopoly - **Number and size of distribution of sellers:** Single seller - **Number and size of distribution of buyers:** Unspecified and large - **Product differentiation:** No close substitutes - **Price Maker:** Monopolist is a price maker, not a price taker. With a view to enhancing his profits, the monopolist - often restricts the output of his product at a level that fetches him a high price. - A monopoly must not only be the only seller of the product but sell a product which does not have close substitutes. - **Conditions of entry and exit:** Prohibited or difficult entry because the producer may be having the exclusive ownership of - strategic raw material. He may be having exclusive knowledge of production techniques He may be having patent rights.