Home Trade contd II
Commerce SSS1 Second Term
WEEK 2
Home Trade contd II
Performance Objectives
Student should be able to
1. Explain branding, after sale service and vending machine.
2. Give three benefits each.
Content
Modern Trends in Retailing
Modern trend in retailing is the rapid growth in economic and technological development. Below are some of the modern trends in retailing.
Branding
Branding is the act of giving names or marks to a product so as to differentiate it from the product of other firms. It is intended to preventnadulteration and to confer identity to the product
Characteristics of Branding
1. There is usually a brand name.
2. The packaging of the product has a uniform shape and colour as a distinguishing feature.
3. Brand name has a distinguishing trade mark.
4. Registration of brand name to avoid duplication, proliferation or theft.
Advantages of Branding
1. Uniform price
2. Easy recognition
3. Ensures high quality of products
4. Standardization of products:
5. Stimulation of self-service
6. Prevention of product adulteration
7. Form of advertising
Disadvantages of Branding
1. High cost of advertising
2. It leads to high price
3. It can confuse customers: too much brands of goods may confuse customers.
4. Creation of false buying: Branding goods may ensure that customers purchase more than what they need.
Self Service
This is a system where the customers to go round the stores to select whatever goods they want to buy from the shelves and pay to the cashier with or without any assistance of the attendants. Appropriate packaging and display enhances self-service.
Characteristics of Self Service
1. Provision of shelves and counters
2. Display of goods
3. Provision of trolley and basket
4. Provision of large floor space for movement
5. Price tags
6. Provision of security men at strategic places to forestall shoplifting
Advantages of Self Service System
1. Increase in sales: Beautifully displayed goods result in impulse buying that is,customers tend to buy what they do not budget for and this act increase overall sales.
2. Employment of few sales clerks: Since customers are allowed to pick what they want to buy, fewer sales attendants are needed and this reduces the overhead cost.
3. Time saving: Self-service saves time that would have been used in bargaining (negotiation)
4. Convenient shopping: This is possible because goods are well displayed; trolleys and basket are made available for customers to carry whatever they have bought.
5. No interference
Disadvantages of Self Service System
1. Possibility of pilfering: It encourages stealing since customers will not be supervised while buying goods and this may lead to shortages.
2. Possibility of over spending: Customers may be tempted to buy more than what they have budgeted for.
3.High running cost: The cost of renting a large accommodation will definitely increase overhead cost.
4. Goods may be damaged: Handling of goods by the customers may damaged the goods.
5. Lack of proper inspection of goods bought.
After-sales service
After-sales services are extra services, guarantees or warranties which are extended to the buyer of a commodity, free of charge, to make such a customer call again on that particular retailer. The extra services may be free delivery, free advice as to how the product concerned is used or operated, free repairs, free fixing or installation of the articles for the customer, etc.
After-sales services may also take the form of the seller allowing the buyer a period of time within which the article bought could be returned for a new one if found faulty, i.e. sellers offer guarantees of a fixed period within which the buyer of the article could test it. A warranty is an alternative term for a guarantee that the article bought is free from defective workmanship.
The aim of after-sales services is to ensure the psychological satisfaction of the customer in order to maintain or improve sales. The availability of swift and efficient after-sales repair facilities, deliveries, advice, guarantees, and warranties offer much satistaction to customers who are very likely to call again on sellers who offer such services.
Factors Determining the Level of After-sales Services To be provided
Whether or not after-sales services will be provided, and to what extent, will depend on the following factors.
a. The type and grade of merchandise: For example, electrical appliances and drugs require the explanation of how they are to be used.
b. The real cost, in the long run, of providing a skilled staff of repair mechanics: Where the cost of the article is very heavy, guarantees have to be given to remove any fears the customer may entertain.
c. Practice of competitors: Where the selling of a particular article is very competitive, free deliveries, for example, could be offered to maintain customers.
d. Legal reguirements: Some consumers protection laws require sellers to grant guarantees to customers especially where the cost of such articles is very high.
e. The importance attached to seller's goodwill: Where the seller attaches much importance to brand image guarantees and extra-services are offered.
f. Relationship of service cost and profit margins: Where services offered do not whittle away profits, after sales services are offered to a large extent.
Advantages of after-sale service
a.Increased volume of sales: Sellers sell more of their goods since most customers always call again, i.e. customers loyalty is assured.
b. Better personal attention: Customers enjoy better personal attention from sellers.
c. Greater confidence: Customers develop greater confidence in articles bought since the fear of expensive articles, for example, getting broken down in no time is allayed.
d. Improved quality of goods: The quality of goods is assured since the seller is concerned with retaining customers.e. Sellers goodwill is established: Sellers are able to improve their reputation through the offering of such services.
f. Less danger of wrong use of articles: The dangers associated with the wrong use of articles, especially drugs, are removed.
Disadvantages of after-sale service
a. Higher prices: In business, nothing goes for nothing and so the extra services may be reflected in the price of the article bought by the customer in the form of higher prices.
b. Possibility of wrong advice: Some inexperienced sellers may mislead customers, i.e. wrong advice might be offered especially where the use of a drug is concerned.
Automatic Vending Machine
Vending machines may be used in selling goods like cigarettes, biscuits and tea. Fixed quantities of the goods are sold at given fixed prices. The buyer merely inserts the correct amount of money for the item and presses a botton showing the good he has paid for and the item comes out paid automatically. The machine is used for selling in public places like office and cinema halls.
An important advantage is that it can sell at any time of the day.
The main disadvantage is that the buyer must hold the correct denomination. However, in some countries, some machines exist which can give change at the same time. Another disadvantage is that the automatic vending machine cannot be used where, there is no efficient power supply, otherwise, the cost of operation will be too high to be economical.
Prepacking
Pre-packing refers to the packaging or packing, wrapping or containerzing, weighing and pricing of goods before being displayed on shelves or counters. E.g. beer sold in take-home cans, rice in cellophane packets, oil in pint containers, biscurts in tins or packets, etc. The packaging may be done by the manutacturer, wholesaler or retailer.
Advantages of prepacking
a. Time-saving: It saves time since the customer does not have to wait for the seller to wrap, package, weigh or price the article as all these have already been done in advance.
b. Increased sales: It increases sales since some containers, wrappers or packets are very decorative and can thus attract more customers.
c. Protection of articles from losing face value: The article is saved from the deterioration caused by constant handling.
d. An advertising medium: It is a way of advertising a product since the packaging is often done in bright and attractive colour.
e. Domestic uses of containers: Containers can be used in homes for other purposes. Easy diiferentiation of products: Pre packaging makes it easier for customers to differentiate one product from another.
Disadvantages of pre-packing
a. Higher prices: Goods packaged tend to have higher prices since customers not only pay for the goods but also the packets, bottles, cans, tins, cellophane, boxes or jar in which the goods are packed.
b. Imperfect marketing: The differentiation of products resulting from pre-packaging encourages imperfect competition or marketing of products.
c. Danger of consuming unhealthy products: Some containers, especially cans and tins, become rusty and thus poison their contents and when these are consumed the effects are often very dangerous to consumers health.
Credit cards
A credit card is a card which enables the holder to obtain goods and services on credit from specified suppliers up to an agreed maximum amount, payment being made monthly to the issuer of the card. E.g. Nigeria's first credit card was launched in Lagos in 1983.
Main Features or Characteristics of credit cards
a. Consideration of applicant's credit-worthiness: A credit card is usually issued after the applicant's credit worthiness has been considered.
b. Increasing popularity in advanced societies: The use of credit cards is very popular in the advanced countries, particularly the United States of America (U.S.A.) and Great Britain.
c. Firms issuing credit shopping cards: Shopping cards are issued by, or in association with, banks, through some large retailers issue their own credit cards for use in their own shops.
d. Obligations of shops and customers to credit-card issuing firms: Shops have to pay a percentage of the sale to the Credit-card issuing firms who also charge customers some interest on any balance outstanding at the end of the month.
e. A form of hire-purchase: Credit cards are, in effect, a form of hire purchase as only a proportion of the balance due has to be paid each month.
f. Various uses: Credit cards can be used in shops, at garages (i.e. petrol-stations or where motor-vehicles are taken care of for security), in hotels, for airway and railway journeys and even to pay for a holiday.
Advantages of credit cards
a. Limits the use of or the danger in volved in carrying cash: The credit card system limits the use of raw cash or the danger involved in the carrying of huge sums of money.
b. Portability: Credit cards are easier to carry about than cash.
c. Credit facilities for holders: The holder of a credit card can buy on credit up to the amount specified.
d. Increased sales: Sales are increased through the use of credit cards since customers can buy goods without having to wait for salaries or wages.
e. Increased profits: Sellers gain more profits, especially where the cards are issued by them, since customers end up paying more than they would have paid if cash were used.
Disadvantages of credit cards
a. Creation of debts for holders: The credit-card system creates unnecessary debts for users since they often buy goods with their cards on occasions when they would not have purchased such goods if they were to use actual cash. In other words, the use of credit cards reduces the restraint or check customers have on impulse buying and, therefore, places them into debts.
b. Payment of interest on outstanding balances: Holders of credit cards pay more for goods since they are also charged some interest on outstanding balances.
c. Reduction in thrift or saving: The impulse to buy increases with the use of credit cards and thereby reduces thrift or saving on the part of holders.
d. Increased bad debts: Issuers of credit cards may face the problem of bad debts since some customers may fail to honour their obligations due to retrenchment from jobs, illness or even death.
e. Less bargaining power of holders: Holders of credit cards issued by shop usually pay more for goods bought since they have no much power to bargain for lower prices.